El Salvador Suffers Huge Loss As Bitcoin Value Plunges

In the last few days, we’ve all come across someone wallowing in despair as their crypto investments plummeted and hit rock bottom. Well, El the country of Salvador might be in a tougher spot. The country’s president Nayib Bukele had bet big on Bitcoin by using taxpayers’ money to buy the cryptocurrency.

Now, the country’s Bitcoin investments are roughly half of what Bukele invested in the cryptocurrency. El Salvador invested over $60,300 per Bitcoin in October last year and bought 420 Bitcoins. Last month, Bukele went to “buy the dip” and bought another 500 Bitcoins by paying $30,700 for each coin.

Bitcoin Losing Its Value

At the time of writing, the value of Bitcoin is at $22,363 and continues to fall. El Salvador has 2,301 Bitcoins as of now, which have a value of around $52 million. It is 50% of the $105.6 million the country invested in acquiring the cryptocurrency.

The crypto market has been suffering huge losses for over a month now. Major credit for this loss goes to the downfall of the stablecoin Terra and DeFi lender Celsius’ insolvency. In simpler words, whoever invested in Bitcoin in the last one-and-a-half years has incurred a loss.

Bukele’s Flawed Strategy

Well, this makes things tougher for the country of El Salvador which was already facing a financial crisis. Bukele bet big on the cryptocurrency in hopes of making huge gains and making the country become the first to accept Bitcoin as legal tender in September last year. Well, Bitcoin didn’t solve the country’s problems.

While the crypto market continues to plummet, Bukele’s stand on Bitcoin remains the same. Bukele wanted to raise funds by issuing “volcano bonds,” which would come in handy to build a “Bitcoin City.” However, the launch of bonds has been delayed due to the bad conditions of the crypto market.

Mining Bitcoin From Volcanoes

Previously, Bukele instructed a state-owned geothermal electric company to make use of geothermal energy from volcanoes to mine Bitcoins. With geothermal energy, the volcano's heat will vaporize the water underground, creating a rush of powerful steam that will make the turbines spin and produce electricity.

There has been a lot of backlash on the environmental impact of mining Bitcoins using heavy computing methods. Experts have suggested that the underlying network to mine Bitcoin is now eating as much energy as Argentina. Crunching complex puzzles to mine cryptocurrencies consumes a huge amount of computing power.