Posted September 29, 2021
By Jonas Elmerraji
El Salvador Is Mining Bitcoin With a Volcano. No Kidding
Nayib Bukele might just be the world’s biggest “Bitcoin bro.”
He’s an active user of Twitter, where he posts tweets about buying the dip and throws shade at institutions like the IMF for manipulating crypto prices.
Oh, yeah, and he’s the president of El Salvador.
Earlier this month, Bukele ushered in legislation that made El Salvador the first country in the world to accept Bitcoin as legal tender. As you probably know by now, it wasn’t a problem-free transition.
But El Salvador isn’t backing down on its Bitcoin bet.
Here in the U.S., the Bureau of Engraving and Printing and the United States Mint make the bills and coins that represent legal currency. El Salvador is mining theirs… using a volcano!
One of the chief complaints about Bitcoin is its environmental impact. It’s something we’ve talked about in the past. Right now, a single Bitcoin transaction consumes 1,810.74 kWh of energy — around the energy that the average U.S. household uses in two months.
Bitcoin’s energy consumption was one of the reasons the World Bank rejected El Salvador’s requests to help the country with the implementation of Bitcoin as legal tender.
But El Salvador has a solution — it’s mining Bitcoin using geothermal energy produced by a volcano:
Bukele instructed the head of El Salvador’s state-owned renewable energy company to make geothermal power available to Bitcoin mining for the government. They’ve already dug a new geothermal well that will provide 95MW of power for a new Bitcoin mining hub.
Ultimately, I don’t think that using renewables solves Bitcoin’s energy problem. They may be more environmentally friendly, but the core problem is still that individual transactions are too power-hungry. But even that is a solvable problem for Bitcoin long term.
From China’s crypto crackdown to El Salvador’s issues launching Bitcoin as legal tender, the important takeaway is that all of the problems, glitches and technical issues Bitcoin has faced are solvable problems given enough time. And so nothing’s different this time around.
Meanwhile, Bitcoin is consolidating this week just above the $40,000 level. The chip we’re seeing here isn’t especially meaningful from a technical standpoint — the if/then scenario we looked at last week still holds. As long as Bitcoin can hold the $40,000 level more or less, the bull trend remains intact.
We’ll be keeping a close eye on it here. Stay tuned.
Jonas Elmerraji, CMT