Introduction

In early 2023, El Salvador approved a new law to allow the creation of a Bitcoin-backed bond. This bond was initially scheduled for issuance in March 2022 but was delayed several times. The legislation paving the way for this bond was introduced in the country's Legislative Assembly towards the end of 2022.

El Salvador's President Nayib Bukele revealed plans for the Volcano Bond in 2021. The objective was to raise funds for establishing a Bitcoin mining industry powered by renewable energy sources. The name 'Volcano Bond' was chosen because of the intention to utilize the Conchagua volcano for running Bitcoin mining machinery.

The introduction of these Volcano Bonds marks the establishment of Bitcoin-centric financial markets in El Salvador. The bonds are expected to be valid for a decade and offer an annual return of 6.5% to investors.

After obtaining regulatory approval, El Salvador's National Bitcoin Office shared the announcement online. The issuance of the bonds is anticipated to take place in the first quarter of 2024 and is considered pivotal for the expansion of new financial markets within the country.

The primary aim of the Volcano Bond is to manage El Salvador's debt responsibilities and raise funds for the development of an upcoming project - the Bitcoin City. These bonds will be traded on the Bitfinex Securities Platform, an authorized segment of the cryptocurrency exchange Bitfinex handling blockchain-based assets and bonds approved by El Salvador.

Numerous cryptocurrency companies, including Tether, are supporting the Volcano Energy initiative that seeks to produce electricity from sustainable sources for future Bitcoin mining activities nationwide. By harnessing volcanic resources for power generation, the Volcano Bonds initiative showcases El Salvador's dedication to utilizing natural assets for enhancing economic and technological advancement.

Volcano Bonds serve as a financial tool uniquely tailored for financing geothermal Bitcoin mining ventures. This attribute ensures that investments align with essential environmental, social, and governance (ESG) regulations that have become central to various legislative efforts globally.