‘Bitcoin city’ will fall flat, says El Salvador green expert

THE grandiose plans of El Salvador’s president, Nayib Bukele, to power the world’s first “Bitcoin city” by volcano have been ridiculed by the country’s leading environmentalist.

Mr Bukele unveiled the project last month, proposing to issue bonds worth 300,000 Bitcoins, equivalent to £12 billion, to fund the building of a city at the base of Conchagua, a volcano beside the Pacific. The idea is that tapping into the mountain’s geothermal power will solve one of the biggest challenges cryptocurrencies face: the vast, unsustainable levels of energy required to power the computers that encrypt transactions.

But the Central American nation, which often suffers power cuts, should first focus on meeting the electricity needs of its six million people, according to Ricardo Navarro, a winner of the Goldman Prize, the green movement’s equivalent of the Nobel. “Geothermal still costs more than oil, otherwise we would already be using more of it. What will end up happening is we will just be buying more oil,” Mr Navarro warned.

He would usually support climatefriendly geothermal energy, but said the policy was misguided.

“Talking about building this city beside a volcano is like thinking you are rich because you live next to a bank. Geothermal energy doesn’t need volcanoes. It needs groundwater, steam. But we already have problems with not enough water in El Salvador.”

Currently, El Salvador imports roughly one quarter of its energy, with the rest coming from hydroelectric dams, geothermal and oil plants.

The city will be designed in the shape of the round Bitcoin logo and, according to the president, feature everything from museums to an airport. Other than VAT, residents will pay no taxes.

Samson Mow, of the tech company Blockstream, claimed that it would make the troubled Central American nation, plagued by poverty and one of the world’s highest murder rates, “the financial centre of the world”.

This year, El Salvador became the first country to accept Bitcoin as legal tender. But some have accused Mr Bukele, 40, of using cryptocurrencies as a smokescreen to deflect attention from his failings as a president.

The move came after the United States put several of his allies on a corruption blacklist, while his promises of badly needed jobs have failed to materialise.