El Salvador is ready to host one of the world’s most significant bitcoin mining facilities using eolic and solar energy sources.
The project will be based in the western department of Santa Ana and is expected to generate renewable energy with a total capacity of 241 MW, with 1.3 EH/s in processing power to mine bitcoin. This project is part of a joint venture between the private sector, El Salvador’s government, and some key crypto industry players like Tether to boost bitcoin’s adoption in the country called Volcano Energy.
Since declaring bitcoin legal tender in 2021 through its Bitcoin Law, El Salvador has gained an essential presence in the Bitcoin industry, community, and specialized media outlets’ headlines. It’s the first country in the world where bitcoin is a currency, and it’s going to the next stage by launching an even bigger bitcoin mining operation.
This project will fulfill President Nayib Bukele’s plans for a volcano bond but with a different approach. In November 2021, Bukele announced these so-called bonds, which were supposed to be created through a public debt scheme with bitcoin mining and holdings as the primary way to provide a profitable investment product, with El Salvador as the counterparty. However, the market conditions and plans have changed.
Inside Volcano Energy Strategy To Mine Bitcoin In El Salvador
The new strategy will tweak the investment scheme from issuing public debt to private equity funding rounds by Volcano Energy. “The reason behind this change is that after looking closely at the economics of our model, we realized that the potential benefits for all stakeholders were much greater doing equity funding, rather than debt.”, Volcano Energy’s Chief Executive Officer, Josué López explained to me in an interview.
But this also means that investors in the $1B initiative, which already have received $250 million in investments, had to dilute their equity to share a part with the local government, which is supposed to get 23% preferred equity participation. “This exchange of equity for economic freedom will enable El Salvador to reap the benefits of this project without having to spend a single penny.”, López added.
The investors will own 27% of the revenue, and 50% will be reallocated to develop the energy facility and the bitcoin mining section. The operation will be in El Shiste hamlet, in Metapan. Due to its good conditions, other electricity facilities are powered by renewable sources in the area, like the eolic park Ventus, with 54 MW capacity.
The project will grant access to any energy surplus they might produce to the local grid. The idea is to “contribute to stabilizing energy availability in the area, benefiting the local community and promoting a more sustainable and reliable energy supply,” Volcano Energy’s CEO detailed.
This renewable approach also means that the bitcoin mining facility will be 100% powered by green sources. That will be part of the 58% of the total Bitcoin hashrate produced from green energies, according to the Bitcoin Minning Council data.
The Project Is Yet To Be Deployed
But besides all the hype generated by Volcano Energy’s announcement, the project is in its pre-engineering stage. The company already chose the place to deploy the operation, but the solar and wind plant designs, the approval of the final engineering plans, and all the aspects and requirements that an operation this ambitious could imply should be adequately addressed before moving forward.
After the final engineering plans are approved, they’ll start the building phase. With the physical installation set, they will focus on installing the necessary Bitcoin mining infrastructure. Deploying this project could take several months.
Ultimately, the goal is to have meaningful participation in the network’s hashrate while opening job opportunities to salvadorean talent in different roles and fields due to what bitcoin mining requires and what capital influx from similar projects can bring to El Salvador.
