El Salvador is raising $1 billion U.S. via a “Bitcoin Bond” in partnership with Blockstream, a digital assets infrastructure company.
The South American country plans to use half of the funds raised from the bond sale to buy more Bitcoin, while the other $500 million U.S. will go toward energy and Bitcoin mining infrastructure, the government said.
Blockstream said that there is a five-year lock-up period on the bond which is designed to take $500 million U.S. of Bitcoin off the market for that period of time. Investors in the bond will get an annual special dividend, Blockstream also said.
Separately, El Salvador also says it plans to construct a “Bitcoin City” near a volcano that will be funded by the world’s largest cryptocurrency.
The city will have residential and commercial areas, services, entertainment, restaurants and an airport and will be built near the Conchagua volcano in the south eastern area of El Salvador.
Construction will begin in 2022 and the city will have no taxes except from value added tax (VAT).
In June of this year , El Salvador passed a law making it the first country in the world to accept Bitcoin as legal tender. But not all of its population is on board with the move.
In September, thousands of people took the streets to protest against the law, fearing the introduction of the cryptocurrency could lead to further instability in the central American nation.
The country has also launched a Bitcoin wallet to allow citizens to use the cryptocurrency.
El Salvador’s government has said that it plans to use geothermal energy from volcanos to power future Bitcoin mining activities.
Bitcoin has fallen about 16% from its record high of $68,990.90 which it reached earlier this month, but it is still up more than 90% this year at its current price of about $57,400.00 per coin.
