El Salvador is becoming the first country to make bitcoin a legal tender. The president of El Salvador, Nayib Bukele, announced on June 5th, 2021 during the biggest Bitcoin Conference 2021. The bill has already been branded as Bitcoin’s most important document since Satoshi’s white paper.
This move by El Salvador will likely be followed by Paraguay, Panama, and many other Central American nations as indicated by their leader on social media.
At press time, the bill is currently being debated and El Salvador has voted to grant favorable opinion toward the bill that makes Bitcoin legal tender, receiving 62 out 84 votes. Congress is yet to pass it but Nayib Bukele, the president of El Salvador says there’s almost “a 100% chance” his bill to make Bitcoin legal tender will pass tonight.
It will go into immediate effect. However, the decree will come into effect in 90 days since its publication in the Official Gazette and the time it will take for the infrastructure to be put into place.
The bill contains a provision that would make it mandatory for “every economic agent” to accept Bitcoin payments. The government will also ensure that the cryptocurrency is instantly convertible to U.S. dollars to mitigate any volatility issues.
The decree states that prices may be expressed in Bitcoin, but the greenback will still be used as a reference currency. Bitcoin transactions won’t be subject to capital gain tax. Moreover, Salvadorans will be able to pay their tax contributions in the flagship cryptocurrency.
Nayib Bukele also revealed that he will be meeting with the International Monetary Fund on Thursday. The government will also be releasing an official Bitcoin wallet (however this will not be mandatory). The government intends to hold Bitcoin on its balance sheet but that will require a separate law. The permanent residency will be available for those who invest 3 BTC in El Salvador. A trust fund will be established to assume the risks of merchants who accept Bitcoin.
El Salvador “cheap and clean” volcano energy for Bitcoin mining
Geothermal energy from active volcanoes is a common occurrence in El Salvador. It is home to 23 active volcanoes of more than 200 Megawatts and supplies more than half of the country’s energy requirement. The president started thinking out loud about how to harness this excess energy to mine Bitcoin.
We wish to remind our readers that the recent bitcoin mining energy concern, started by Tesla CEO Elon Musk over his bitcoin payment suspension announcement had lead to severe FUD in the crypto industry causing a massive market crash and loss of trillions of dollars within few weeks. The market is yet to recover from this catastrophe. The world is now divided over Elon’s actions he is even being warned by the Anonymous hacktivist group for the same.
It is very early to say but this move will bring more attention to El Salvador as most of the bitcoin mining companies are looking to transform into renewable energy-based mining setup and move out of China and other countries where they don’t have this leverage. Not to mention that the favorable policies and legal tender is going to accelerate this move even further.
Also see - Square to invest $5 million to build a renewable Bitcoin mining facility
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