President Nayib Bukele announced on social media Wednesday that El Salvador will be the first country in the world to adopt Bitcoin as currency, joining the U.S. dollar as its only other official currency.
Bukele tweeted the achievement hours after congress voted in favor of accepting the cryptocurrency as legal tender.
The idea behind the use of volcanoes comes down to the powerful steam that comes from the water being heated from underground. The steam can then spin turbines and generate electricity.
Bitcoin mining is done by highly sophisticated computers performing complex computational math problems within a blockchain ledger. The more problems a person – or their computer – solves, the bigger their payout in Bitcoins. Just one Bitcoin is worth more than $35,000.
It takes a massive amount of electricity to meet the intense demand from these computers as well as cooling them down when they overheat. This has raised concerns regarding the environmental cost of it all.
According to the Cambridge Bitcoin Electricity Consumption Index, at 105 terawatts a year, Bitcoin mining uses more electricity in one year than Kazakhstan and the Philippines. It could also safely meet energy needs for the university for 580 years.
Coupled with this overhaul is its inefficiency. The same index notes that hydroelectricity could power the entire Bitcoin network 41 times. Other renewables are also just as efficient, with biofuels accomplishing the task six times and solar, wind, and others doing it 14 times.
The legislation requires the Salvadorian government to provide “the necessary training and mechanisms” for citizens to access transactions involving Bitcoin. President Bukele hopes that making Bitcoin legal tender will attract investment in the country and increase the wealth of its citizens.
The International Monetary Fund responded to the news with apprehension, saying the move “raises a number of macroeconomic, financial and legal issues,” and they will be monitoring the situation closely.
