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Crypto prices skyrocket after El Salvador begins harvesting volcano power to mine for Bitcoin

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  • Nayib Bukele
    President of El Salvador

The value of cryptocurrencies is erupting after El Salvador announced it is now using volcanic energy to mine Bitcoin.

El Salvador’s President Nayib Bukele tweeted on Friday at about 1 a.m. local time that his country had minted the first volcano-powered Bitcoin. He referred to the mining operation as the “volcanode” after posting a video earlier this week of what appeared to be rigs at a geothermal Bitcoin mining operation.

Bukele posted a photo displaying an account balance Friday morning that showed his country successfully mined 0.00599179 Bitcoin, which equates to about $280. The president said El Salvador is “still testing and installing” the geothermal operation but pointed out that the process has begun in earnest.

The price of Bitcoin and all 30 of the largest cryptocurrencies were up on Friday following the early morning news. Bitcoin was hovering at above $47,000, a gain of about 10%, while Ethereum was up more than 7%. Ripple rose 7.6%, and the value of Cardano grew by more than 5.5%.

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To mine for Bitcoin, high-powered computers are used to create rigs that verify virtual coin transactions. Those rigs consume an enormous amount of power and have raised environmental concerns, especially in places like China that use high-emission energy sources, such as coal, to produce electricity.

The price of Bitcoin dipped dramatically earlier this year when Tesla CEO Elon Musk announced that his company, citing environmental concerns, was suspending the use of Bitcoin to purchase vehicles. Musk expressed in a statement at the time that he thinks cryptocurrency has a promising future but that it can’t come at the detriment of the environment.

“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk said. “Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”

The volcano-derived energy is one solution to the environmental concerns that come in tandem with the production of Bitcoin and other proof-of-work cryptocurrencies.

Since assuming office in 2019, Bukele, a 40-year-old tech-savvy businessman, has generated headlines about his plans to use Bitcoin to transform his poverty-stricken country.

El Salvador approved the decision to make Bitcoin as legal tender in June, and it became one of the country’s national currencies, joining the U.S. dollar, earlier this month. The move represented a major milestone for cryptocurrencies, which many economists dismissed as a passing fad just a few years ago.

El Salvador introduced federal digital wallets called Chivo, which is slang for “cool,” as part of the country’s Bitcoin rollout, which got off to a bumpy start. Bukele’s administration hopes that Salvadorans will use Chivo to pay for a wide array of products and services and has invested more than $225 million in dozens of Bitcoin ATMs spread across the country. The government also offered adopters of the Chivo system $30 in free Bitcoin.

The use of Bitcoin may prove advantageous to the economy of El Salvador, which is propped up by remittances — generally money transferred from immigrants in the United States back to relatives living in El Salvador.

Bukele believes that using Bitcoin to transfer funds avoids fees and represents a cheaper way to send money. Of the $6 billion in remittances each year, Bukele said, a large amount is lost to intermediaries. He hopes that Bitcoin will be able to better support impoverished families who need all the money they can get.

Another factor driving Bitcoin’s sharp Friday uptick is likely remarks made by U.S. Federal Reserve Chairman Jerome Powell the day before. Powell calmed the nerves of investors when he testified that the central bank has “no intention to ban” cryptocurrencies or make moves similar to China.

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Earlier this month, the Chinese government announced a major crackdown on the digital assets. The People’s Bank of China said all cryptocurrency transactions are outlawed and that services offering trading for cryptocurrencies and overseas cryptocurrency exchanges are banned. China will also root out mining operations within its borders.

Generally speaking, Bitcoin and other major cryptocurrencies have had a wild year. Bitcoin vaulted from $29,000 on New Year’s Day to more than $63,000 in April before tumbling back down to about $29,000 in late July. It has regained much of the summer losses, and investors are hoping to see it rise above $50,000 soon.

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Tags: News, Bitcoin, Cryptocurrency, El Salvador, Business, Technology, Mining

Original Author: Zachary Halaschak

Original Location: Crypto prices skyrocket after El Salvador begins harvesting volcano power to mine for Bitcoin

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