El Salvador: mining Bitcoin (BTC) using volcanic energy

A look back at the plan to mine Bitcoin using volcanic energy 

The project was initiated three years ago. Following the legalization of Bitcoin (BTC) as an official currency, El Salvador had revealed its plans to use volcanic energy for mining. Thus, El Salvador aims to harness its volcanic activity to offer a more sustainable method of cryptocurrency mining, differentiating itself from traditional techniques often criticized for their environmental impact. Since then, operations have continued, and this week Reuters reported that the country had successfully mined 473.5 BTC by this means.

1. In 2024, re-elected for a second term, Bitcoin enthusiast Nayib Bukele approved the installation of 300 processors specifically for bitcoin mining. These devices consume 1.5 MW of energy, supplied by a geothermal power plant with a total capacity of 102 MW. Cryptocurrency mining requires large amounts of energy to perform complex calculations and to cool the facilities, raising environmental concerns about pressure on power grids and carbon emissions. This makes it an expensive process. However, the use of geothermal energy has enabled El Salvador to reduce its energy costs.
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2. With the current market price, these almost 474 BTC are worth over $33 million. The new blockchain explorer launched by El Salvador last week now tracks the government's holdings in real time. As a result, at the time of writing, El Salvador currently holds just over 5,750 BTC in its public treasury address, which was disclosed by President Nayib Bukele earlier this year.
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Source of concern

The 474 BTC mined thanks to green, renewable energy supplied by a volcano testifies to an important development in the cryptocurrency world as well as for the country's economy. However, according to Coin Edition, sources of concern remain:

1. Geothermal energy challenges

El Salvador's initiative to use geothermal energy to mine bitcoins is not without its challenges. Although the 1.5 MW dedicated to this activity represents only a small portion of the plant's total capacity, the long-term success of this strategy hinges on two central factors: the price of bitcoin and the efficiency of mining operations.

2. Financial stability

1. El Salvador's 2021 decision to adopt bitcoin as legal tender alongside the US dollar remains controversial. The International Monetary Fund (IMF) and other financial institutions have expressed persistent concerns about bitcoin's volatility and potential impact on the country's financial stability.
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Conclusion 

El Salvador's ambitious project to use geothermal energy to mine Bitcoin offers several advantages. By harnessing a renewable energy source, the country is positioning itself as a pioneer of sustainable innovation in the cryptocurrency world. This could potentially reduce the environmental impact of traditional mining and offer a new economic avenue for El Salvador. 

However, concerns persist about the geothermal energy use and financial challenges associated with this initiative. The high energy consumption of cryptocurrency mining and the volatility of Bitcoin raise questions about the long-term sustainability and stability of this project.

Despite these challenges, El Salvador's initiative could inspire other nations to explore greener methods for cryptocurrency mining. Only time will tell whether this innovative approach will succeed in balancing economic and environmental benefits.

1. Sources:
2. https://www.reuters.com/world/americas/el-salvador-mined-nearly-474-bitcoins-adding-state-crypto-holding-last-three-2024-05-14/, consulted on 20.04.24
3. https://coinedition.com/fr/le-salvador-mine-des-bitcoins-en-utilisant-lenergie-du-volcan-augmentant-ainsi-ses-avoirs/#:~:text=Le%20Salvador%20extrait%20pr%C3%A8s%20de,v%C3%A9rifie%20les%20transactions%20Bitcoin%20pass%C3%A9es, consulted on 20.04.24
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