A volcano deserves the credit for shoring up El Salvador’s bitcoin reserves. The government announced this week that the country, which adopted bitcoin as legal tender in 2021, has been using geothermal energy from the Tecapa volcano to mine nearly 474 bitcoin, worth nearly $30 million.
Under the leadership of President and crypto enthusiast Nayib Bukele, El Salvador has installed 300 processors that use heat from the volcano specifically for bitcoin mining. The country’s Bitcoin Office, an official government entity, reports that the government now holds 5,750 bitcoins. At current prices, El Salvador’s total bitcoin portfolio runs to nearly $375 million.
A Green Alternative
The crypto industry has faced pressure from environmental groups who charge that mining uses an enormous amount of energy, particularly in third world countries. By turning to geothermal power, El Salvador may have found a sustainably green way to mine bitcoin. Geothermal energy accounts for about a quarter of the power in El Salvador, which has 23 volcanoes.
“We don’t spend resources that contaminate the environment, we don’t depend on oil, we don’t depend on natural gas, on any resource that isn’t renewable,” said Daniel Álvarez, President of the Rio Lempa Hydroelectric Executive Commission, when the Tecapa plant began mining bitcoin in 2021.
At that time, Tecapa was already the site of a state-owned power plant. Of the 102 megawatts it produces, 1.5 MW are now devoted to cryptocurrency mining, or a little more than 1% of its output. The recently mined 474 bitcoin were the result of a collaborative effort by cryptocurrency miners Foundry USA, Ant pool, ViaBTC, F2Pool, and Binance Pool.
In Need of Good News
The innovative use of resources is good news for El Salvador, which has hit a few stumbling blocks since adopting bitcoin as legal currency in 2021. In the first year after El Salvador adopted bitcoin, the currency lost two thirds of its value, although it has rebounded strongly since then.
Adoption has been painfully slow at times. A survey indicated that 85% of Salvadorans did not use bitcoin for transactions in 2023. And there were criminal issues, too. The government opened a digital wallet called Chivo in 2021 and gave every citizen the equivalent of $30 in bitcoin. But hundreds of the Chivo accounts were hacked. Not only the assets were stolen, but the account owner’s identity as well.
