{"id":50046265,"date":"2021-09-15T18:43:26","date_gmt":"2021-09-15T17:43:26","guid":{"rendered":"https:\/\/stage.dialogochino.net\/?p=46265"},"modified":"2023-02-10T19:10:35","modified_gmt":"2023-02-10T19:10:35","slug":"46265-el-salvadorans-wary-of-energy-hungry-bitcoin","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/business\/46265-el-salvadorans-wary-of-energy-hungry-bitcoin\/","title":{"rendered":"El Salvadorans wary of energy-hungry bitcoin"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">\u201cNo to bitcoin\u201d, \u201cWe don&#8217;t want bitcoin!\u201d Unanimous cries were heard in the streets of El Salvador\u2019s capital San Salvador as it became the first country in the world to adopt Bitcoin as legal tender. But with most El Salvadorans confused as to how to use it, the Bitcoin Law has implications for President Nayib Bukele\u2019s popularity, as well as the country\u2019s energy supply.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On September 7, around a thousand people marched to the Legislative Assembly protesting at the introduction of the cryptocurrency and Bukele\u2019s decision to amend the constitution to <\/span><a href=\"https:\/\/www.bbc.com\/mundo\/noticias-america-latina-58448705\"><span style=\"font-weight: 400;\">allow<\/span><\/a><span style=\"font-weight: 400;\">&nbsp; presidential re-election.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As a group of Salvadorans try to jump the barricades and get past riot police to the Assembly, a few kilometers away on Gran V\u00eda &#8211; one of the most popular shopping centers in the country, I\u2019m in a queue ready to use the bitcoin ATM for the first time. Two people in front of me turn their bitcoins into dollars and withdraw the money. The process looks simple enough.&nbsp;<\/span><\/p>\n<div class='block--pullout-stat block--pullout-stat--float cd-shortcode--factbox'>\n                <p class='block--pullout-stat__title'>Did you know\u2026?<\/p>\n                <div class='block--pullout-stat__content'>\n                    <br \/>\nChina used to be home to over 65% of bitcoin mining<br \/>\n\n                <\/div>\n            <\/div>\n<p><span style=\"font-weight: 400;\">With the same ease, I try to buy my first bitcoins and fail. After five frustrating&nbsp; minutes of pressing buttons and calling a friend, a young woman explains how to buy them and tells me with confidence that she has been using them for years. In an impromptu lesson, she explains that bitcoin is a digital currency, that it is volatile, but just as its value can drop it can also increase, yielding profits. <\/span><\/p>\n<p><a href=\"https:\/\/translate.google.com\/translate?hl=en&amp;prev=_t&amp;sl=es&amp;tl=en&amp;u=https:\/\/especiales.dinero.com\/bitcoin\/index.html\"><span style=\"font-weight: 400;\">Bitcoin<\/span><\/a><span style=\"font-weight: 400;\"> is a decentralised currency, meaning there is no authority or control body responsible for issuance and registration of its movements. There is a system to store and use them, called an electronic wallet, which can be used from computers or mobile devices with the bitcoin app.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, the cryptocurrency&#8217;s volatility is not its only drawback. The process of bitcoin \u2018mining\u2019 &#8211; running computers around the clock to generate unique numerical codes that constitute one \u2018coin\u2019 &#8211; is extremely energy intensive. So much so, that countries including China have banned bitcoin. <a href=\"http:\/\/stage.dialogochino.net\/en\/trade-investment\/22556-what-next-for-china-and-el-salvador\/\">El Salvador<\/a> is set to devote one entire geothermal plant to bitcoin mining.&nbsp;&nbsp;&nbsp;&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">&#8220;If you want to talk more about Bitcoin, here is my card,&#8221; the woman offers back at the machine before leaving. I&#8217;ve learned that if there&#8217;s one thing bitcoin fans like more than bitcoin, it&#8217;s talking about bitcoin.&nbsp;<\/span><\/p>\n<h2>China bans Bitcoin as El Salvador moves ahead<\/h2>\n<p><span style=\"font-weight: 400;\">El Salvador&#8217;s move to legalise Bitcoin comes a few months after China banned it. China&#8217;s crackdown, <\/span><a href=\"https:\/\/www.globaltimes.cn\/page\/202106\/1226598.shtml\"><span style=\"font-weight: 400;\">according<\/span><\/a><span style=\"font-weight: 400;\"> to the Committee for Development and Financial Stability of the State Council, stemmed from the fear that cryptocurrencies alter the economic order and &#8220;resolutely prevent the transmission of individual risks to society in general\u201d.<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">I have instructed the president of LaGeo, our public geothermal energy company to put in place a plan that offers facilities for mining Bitcoin with energy that comes from our volcanoes<\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Formerly home to more that <\/span><a href=\"https:\/\/www.voanews.com\/east-asia-pacific\/voa-news-china\/why-china-cracking-down-bitcoin\"><span style=\"font-weight: 400;\">65% of mines, <\/span><\/a><span style=\"font-weight: 400;\">China was the world\u2019s top cryptocurrency market. Its secure energy supply encouraged miners. But environmental activists have <\/span><a href=\"https:\/\/dialogue.earth\/en\/energy\/10606-is-blockchain-energy-use-sustainable\/\"><span style=\"font-weight: 400;\">criticised<\/span><\/a><span style=\"font-weight: 400;\"> the unsustainability of the currency\u2019s energy demands.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Bukele said that geothermal energy will generate electricity for cryptocurrency mining, and urged state-owned renewable geothermal energy company LaGeo to build new facilities to power mines.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cI have instructed the president of LaGeo, our public geothermal energy company to put in place a plan that offers facilities for mining Bitcoin with energy that comes from our volcanoes: Cheap, 100% clean and with zero emissions. This will evolve fast!\u201d he s<\/span><a href=\"https:\/\/www.presidencia.gob.sv\/gobierno-salvadoreno-promovera-la-geotermia-para-la-mineria-de-bitcoin\/\"><span style=\"font-weight: 400;\">aid<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">El Salvador has two geothermal plants: Ahuachap\u00e1n, 103 kilometers west of San Salvador, that has an installed capacity of 95 megawatts (MW), and Berlin, a 109MW-plant 106 kilometers east of the capital. Together they <\/span><a href=\"https:\/\/historico.elsalvador.com\/historico\/678604\/la-geotermia-aporta-mas-del-20-de-la-electricidad-que-consume-el-pais.html\"><span style=\"font-weight: 400;\">meet<\/span><\/a><span style=\"font-weight: 400;\"> the needs of 1.5 million of El Salvador\u2019s 6.5 million citizens.<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">If bitcoin were mined in El Salvador, it would cause an excessive increase in the demand for electricity and the country would be forced to import more<\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">But according to <\/span><span style=\"font-weight: 400;\">\u00c1lvaro Trigueros, director of the Department of Economic Studies at the Salvadoran Foundation for Economic and Social Development (FUSADES),<\/span><span style=\"font-weight: 400;\"> there are risks involved in devoting energy to bitcoin in a nation already dependent on energy imports.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">&#8220;Given that the country is not self-sufficient, if bitcoin were mined in El Salvador, it would cause an excessive increase in the demand for electricity and the country would be forced to import more,&#8221; he <\/span><a href=\"https:\/\/www.dw.com\/es\/bitcoins-volc%C3%A1nicos-el-salvador-minar%C3%A1-bitcoins-con-energ%C3%ADa-geot%C3%A9rmica\/a-59105125\"><span style=\"font-weight: 400;\">said<\/span><\/a><span style=\"font-weight: 400;\">.&nbsp;<\/span><\/p>\n<h2>Volatility<\/h2>\n<p><span style=\"font-weight: 400;\">Carlos Mart\u00ednez Cruz, a professor of Electrical Engineering at the University of El Salvador said that<\/span><span style=\"font-weight: 400;\"> handing over a geothermal power plant to the bitcoin industry is dangerous because it is a financial market&nbsp; sector based on speculation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So how volatile is bitcoin exactly?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I review my transaction in the ATM. My US$25 is now $23 because of the commission. It is converted into 0.00039341 Satoshis or Sats, the name of the fraction of the bitcoin. One bitcoin is currently worth US$7,500, so it has to be denominated in small fractions. In a matter of 10 minutes my $23 has become $21.92. It turns out today&nbsp; is one of the worst days to buy bitcoins because its value fell by 17%. That cost me $1.08 and it cost the government too, which bought 550 bitcoins the day before, over half a million dollars&nbsp; in losses. All in a matter of hours.&nbsp;<\/span><span style=\"font-weight: 400;\">&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">&#8220;One of the fears is that people start receiving their salary in bitcoins. That is subject to fluctuations because, as you can see, they deposit $300 on payday, when you go to the bank the next day it may drop to $280 and with $20 a family can eat for a week,\u201d said \u00d3scar Salguero, a software engineer states.<\/span><\/p>\n<div class='block--pullout-stat block--pullout-stat--float cd-shortcode--factbox'>\n                <p class='block--pullout-stat__title'>Did you know\u2026?<\/p>\n                <div class='block--pullout-stat__content'>\n                    <br \/>\n<span style=\"font-weight: 400;\">Bitcoin is a decentralised currency, meaning there is no authority or control body responsible for issuance and registration of its movements<\/span><br \/>\n\n                <\/div>\n            <\/div>\n<p><span style=\"font-weight: 400;\">To safeguard against fluctuations, the Bitcoin Law proposes a trust at the Development Bank of El Salvador (Bandesal) with reserves of US$150 million.<\/span><span style=\"font-weight: 400;\"> It will function as a convertibility box to support bitcoin transactions in real time. This, in theory, will protect against the much feared volatility of bitcoin in the market. <\/span><span style=\"font-weight: 400;\">But for economist Rommel Rodriguez, this is not a solution.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cIf people start to make many remittances in bitcoins, it implies the entry of this cryptocurrency into the economy and not the entry of dollars,\u201d he said, adding; \u201cThe provision of dollars in El Salvador depends on whether they enter the country and if bitcoins begin to enter, there is doubt about how the bitcoin trust is going to provide these dollars,&#8221; he explains.&nbsp;<\/span><\/p>\n<h2>Buying a packet of gum<\/h2>\n<p><span style=\"font-weight: 400;\">I leave the ATM with the firm intention of spending what is now US$19.80. But on a tour of the centre of Antiguo Cuscatl\u00e1n, I visit 30 shops and find that spending my cryptocurrency is impossible.&nbsp;<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">One of the fears is that people start receiving their salary in bitcoins. That is subject to fluctuations because, as you can see, they deposit $300 on payday, when you go to the bank the next day it may drop to $280<\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Just as I am about to give up, I ask in one last store if I can use bitcoins there.&nbsp; Luis Ben\u00edtez, a young man, gets up from his chair confused and replies doubtfully \u201cmmmm, yes I think so\u201d.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">After 10 minutes struggling with the application and a couple of error messages, I manage to buy a pack of gum. With the losses from the fall of bitcoin and the cost of the, gum, I ended up spending $3 dollars. It should have cost $0.50 cents.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A <\/span><a href=\"https:\/\/translate.google.com\/translate?hl=en&amp;prev=_t&amp;sl=es&amp;tl=en&amp;u=https:\/\/uca.edu.sv\/iudop\/publicacion\/encuesta-especializada-46\/\"><span style=\"font-weight: 400;\">survey<\/span><\/a><span style=\"font-weight: 400;\"> published by the University Institute of Public Opinion (Iudop) suggests that Bukele\u2019s bitcoin gamble caused his approval rate to drop from 8.7% to 7.6% in just three months. The survey also indicates that 9 out of 10 Salvadorans still do not have a clear idea about what bitcoin is. 67% of the population believes that the law should be repealed. Despite this, it is legally mandated&nbsp; people receive bitcoin as payment. For now, with respect to value, the energy equation and simply how to use it, Salvadorans are left with more questions than answers.&nbsp;&nbsp;<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Confusion reigns as El Salvador adopts bitcoin as legal tender and President Bukele promises to use geothermal energy for the intensive \u2018mining\u2019 process<\/p>\n","protected":false},"author":3250,"featured_media":50046267,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[758],"tags":[544,566],"hashtags":[],"country":[50006305],"class_list":["post-50046265","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-finance","tag-mining","country-el-salvador"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v26.0) - 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