El Salvador plans to build the world’s first tax-free “Bitcoin city”

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In a rock concert atmosphere, Salvadoran President Nayib Bukele announced that his government would build a “Bitcoin City” by the ocean at the foot of a volcano.

Mr Bukele used a rally of Bitcoin enthusiasts this weekend to launch his latest idea, just as he used a previous Bitcoin conference in Miami to announce in a video message that El Salvador would be the first country to become legal tender. to cryptocurrency.

A bond offering would take place in 2022 entirely in Bitcoin, Mr Bukele said, wearing his baseball cap upside down. And construction would begin 60 days after the financing is ready.

The city will be built near the Conchagua volcano to take advantage of geothermal energy to power both the city and Bitcoin mining – the power-hungry solving complex mathematical calculations day and night to verify currency transactions.

The government is already running a pilot Bitcoin mining company at another geothermal power plant next to the Tecapa volcano.

The oceanfront Conchagua volcano is located in the southeast of El Salvador, in the Gulf of Fonseca.

The government will provide land and infrastructure in addition to trying to attract investors.

The only tax collected there will be VAT, half of which will be used to pay municipal obligations and the rest to municipal infrastructure and maintenance. Mr Bukele said there would be no property, income or municipal tax and that the city would have zero carbon dioxide emissions.

The city would be built with an eye on foreign investment. It will include residential areas, shopping centers, restaurants and a port, Mr Bukele said. The president also spoke about digital education, technology and sustainable public transport.

“Invest here and earn all the money you want,” Bukele told the enthusiastic crowd in English at the closing of the Latin American Bitcoin and Blockchain conference in El Salvador.

Bitcoin has been legal tender in El Salvador alongside the US dollar since September 7.

The government is backing Bitcoin with a $ 150 million fund. To get Salvadorians to use it, the government offered $ 30 in credit to those who use its digital wallet.

Critics said the currency’s lack of transparency could lead to an increase in criminal activity and the wild swings of the digital currency would pose a risk to holders.

Bitcoin was originally created to operate outside of government-controlled financial systems. Mr Bukele said it would help attract foreign investment to El Salvador and allow Salvadorans living abroad to send money to their families at a lower cost.

Updated: November 22, 2021 08:25


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