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El Salvador to Build 'Bitcoin City' at Volcano's Base

El Salvador's president said no income taxes would be levied in the city.

El Salvador will build an oceanside “Bitcoin City” at the base of a volcano, President Nayib Bukele said on Saturday.

Bukele said the city will be circular to represent the shape of a large coin and will be built in the southeastern region of La Unión.

The location will take advantage of the Conchagua volcano's geothermal energy to power Bitcoin mining.

Bukele said the planned new city would "include everything", according to the BBC.

"Residential areas, commercial areas, services, museums, entertainment, bars, restaurants, airport, port, rail. Everything devoted to Bitcoin," he said.

He said that half of the revenue gained from this would be used to "to build up the city", while the rest would be used to keep the streets "neat and clean".

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 He said that no income taxes would be levied in the city, only value added tax. 

Half of the VAT levied would be used to fund the bonds issued to build the city, and the other half would pay for services such as garbage collection. 

El Salvador plans to raise about $1 billion through a bitcoin bond in partnership with Blockstream, a digital assets infrastructure company.

The $1 billion raised will be split between a $500 million allocation of bitcoin and a $500 million infrastructure spend for building out energy and Bitcoin mining infrastructure in the region, Blockstream said in a blog post.

In September, El Salvador became the first country to make bitcoin legal tender.

The government promoted the cryptocurrency’s use by giving US$30 in free bitcoins to citizens who sign up for its national digital wallet, known as “Chivo,” or “cool” in English.

Bitcoin mining has sparked controversy due the vast amounts of energy it requires.