The grandiose plans of El Salvador’s millennial 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 Ocean.
The idea is that tapping into the mountain’s geothermal power will solve one of the biggest challenges facing cryptocurrencies – the vast, unsustainable levels of energy required to power the computers that encrypt transactions.
But the troubled Central American nation, which often suffers power cuts, should first focus on meeting the existing electricity needs of its population of six million, Ricardo Navarro, a winner of the Goldman Prize – the green movement’s equivalent of the Nobel – told The Telegraph.
“Geothermal still costs more than oil, otherwise we would already be using more of it. What will end up happening is that we will just be buying more oil,” warned Mr Navarro, who heads the El Salvadoran Center of Appropriate Technology, a local think tank.
He would usually support climate-friendly 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 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.
The ambitious plans have excited cryptocurrency advocates. Samson Mow, of tech company Blockstream, went so far as to claim 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.”
El Salvador became the first country in the world to accept Bitcoin as legal tender this year. 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 shortly after the United States put several of Bukele’s closest allies on a corruption blacklist. Meanwhile, his promises of badly needed jobs, including Amazon opening a regional headquarters in El Salvador and Lufthansa launching a new airport, have failed to materialise.
Nevertheless, depending on the time frame – something the president has not made clear – his Bitcoin city plans could work, says Marit Brommer, executive director of the Germany-based International Geothermal Association.
“El Salvador is known for its geothermal potential. But if he is promising anything in the next six months, that would not be feasible,” she said. “Geothermal has a long lead time. We need to identify the resources, do modelling, drill wells. It would likely take at least two or three years, and probably longer before you could generate any electricity.”
It has been calculated that global cryptocurrency transactions already consume more electricity each year than the Netherlands.
