A company in El Salvador plans to issue bitcoin-backed bonds in 2024. This will be the equivalent of a bitcoin ETF launched without SEC approval. The country's goal is to use this new asset to reduce sovereign debt and develop a renewable energy bitcoin mining industry.
Information that the so-called "volcano bonds" have received approval from regulator CNAD appeared on the El Salvador National Bitcoin Office's X (former Twitter) account. According to their statement, the issuance is expected to begin in the first quarter of 2024. El Salvador's President Nayib Bukele also supported the idea in his posts on X.
The bonds will be listed on Bitfinex Securities, a regulated division of cryptocurrency exchange Bitfinex. The platform received El Salvador's first cryptocurrency services license in April.
Bukele first announced the issuance of bitcoin-backed bonds in 2021, shortly after signing a law recognizing bitcoin as legal tender in the country on par with the U.S. dollar. The issuance was originally scheduled to begin in March 2022, but the date has been postponed several times.
The Digital Assets Act passed earlier this year laid the groundwork for the issuance of "volcano bonds." These bonds will be used, among other things, to repay sovereign debt. In addition, Bukele intends to use them to raise $1 billion and create a bitcoin mining industry based entirely on renewable energy, including the use of energy generated by volcanoes.
El Salvador's first local bitcoin mining pool was launched in October in partnership with Luxor Technology, utilizing 241 MW of the world's largest renewable energy generation site. Among the project's investors, Tether, the issuer of stablecoins, stands out.
El Salvador's investment in the cryptocurrency made a profit in early December, thanks to the rise of bitcoin. The country recently launched a citizenship program for bitcoins and USDT.
If the project is successful, El Salvador could become an example for other states with high public debt and weak economies, showing how to get out of the crisis. It is important to note that El Salvador's public debt is planned to be covered not by the growth of the bitcoin price, but by the development of a renewable energy bitcoin mining industry.
If the project is successful, it could become a model for other countries. Previously, similar attempts to free themselves from American influence in the field of debt ended unsuccessfully.
We wish President Bukele good luck and good health in this audacious experiment.