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Bitcoin-friendly El Salvador can become ‘Singapore of the Americas’: VanEck advisor

VanEck strategy advisor Gabor Gurbacs expects a wave of new investment capital and immigration will push El Salvador’s economic growth in the coming years.

El Salvador can follow Singapore’s lead and become a financial center in the Americas, according to  Gabor Gurbacs, strategy advisor of investment management firm VanEck.

“I say often to portfolio managers and asset allocators that El Salvador has the potential to become the Singapore of the Americas,” Gurbacs explained in an Oct. 28 X post.

Similar to what Singapore achieved in the late 1900s, Gurbacs expects new capital investment and immigration will be the main drivers behind El Salvador’s increased economic growth over the next few years.

His comments follow an Oct. 28 post by United States broadcaster and Bitcoiner Max Keiser, which was captioned “Move to #ElSalvador, The New Land of the Free.”

Keiser, who now lives in El Salvador, listed Bitcoin (BTC) and the U.S. dollar's legal tender status, a clean up in El Salvadoran crime, great beaches and great coffee as some of the main reasons why the Central American country should be on everyone’s radar.

El Salvador’s status as an emerging economy became more prominent when Nayib Bukele was appointed as the country’s president in June 2019.

El Salvador’s sovereign bonds have outperformed many other emerging markets in 2023, yielding an eye-popping 70% return by August 2023 which caught the attention of JPMorgan, Eaton Vance and other investment management firms.

Bukele and the El Salvador government made Bitcoin legal tender in September 2021 in addition to rolling out a Bitcoin custodial wallet, Chivo Wallet for all El Salvadorans in the same week.

El Salvador is also tapping into its volcanic resources to power a Bitcoin mining operation startup, Volcano Energy, which launched in June on the back of a $1 billion investment. Keiser serves as the company’s executive chairman.

Its first mining pool was launched following a partnership with Bitcoin miners Luxor Technology in October.

Related: El Salvador’s Bitcoin strategy evolved with the bear market in 2022

El Salvador appointed Dr. Saifedean Ammous, the author of “The Bitcoin Standard” as an economic advisor to the National Bitcoin Office in May. The country plans to accumulate Bitcoin as a strategy to clean out its debt within the next five years.

Bukele also made a bold move to eliminate all taxes on technology innovations in April — which could entice more entrepreneurs and foreign capital to move into the country.

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El Salvador launches first Bitcoin mining pool as Volcano Energy partners with Luxor

El Salvador’s ambitious renewable energy Bitcoin mining operation welcomes its first mining pool as Volcano Energy partners with Luxor.

El Salvador officially launched its first local Bitcoin (BTC) mining pool as the Volcano Energy project begins mining blocks through Lava Pool in partnership with Luxor Technology.

The Bitcoin-friendly country’s $1 billion renewable energy project made headlines earlier in 2023, with stablecoin issuer Tether among companies investing in the project that plans to generate electricity from renewable sources in El Salvador to power future Bitcoin mining operations in the country.

Volcano Energy is tapping into Luxor’s experience in providing Bitcoin mining software and services. The project will also use Luxor’s Hashrate Forward Marketplace to mitigate market volatility through automated risk management strategies used by other major Bitcoin mining operators.

A statement from Volcano Energy chief strategy officer Gerson Martinez highlighted ongoing efforts by El Salvador to secure first-mover advantage as a Bitcoin-adopting nationstate:

“Our vision is to create a vertically integrated energy and bitcoin mining company whose value is accretive to investors and to all Salvadoran citizens.”

Luxor’s chief operating officer Ethan Vera said the establishment of Volcano Energy and the start of local Bitcoin mining will contribute to Bitcoin’s ethos of geographical decentralization.

The announcement also mentions the potential for countries with abundant renewable energy sources to use Bitcoin mining to improve the economics of new energy projects. Mining operations can provide a “flexible buyer of first and last resort” for energy producers and act as an alternative revenue stream.

As a public-private partnership, Volcano Energy is set to contribute 23% of its net income from mining operations to the El Salvador government. Mining profits are also set to be reinvested into energy transmission and infrastructure to stimulate economic and technological growth in the Central American nation.

Related: Bitcoin-friendly El Salvador sees bond returns soar to 70% in 2023

The first phase of the Volcano Energy project involves the construction of a 241-megawatt (MW) renewable energy park in Metapán that will comprise 169 MWs of photovoltaic solar energy and 72 MWs of wind power. The long-term goal of the project is to tap into abundant geothermal energy in the country. 

In a previous exclusive interview with Cointelegraph at the Money20/20 conference in Amsterdam, Tether’s chief technology officer Paolo Ardoino said that the company’s investment was aimed at diversifying its interests into energy production while making use of renewable energy to mine Bitcoin.

Cointelegraph journalist Joe Hall traveled to El Salvador in 2023, documenting the adoption of Bitcoin as a means of payment in the two years since the country became the first in the world to officially make BTC legal tender.

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Tether’s game plan in El Salvador: Why invest in Volcano Energy?

Stablecoin issuer Tether is making a strategic investment in energy production and Bitcoin mining to support El Salvador’s adoption of BTC.

Stablecoin issuer Tether has dipped into its war chest to invest in El Salvador’s $1 billion renewable energy project to help drive Bitcoin (BTC) adoption in the Central American nation.

The Tether (USDT) issuer is one of a handful of companies investing in El Salvador’s renewable power generation project. Volcano Energy is set to generate electricity from solar and wind energy in El Salvador to power future Bitcoin mining operations in the country.

The planned 241-megawatt (MW) renewable energy park is the latest move in El Salvador’s Bitcoin adoption drive after the country made BTC legal tender back in 2021.

Cointelegraph caught up with Tether’s chief technology officer Paolo Ardoino during Money 20/20 in Amsterdam. Ardoino — who is attending the renowned finance and payments convention promoting Bitfinex Pay and the Lightning Network — delved into several topics concerning Tether, Bitfinex and the wider cryptocurrency space.

Tether chief technology officer Paolo Ardoino and Cointelegraph journalist Gareth Jenkinson at Money 20/20 in Amsterdam. Source: Cointelegraph

Just two days before the interview, Tether announced it would be investing in Volcano Energy to gain exposure to energy production and leverage the facility to power Bitcoin mining farms in the future.

There is also an ideological element to the move, with Ardoino stressing his belief that El Salvador is blazing a trail for sovereign Bitcoin adoption despite the relatively slow uptake of BTC as a payment option in the country.

Ardoino drew parallels to the European Union adopting the euro as a continental currency in the early 2000s, which required significant resources to change existing financial infrastructure, as well as buy-in from citizens of its 27 member states.

“Given all the powers that they had, it still took five, six years, and yet people were super confused.”

The proliferation of Bitcoin as a payment method in El Salvador has had some teething problems, as explored by Cointelegraph journalist Joe Hall in a recent visit to the country using BTC as a primary means of payment.

Ardoino contends that the path to widespread BTC use and adoption in El Salvador will take time, considering that citizens are not being forced to use the alternative currency in their everyday lives:

“It’s extremely unfair to expect that the whole population will use Bitcoin because, first of all, it’s not forced. Adoption is through private companies and public investments, rather than being taxpayer money.”

Tether’s investment in the country’s energy production program is part of a two-fold strategy. Firstly, investing in energy-producing infrastructure holds its own value, which can then be utilized to power Bitcoin mining operations.

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Ardoino also argued against the prevailing narratives around the environmental impact of Bitcoin mining and critiques of the industry for putting a strain on the global energy grid:

“Firstly, the majority of Bitcoin mining is already happening with renewable energy. Secondly, Bitcoin mining is mainly using excess energy anyway, but even more so if we first build the energy production.”

Ardoino said Tether’s investment alongside a group of 12 investors aims to build an energy production facility that companies, factories and households can also tap into. The excess energy from Volcano Energy will be used for BTC mining to help make El Salvador a “unicorn with its own unique story.“

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