Volcano Energy, a public-private partnership in El Salvador, has unveiled plans to invest $1 billion in the development of a major bitcoin mining farm. The project, which is set to become one of the largest of its kind globally, will initially receive $250 million in funding from prominent figures in the Bitcoin industry and renewable energy developers. The state “Bitcoin Office” of El Salvador shared the news on Twitter, although the presidential office has yet to comment on the matter.
Volcano Energy intends to use the funds to establish a 241 MW power generation park in the municipality of Metapan. The park will harness solar and wind energy to power the bitcoin mining farm. Bitcoin mining involves using powerful computers connected to a global network, consuming substantial amounts of electricity in the process. Environmentalists have raised concerns about the environmental impact of this energy-intensive practice, fearing that it could contribute to deforestation and climate change.
This announcement follows Salvadoran President Nayib Bukele’s declaration two years ago to make bitcoin legal tender in the country. While adoption of the cryptocurrency among Salvadoran residents has been inconsistent, Bukele and his bitcoin supporters argue that it can bring job opportunities, financial inclusion, and foreign investment to one of the poorest nations in the Western Hemisphere. However, the International Monetary Fund has cautioned against embracing bitcoin due to legal risks, fiscal vulnerabilities, and the speculative nature of the cryptocurrency market.
Under the terms of the partnership, the El Salvador government will hold a preferred participation equivalent to 23% of the project’s revenues, while private investors will have a 27% stake. The remaining 50% of the revenue will be reinvested into infrastructure, although the statement does not clarify the overall ownership structure. Tether, a startup operating a cryptocurrency pegged to the U.S. dollar, confirmed its participation in the initial investment but did not disclose the specific amount contributed. Josue Lopez, who was involved in a $200 million solar energy plant announced in the previous year, is listed as the CEO of Volcano Energy, and Max Keiser, a prominent bitcoin influencer, serves as its chairman.
