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Economist Questions El Salvador’s Logic, President Defends Bitcoin Mining And Tags Him As ID-10t

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  • A fight on Twitter broke out between economist Steve Hanke and President Nayib Bukele when Hanke questioned El Salvador’s logic behind Bitcoin mining’s energy plan.
  • Bukele wrecked Hanke’s claims and responded by saying that volcanoes are obviously inactive, and well near the volcano are where most of the geothermal power is extracted from.
  • Despite Bukele being optimistic, the region’s local people do carry concerns that if the Bitcoin city is established, how it might affect the economy and land.

Within the first ten days of the year, people got to see something unexpected, a world-renowned economist and country’s head of state getting involved in a fight over Twitter. The dispute began when Steve Hanke, Johns Hopkins economist, presented questions to El Salvador’s logic behind the energy plan of Bitcoin mining. This was when President Nayib Bukele struck answers simultaneously calling Hanke as an “ID-10t”.c

What Happened?

Steve Hanke, on January 8, posted a tweet, saying how much energy you could extract from the inactive Conchagua volcano and where is the feasible study. He also said that El Salvador has a massive energy shortage and that he already imports 22% of its electricity use. Hanke further said that without any feasible study, none could understand how Bitcoin City will affect the shortage.

To this tweet from Hanke, Bukele replied that it is obviously an inactive volcano and that most of the geothermal energy is drawn out from the well near the inactive volcanoes.

As per a report from Arcane Research, Kuwait is the cheapest place for Bitcoin mining all round the world, which is estimated to be $880 for every Bitcoin based on electricity expenses. Whereas, in El Salvador, the cost of each Bitcoin based on electricity costs would be more than $10,000.

Bukele’s Response

Bukele, in no time, wrecked Hanke’s claim about the massive energy shortage by explaining that El Salvador imports energy because the producers in the region provide better value for money, and he ensured that things would change. He also claimed that natural gas power plants are under construction, and energy production might begin by May 2022. Also, a separate new water dam is under construction, said Bukele.

Responding to the volcanic energy questions, he said they had dug new wells and are planning to increase the geothermal production massively. He highlighted that the well he tweeted about a few months ago would produce about 95 MW of cheap, clean, and renewable energy from a source that would at least last a few million years. As per the President, Conchagua Volcano is ideal to power Bitcoin City, and four wells have already been dug.

Bukele also revealed that they acquire a 90% probability of finding a well of +42 MW which would be sufficient to power the complete Bitcoin City. In case if the city grows more than the expectations, they would utilize the 95 MW plant that they are constructing for powering the city at the beginning.

Concerns Crawl Around

Even though Bukele has been and is optimistic about the volcanic energy sources and profits from the Bitcoin City, numerous concerns are crawling around local people in the region about what this fintech hub might do to their economy and lands. At the beginning of this year, he also made predictions that Volcano Bonds might be oversubscribed and Bitcoin City might begin the construction.

Steve Anderrson

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