El Salvador’s president has announced an ambitious plan to build a so-called “Bitcoin City” in which the cryptocurrency will be the only legal tender.

President Nayib Bukele made the announcement on Saturday night, claiming that the new city would be fully fledged. The city will include residential and commercial areas, restaurants, an airport, port and rail service, Coindesk reported Saturday.

The city will be located near the Conchagua volcano (pictured), a stratovolcano located in the La Unión Department within El Salvador. The choice of the volcano is key to the plan. Although there are no confirmed historical eruptions of Colchagua, there is geothermal activity under the volcano and this will be tapped to power bitcoin mining in the new city.

To help the bitcoin city to take off, Bukele also promised that the proposed city would not be subject to capital gains, income or payroll tax, only value-added tax. A 13% VAT in El Salvador, known locally as Impuesto al Valor Agregado, is charged on goods and services.

Bukele did not specify a timeline for the development of the city.

Along with announcing the new city, Bukele also unveiled a $1 billion “bitcoin bond,” a tokenized financial instrument developed by Blockstream Corp. Inc. to be hosted on the Liquid Network. $500 million raised from the bond will be used to construct energy and bitcoin mining infrastructure, while the remaining $500 million will be used to buy more bitcoin.

El Salvador aims to create a new government security law and grant a license to Bitfinex Securities to process the bond issuance, according to a blog post today from Blockstream. This could also pave the way for other Liquid security tokens such as the Blockstream Mining Note or Exordium token to be listed on a regulated El Salvadorian securities exchange.

The announcement of a bitcoin city is new, but El Salvador’s embrace of bitcoin is not. The country became the first in the world to accept bitcoin as legal tender in September. Bukele said at the time that legalizing bitcoin would spur investment in the country and assist the 70% of Salvadorans who don’t have access to traditional financial services.

In June, Bukele also promised that El Salvador would offer “very cheap, 100% clean, 100% renewable, zero-emissions energy from our volcanos” for bitcoin mining.

Photo: Smithsonian/Wikimedia Commons