El Salvador becomes the first country in the world to recognize Bitcoin as legal tender. Bitcoin (BTC) now enjoys a powerful position in the country.
Where on one hand China is going full force with its Bitcoin (BTC) mining crackdown, other countries are realizing the profit potential in the mining industry. Cryptocurrencies are gaining increasing importance in Latin America. The president of El Salvador NayibBukelehad recently proposed a bill to make Bitcoin legal tender in the country. As the president controls a majority in the Legislative Assembly, the bill had been passed.
Bukele’s Bitcoin bill makes BTC legal tender in the country. Furthermore, the bill also mandates that retailers and businesses accept Bitcoin as a mode of payment unless it is not feasible due to lack of internet access. Bitcoin is also exempted from capital gains tax.
The bill has given Bitcoin immense power in the country – close to being a currency in El Salvador. With mandatory acceptance and adoption of Bitcoin in the country, prices can also be expressed in terms of Bitcoin.
NayibBukele is not done yet with the cryptocurrency. Right after the announcement of the passage of the bill, the president moved towards facilitating Bitcoin mining in the country. The president is in talks with the head of the state-owned electricity company – LaGeo – to move towards Bitcoin mining. Bukele is planning to harness the energy from volcanoes to power the BTC mining industry in El Salvador. The geothermal electricity would mean BTC mining would be 100% clean.
El Salvador has around 20 volcanoes but the country’s electricity needs are not being met by domestic firms. El Salvador imports 25% of its electricity with the lack – or high cost – of electricity being a huge hindrance for industries. Will El Salvador be able to meet the energy requirements for Bitcoin mining? And what would that mean for local businesses? Although the president’s plan seems ambitious, implementation may reveal more loopholes.