Bukele announced his move on Twitter at 1:35 a.m. Thursday, June 10, just hours after El Salvador became the first country to authorize bitcoin as a legal tender.
"I've just instructed the president of @LaGeoSV (our state-owned geothermal electric company) to put up a plan to offer facilities for bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanoes," Bukele tweeted.
In another tweet, Bukele said the country's engineers have dug a new well to provide around 95 megawatts of 100 percent clean – zero-emission – geothermal energy from volcanoes. "Starting to design a full bitcoin mining hub around it," he wrote along with a video of steam rising from a well.
The move comes amidst growing criticism of the environmental impact of bitcoin mining. The underlying network to produce the cryptocurrency now requires nearly as much energy as the entire country of Argentina. (Related: BITCOIN GREENWASHING: No, Bitcoin mining isn't mostly powered by clean, renewable energy, but the cult-like self-delusion of Bitcoin apologists is itself a fascinating science experiment.)
Bitcoin mining, a process that generates new units of the virtual currency, involves solving complex mathematical equations that require energy-intensive computer operations. An analysis by the University of Cambridge noted that the bitcoin network uses over 121 terawatt-hours annually, which would rank in the top 30 electricity consumers worldwide if it were a country.
Big companies like Tesla have stopped receiving bitcoin as a mode of payment. "We are concerned about rapid increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel," said Elon Musk, Tesla's chief executive.
More countries may follow El Salvador
On Wednesday, June 9, the Bitcoin Law received 62 out of the possible 84 votes from El Salvador lawmakers to make the Central American country the first to adopt the cryptocurrency as legal tender. Recent developments suggest that more countries would follow.
Politicians in several Latin American countries have already expressed an interest, with some even adding bitcoin laser eyes to their Twitter profiles as a symbol of support for the cryptocurrency.
One such politician is Paraguay Congressman Carlos Rejala, who hopes to pass a bill next month aimed at attracting crypto businesses. If it passes, Rejala said he will seek to present a second bill promoting the use of bitcoin as legal tender.
"As I was saying a long time ago, our country needs to advance hand in hand with the new generation," Rejala said. "The moment has come, our moment. This week we start with an important project to innovate Paraguay in front of the world."
Gabriel Silva, a Panama politician, warned that his country could fall behind its regional neighbor in terms of economic development if it would not follow suit. Silva recently said that he is preparing a similar proposal to present at the nation's Assembly.
"This is important. And Panama cannot be left behind," Silva tweeted. "If we want to be a true technology and entrepreneurship hub, we have to support cryptocurrencies."
Elected officials in Argentina, Brazil, Mexico and Nicaragua also have spoken favorably about bitcoin, with some pledging to introduce legislation that is favorable to cryptocurrencies.
Bitcoin poses threat to U.S. dollar
There are obvious benefits to formally recognizing bitcoin as legal tender, such as slowing inflation, enticing crypto entrepreneurs and increasing financial inclusion of those forgotten by the formal economy. But there are also some risks that come with it.
Speculation within bitcoin forums and among crypto commentators on Twitter is that the U.S. could target El Salvador with sanctions, as it represents a threat to the strength of the U.S. dollar – the other official currency of the country.
One way to alleviate this risk would be for countries that accept bitcoin as legal tender to form an economic alliance.
"Other countries must follow El Salvador FAST!! Paraguay, Argentina, Panama, Brazil, Nicaragua. El Salvador's decision to make bitcoin legal tender has geopolitical implications. US will react, with IMF or aircraft carriers. Easy to attack one, difficult to attack many," tweeted prominent market analyst known as PlanB, a Dutch institutional investor who created the bitcoin Stock-to-Flow (S2F) model.
In another tweet, PlanB wrote: "A free trade zone with bitcoin as legal tender and 0 percent wealth/CGT [capital gains tax] would be stronger if some oil producing countries like Iraq, Iran, Libya, etc. join. Pay for oil in bitcoin instead of petrodollar. Plus some already bitcoin friendly nations like Dubai."
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