El Salvador President Nayib Bukele said in the beach village of Mizata to a crowd of cheering Bitcoin aficionados that the country is looking at issuing the world's first sovereign Bitcoin bonds and establishing "Bitcoin City," which will be free of income, property, and capital gains taxes.
Bukele claimed the city planned in the eastern district of La Union would get geothermal power from a volcano and would not impose any taxes except the value-added tax during an event that wrapped up a week-long promotion of bitcoin in El Salvador.
"Invest in our city and make all the money you want," Bukele remarked in English in the seaside town of Mizata, clad completely in white and sporting a reversed baseball cap. "This is a fully ecological metropolis that runs on a volcano's energy."
The planned bitcoin metropolis would be round in design, resembling a giant coin, Bukele said. He went on to say that the location would use the Conchagua volcano's geothermal energy to fuel Bitcoin mining.
El Salvador became the first country to recognize Bitcoin as a legal currency recently.
Fears that Bitcoin will bring instability and inflation to the impoverished Latin American country prompted large-scale protests.
Samson Mow, chief strategy officer of Blockstream, said El Salvador's objective is to sell $1 billion in tokenized U.S. dollar-denominated 10-year bonds that will pay 6.5% through the Liquid Network.
Mow, who shared the platform with Bukele, pointed out that around 50% of the funds from the so-called "volcano bond" will be converted to Bitcoin, and the other half will be allocated for infrastructure and Bitcoin mining powered by geothermal energy.
The government would begin selling its Bitcoins and paying an additional dividend to investors after a five-year lockup period, according to Mow. On Thursday, he told Bloomberg News about his suggestion.
Despite the fact that Bukele is a popular president, opinion polls reveal that Salvadorans are dubious of his enthusiasm for crypto.
Bitcoin City, Bukele added, would feature amenities like an airport, residential and business districts, and a central square built to look like a bitcoin symbol from the air, similar to cities founded by Alexander the Great.
Bukele did not specify a timeline for the city's building or completion, but he did say that a large part of the public infrastructure would cost roughly 300,000 Bitcoins.
At the time of writing, one Bitcoin is worth little under $60,000 (£45,000), figures from Coingecko show.