Bitcoin City, flagship project of Salvador, arouses many questions. Bitcoin focused and funded by innovative obligations, this ambitious initiative raises questions about its feasibility, its economic impact and the energy challenges it will have to overcome.
The colossal site of Bitcoin City south of Salvador
In 2021, the Salvador became the 1st country to adopt Bitcoin as a legal currency. Today, he remains the only one to have crossed this milestone, but many countries in Latin America, as well as elsewhere in the world, show a growing interest in the “bukele method”. The latter allowed the Salvador to end several decades of gang war and to reposition the country on the international scene.
That same year was marked by an euphoria on the Bitcoin course, with a price reaching a historic summit at 69,000 dollars. During this period, all the projects directly or indirectly linked to the BTC benefited from intense media coverage and attracted significant investments.
To go further, discover our documentary on the adoption of Bitcoin in Salvador in full on Youtube.
Among these initiatives are The creation of a city entirely centered on Bitcoin, soberly called “Bitcoin City”.
Photo taken during Nayib Bukele with Bitcoin City
According to the Nayib Bukele project, Bitcoin City should offer tax advantages: no taxes on income, capital gains or property. The city would be designed around Bitcoin, integrating it as a central pillar of its economy, whether to promote commercial transactions in BTC or for Use the mining powered by the geothermal energy of the CONCHAGUA volcano.
The total cost of this initiative is estimated at $ 17 billion. To finance its construction, President Nayib Bukele announced the launch of “volcano bonds” (volcanic obligations). These financial titles aim to raise several billion dollars, promising investors an annual return of 6.5 % over a period of 10 years.
A few months later, when the euphoria of Bull Run had dissipated, the government had to face the reality of the challenges of such a project. This has proven to be much more complex than expected, requiring not only several years, even decadesto build geothermal power plants, but also to modernize the infrastructure around the city, including the ports of Unión and Acajutla.
In November 2024, the Cryptoast team went to Salvador to observe and experience the adoption of bitcoin in the country. This immersion gave birth to a documentary, now available on our YouTube channel.
https://www.youtube.com/watch?v=eelnuqs2i9c
Feel Mining: Generate passive income with your cryptos
What future for Bitcoin's mining in Salvador?
During our trip to Salvador, we met Francisco Avila, a Salvadoan engineer and manager of a company specializing in solar photovoltaic energy projects.
Francisco has confirmed to us that the Bitcoin City's mining and creation project is much more complex than what the government had presentedmainly due to the high cost of electricity in Salvador.
This oscillates 8 to 12 dollar cents per kWh for large consumers, and reaches 30 dollar cents for individuals. For comparison, in 2024, electricity cost 25 euro cents (about 26 dollar cents) in France for individuals.
For Bitcoin miningthis rate remains too high to guarantee any profitability.
Indeed, competition in the Bitcoin mining sector is extremely strong. Today, The most profitable minors exploit the excess electricity produced by the power plants, an energy which would be otherwise wasted. This excess energy availability explains their ability to obtain much lower production costs.
To dig the subject: discover how Bitcoin's mining influences the energy sector
Although 80 % of Salvador's electricity production comes from renewable energies, the country remains strongly dependent on oil, which represents 52 % of its total energy consumption. This dependence contributes to maintaining high electricity prices, despite a share of 40 % of renewable energies in total consumption.
Salvador energy mix since 2000
Francisco told us that President Bukele had significantly improved security conditions in Salvador. According to him, the time has come to invest more in the energy sector to reduce consumption costs, which would also promote the economic development of the country.
He specifies:
“Mr. Bukele, from a security point of view, it's true, he has changed a lot. Now we can say that we have gone from a country with little security to a super quiet country. […] I think we still need more investments or ideas to increase the penetration of renewable energies, such as solar and geothermal energy, which could help get a better price for the whole country. »»
The creation of Bitcoin City is a titanic project, requiring the development of new power plants, especially geothermal. However, the time required to build these infrastructure could exceed the time necessary for the city to reach sufficient size to consume the energy produced. Bitcoin's mining could then play a key role, not only by returning this excess energy, but also by contributing to the financing of construction sites.
For example, in Texas, the ERCOT company already operates Bitcoin's mining to make profitable and develop its electrical installations and its renewable energy power plants. Mining also acts as a flexible consumer, making it possible to stabilize the network during peaks or hollows of demand. This made it possible to avoid the blackouts which had in the past left part of the Texan population without electricity for periods of extreme cold.
Other companies around the world follow this example, especially in Japan, in Russia and the Democratic Republic of Congo. Salvador, 1st country to have adopted Bitcoin as a legal currency, could also take advantage of this approach.
Ledger: the best solution to protect your cryptocurrencies 
Source: IEA
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First attracted by the bait of gain, I am now trapped Deep the Rabbit Hole. Without a way out, I just have to share my knowledge and transmit the passion I have for Bitcoin. I am also the creator of Adopt A Block, an educational site dedicated to Bitcoin.
Marius Farashi Tasooji
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