President Nayib Bukele of El Salvador announced plans to make Bitcoin legal tender at Miami’s 2021 Bitcoin Conference. Just days later, the Salvadoran congress approved the bill for Bitcoin with overwhelming support.
El Salvador plans to power their Bitcoin operations using geothermal energy produced by local volcanoes.
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The scoop: El Salvador announced that Bitcoin is now legal tender. Citizens can pay taxes with it and stuff.
Why it matters: El Salvador is the first country to recognize a cryptocurrency as a legal form of currency. This marks a major shift toward government’s view of decentralized financial systems, and a potential shift away from central banks.
The energy problem: We all know Bitcoin has an energy problem. To combat that, El Salvador plans to use geothermal energy from its volcanoes to produce cheap, clean energy for bitcoin mining. Let’s see if they can build sophisticated infrastructure to match pent-up demand.
Bottom line: In the rush to make bets on the future of finance, governments around the world are responding with crypto plans for citizens.
Question: Will this push for legal forms of cryptocurrency help or hurt its climate impact in the long-run?
Dig deeper → 2 min
El Salvador is the first country on Earth to accept cryptocurrency as a legal form of currency, meaning all Salvadoran businesses must accept Bitcoin payments. Plus, citizens will be able to pay taxes with it.
Following the announcement from President Bukele, leaders from Paraguay, Panama, Brazil, and Mexico also expressed support for Bitcoin adoption.
How El Salvador plans to power its bitcoin mining
The process of crypto mining requires vast amounts of energy, similar to other technical processes that use heavy data sets like streaming and cloud computing. But harnessing cheap, clean energy would expedite the widespread adoption of cryptocurrency in everyday transactions.
Companies like Northern Bitcoin are finding creative ways to mine coins using renewable energy. Innovation is on the horizon. And the fastest nations to adopt cryptocurrency will hedge the biggest bets on what could be the future of finance. In the battle between central banks and decentralized ledgers, energy and regulation will ultimately be the deciding factors.
How geothermal energy works
Volcanoes produce a lot of heat. Those steamy temperatures drift into water underground. The steam produced by the hot water can be generated into electricity, or even power wind turbines.
El Salvador has already kicked off projects, digging a new well to design a “mining hub” around it. Bitcoin sucks up more energy annually than nations like Argentina and the Philippines, so it may take more than a well to keep the world’s attention and attract foreign investment.
Can this tiny nation keep the world’s attention?
El Salvador is one of the poorest nations in the Americas. If they can lead its continent in the crypto space, it could help alleviate harsh economic conditions in the region. But there is a serious infrastructural challenge ahead.
If the tiny nation wants to compete on the global stage, it will take more than a hole in the ground and some tweets. It requires a cultural upheaval, a mass influx of new business and capital emerging in the Central American state.