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Bitcoin City, the "crypto-oriented" urban dream of El Salvador

With an area of 21,041 km2 in area and around 6.5 million inhabitants, El Salvador is one of the smallest and least populated countries in Latin America. However, over the past few months, this Central American nation has made headlines in the world press due to its decision to implement Bitcoin as legal tender in the country.

This venture, promoted by President Nayib Bukele, was followed by a bolder proposal that goes beyond the strictly financial sphere. On 20 November 2021, in a massive event, the Salvadoran president announced the creation of "Bitcoin City", a new urban development planned from scratch and whose economy will be mainly oriented towards cryptocurrency mining and financial services.

Bitcoin Beach in El Salvador. Source

Bitcoin City will be located at the foot of the Conchagua volcano, 180 km from the capital San Salvador. This location is not fortuitous, as it is planned to take advantage of the geothermal energy produced by the volcano, which will cover the demand generated by the city and, especially, the required for cryptocurrency mining.

The general plan for Bitcoin City was developed by FR-EE/Fernando Romero Enterprise. According to the firm's description: "This new city will mark the new moment of our civilization. It will be an environmentally conscious new urbanism because Bitcoin City generates its own energy from the volcano located on the perimeter. It will showcase a new humanitarian city plan".

Master plan of Bitcoin City. Source

In terms of urban design, Bitcoin City is developed based on a radiocentric layout around a central square. From there, 12 axes are distributed and connected by hexagons, on the sides of which industries, offices and community services will be located.  Regarding the city's development process, FR-EE adds: "The city has been designed to be built in stages. As a decentralized system, investment can be regulated according to growth needs".



Finally, with regard to mobility, Bitcoin City is conceived as a pedestrian-friendly city, where short distances between residential areas and urban activity nodes will avoid car dependency. Furthermore, the city's approach projects a robust, clean and sustainable transport system based on a network of trains, trams and cycle routes.



A “crypto-utopia”?

Bitcoin City is undoubtedly one of the most ambitious urban projects in recent Latin American history. In a continent with large cities planned from scratch such as La Plata (Argentina) and Brasilia (Brazil), the new Salvadorian city poses great technical and economic challenges in one of the most convulsive regions of the western hemisphere.

Firstly, geothermal power generation is a technology that few countries are committed to developing and its large-scale use is still at a preliminary stage. In this sense, Bitcoin City could represent a new era in this type of energy harnessing, which could be replicated in other places around the world.

Illustrative scheme of geothermal power generation in Bitcoin City. Source 

Nevertheless, it is in the economic sphere that Bitcoin City will face the biggest challenges. According to President Bukele, the cost of the entire public infrastructure will be approximately 300,000 bitcoins (more than 10 billion dollars at the current exchange rate), which represents more than a third of El Salvador's GDP. In addition, it will be a city free of most taxes, in order to attract as many investors as possible. "Invest here and make as much money as you want," Bukele said.

Tax-free policy of Bitcoin City. Source 

For many experts, Bitcoin City represents an overly optimistic bet, which will depend on the strengthening of this currency and the confidence that the investment bonds that El Salvador plans to sell can generate. On the other hand, the centralized approach to crypto-mining and Bitcoin-derived services poses a considerable risk to the financial sustainability of the city, due to the high volatility of this currency and the dependence on a single productive sector, which in several cases has led to serious economic crises for cities (Detroit is a case in point). 

Only time and the markets will tell whether El Salvador's ambitious bid becomes a reality or remains a contemporary urban utopia.



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