News In Brief - November 24, 2021

November 24, 2021
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After making Bitcoin legal tender, El Salvador is now planning to build the first-ever Bitcoin City, powered by a volcano.

After making Bitcoin legal tender, El Salvador is now planning to build the first-ever Bitcoin City, powered by a volcano.

Sounding a bit like a rejected plot from a James Bond movie, El Salvador President Nayib Bukele announced on Sunday plans to build the world’s first Bitcoin City on the Conchagua volcano. The active volcano, it is claimed, will provide the necessary geothermal energy to mine the cryptocurrency.

The environmental damage of cryptocurrencies, such as Bitcoin, that use a proof-of-work methodology to mine the currency is a big concern for policymakers. Earlier in November, Swedish regulators called for an EU-wide ban on mining proof-of-work currencies within the region's borders citing ecological risks.

The new Bitcoin City will have a circular shape, imitating the shape of a coin, and will have residential areas, social sectors, green zones, offices and its own airport. Some 7 percent of the area will be reserved for digital equipment and a further 3 percent for eco-infrastructure.

El Salvador made Bitcoin a legal tender in June and is now planning to issue ten-year Bitcoin bonds to fund the Bitcoin City project. According to news reports, the country aims to issue $1bn in tokenised US-dollar denominated bonds with a 6.5 percent interest.

Half of the funds will be held in Bitcoin, while the other half will be used for construction and Bitcoin mining.

In addition, residents of the city will not have to pay any taxes other than the value-added tax (VAT).

“The only tax in the 'Bitcoin City' is VAT. Half of it will be used to pay the bonds of the city and the other half will be spent on public infrastructure and city maintenance", the forty-year-old President said.

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