Dressed in all white and donning a backward baseball cap, President Nayib Bukele looked more like a pop star than a politician as he described an ecological metropolis funded by Bitcoin-backed bonds. He compared his strategy to that of Alexander the Great founding cities that he humbly named after himself:
— Nayib Bukele ?? (@nayibbukele) November 22, 2021 Bukele, who once “jokingly” described himself as “the coolest dictator in the world,” shared some key details on how he hoped to build his Alexandria.
Volcano power
Bukele said the city would be built near the Conchagua volcano in southeastern El Salvador. The volcano would provide geothermal power for both the city and Bitcoin mining. “This is a fully ecological city that works and is energized by a volcano,” said Bukele. It wasn’t the first time that Bukele has touted this approach. In October, the 40-year-old said the country had started mining Bitcoin using geothermal energy, which accounts for around 21% of El Salvador’s electricity generation.
— Nayib Bukele ?? (@nayibbukele) October 1, 2021
Covering the costs
The city will be funded by a sales tax and an issue of $1bn in sovereign bonds backed by Bitcoin, Bukele told the raucous crowd at the beach resort of Mizata. Half of the $1 billion in bonds will go towards building energy and mining infrastructure, while the other half will be invested in bitcoin. The bond will be managed by blockchain tech firm Blockstream and issued on the “liquid network,” a Bitcoin sidechain network. Samson Mow, chief strategy officer of Blockstream, said El Salvador also aims to create a government securities law and grant a license to Bitfinex Securities, a crypto exchange, to process the bond issuance. “The coming digital securities laws in El Salvador will make it the new center of the financial world,” he said.
— Samson Mow (@Excellion) November 21, 2021 Bukele promised that there would be no income, capital gains, property, payroll, and municipal taxes. The only tax collected will be a 10% value-added tax. Half of this will be used to pay for the bonds, and the rest will be invested in municipal works. Bukele also said the city would have zero carbon dioxide emissions.
City planning
He said construction of the city will begin 60 days after the bond offering, which will take place in 2022. The announcement forms part of Bukele’s plans to create a global crypto hub.
