The Salvadoran government has earmarked $203 million for infrastructure improvements near the so-called “Bitcoin Beach” in the La Libertad area.
The news is curious in the context of El Salvador’s plummeting creditworthiness, major delays in bond offerings, sovereign debt at 40 cents on the dollar, repeated warnings from the country’s largest creditor to cancel its adoption of Bitcoin as legal tender and the escalation of gang violence that prompted the country’s president to threaten to starve gang prisoners to death.
Salvadoran President Nayib Bukele says La Libertad will use the cash injection to build a shopping mall, parking lot, beach club and processing plant in an area of 15,000 square meters. Bukele administration also plans to extend 21 kilometers of highway in “Surf City” to four lanes.
Administrators announced the use of hydraulic concrete, which has a higher initial cost but lasts longer than asphalt. The portion of the $203 million attributable to the incremental expense of better concrete was not disclosed.
Other improvements included new bike lanes and improvements to drainage systems and bridges. All in all, Bukele aims to support tourism in the pro-bitcoin region.
El Salvador has plenty of money for Bitcoin Beach
Bitcoin Beach predates President Bukele’s efforts to roll out bitcoin as legal tender. In 2019, an anonymous benefactor donated to the non-profit organization Mission Sake’s Community Build and funnel large funds to El Zonte in La Libertad to develop the city’s bitcoin infrastructure.
As the Bitcoin Beach app proliferated on residents’ mobile devices and merchants set up point-of-sale terminals that accepted bitcoin as a method of payment – attracting foreign bitcoiners as tourists – the town earned the nickname ” Bitcoin Beach”.
Read more: Bitcoin ATM startup sues former executive over El Salvador’s botched launch
Bitcoin Beach quickly rebuilt its tourism industry after the COVID-19 pandemic. Bukele attributed the rebound in tourism to El Salvador’s crackdown on violent gang activity, great surfing and tours of foreign bitcoiners. Salvadoran Tourism Minister Morena Valdez added that the country’s other responses to COVID-19 have helped boost tourist confidence.
In 2019, very few people in the El Zonte region had access to mainstream financial infrastructure. Now residents can pay for essentials like food and utilities using bitcoin on the Lightning Network.
Morena Valdez hailed Bitcoin Beach’s contribution to the tourism industry, saying visitors to the El Zonte region interested in bitcoin spend more money and stay longer. She seemed barely phased by criticism of bitcoin’s rollout in El Salvador as legal tender. She said the initiative has helped boost the tourism sector.
Bitcoin (and Tether) bonds delayed
El Salvador’s so-called bitcoin bonds, which also accept Tether (USDT) for payment, continue to be a problem for the Bukele government. On August 30, 2022, their show was delayed again.
Bitfinex, a sister exchange of Tether Ltd., was hesitant to start the show. However, in the next few weeks, Bukele’s New Ideas party should pass legislation that will pave the way for Bitfinex to be approved as a bond issuance technology provider.
Bukele’s bitcoin bonds and Volcano tokens have been pushed back by the International Monetary Fund (IMF) and Banco Bilbao Vizcaya Argentaria (BBVA). BBVA’s William Snead has expressed doubts about the Volcano Token launch. The IMF previously called on El Salvador to reverse its decision to make bitcoin legal tender.
Despite the uncertainty, Bitfinex and Tether CTO Paolo Ardoino expressed confidence that Volcano Token would launch in mid-September and could lift full $1 billion objective. El Zonte Capital chief Stacy Herbert, wife of bitcoin evangelist Max Keiser, mentioned that some people seem eager for the Volcano Token to be launched.
Read more: Will El Salvador default on its debt because of Bitcoin? The markets say yes
Bitcoin Beach remains a focal point for bitcoin adoption in El Salvador. Uptake to date has been disappointing, with only 20% of residents continuing to use the country’s Chivo app after spending their free bitcoin incentive. Worse still, only 1.6% of international remittances to Salvadoran recipients used bitcoin despite government promises to lower transfer fees.
For more informed news, follow us on Twitter and Google News.