After several weeks of controversies surrounding China’s crackdown on Bitcoin mining, the crypto industry woke up on June 9th to find that the small Latin American country of El Salvador has become the first country to accept Bitcoin as legal tender. Just days after it was first announced by El Salvador’s President Nayib Bukele at the Bitcoin Miami conference, the law was passed in the Parliament with a supermajority.
And while this was certainly huge news for the small country with under 6.5 million people, it also sparked global conversations about the implications of equating Bitcoin with any other fiat currency. The conversation presented itself as a welcome break from the regulatory uncertainty facing Bitcoin mining in China, but soon sparked another debate about renewable energy.
After announcing the revolutionary new Bitcoin law, President Bukele said that he has instructed the directors of LaGeo, the state-owned geothermal electric company, to come up with a plan to offer Bitcoin mining facilities the opportunity to set up their operations in El Salvador and utilize the country’s clean, renewable, and zero-emission geothermal energy. A new well dug out within the existing LaGeo infrastructure will be able to provide approximately 95 MW of geothermal energy that will be used to power a Bitcoin mining hub.
The founder of F2Pool, one of the largest mining pools coming out of China, said that the future of Bitcoin mining lies in geothermal energy. According to a report from Colin Wu, a cryptocurrency reported posting on the Wu Blockchain Twitter channel, the anonymous founder of the pool said that aside from the original high cost of digging geothermal wells, geothermal power generation is extremely cheap and offers incredible stability. This is especially true in areas with a lot of volcanos, where the geothermal energy provided by intense volcanic activity is almost never harvested to its full potential.
Wu’s source, who goes by the name Shen Yu, said that the current infrastructure provided by the LaGeo power station has the potential to supply 1,000 Bitcoin mining machines with energy.
The sentiment is shared by many other Bitcoin miners, with hundreds of people expressing support for El Salvador’s support for the Bitcoin industry. We are yet to see whether the recent crackdown on Bitcoin mining operations in China’s northern provinces pushes any of the country’s miners to seek refuge in El Salvador. According to the latest data, there hasn’t been a significant drop in Bitcoin’s hash rate in the past week or so, which could indicate a significant number of miners shutting down their operations in China.