Bitfinex CTO expects El Salvador bitcoin volcano bonds this year
The Chief Technical Officer (CTO) of Bitfinex, a cryptocurrency exchange, expects the issuance of Bitcoin-backed bonds by El Salvador this year, according to recent reports. Paolo Ardoino, the CTO, stated that the Bitcoin volcano bonds will help in financing the construction of geothermal plants that harness the energy of volcanoes to generate electricity. The initiative is part of El Salvador’s broader plan to use Bitcoin as a tool for economic development and investment.
The announcement of the Bitcoin volcano bonds comes after El Salvador became the first country in the world to adopt Bitcoin as legal tender. The move, which was announced by President Nayib Bukele in June 2021, has been met with both enthusiasm and skepticism. Proponents of the move argue that it will help to promote financial inclusion and boost economic growth, while critics have raised concerns about the volatility of Bitcoin and its potential impact on the country’s economy.
The Bitcoin volcano bonds are expected to be issued on the Liquid Network, a sidechain of the Bitcoin blockchain that allows for faster and cheaper transactions. According to Ardoino, the bonds will be structured as asset-backed securities, with investors receiving interest payments in Bitcoin. The bonds will be denominated in US dollars, with the Bitcoin backing serving as collateral.
The use of Bitcoin to finance geothermal projects is seen as a unique way to harness the country’s natural resources and promote sustainable development. The Bitcoin volcano bonds are expected to raise around $1 billion, with the proceeds being used to fund the construction of two geothermal plants in the country. The plants are expected to generate 95 megawatts of electricity, enough to power around 500,000 homes.