El Salvador has officially opened the Lava Pool, a Bitcoin mining pool powered by geothermal energy.
The initiative came about as a result of a partnership between the mining infrastructure provider, Luxor Technology Corporation, bitcoin miner Volcano Energy and the Government of El Salvador. As per Volcano Energy’s statement on Tuesday, it intends to allocate 23 per cent of its mining operation’s net income to the government of El Salvador.
Volcano Energy, which is a private-public partnership, will mine blocks using the Lava Pool and direct a portion of its profits to the rejuvenation of the nation’s existing power transmission and distribution infrastructure.
The project’s first stage entails the development of a 241-megawatt (MW) renewable energy park located in Metapán. This park will comprise 169 MW of solar photovoltaic energy and 72 MW of wind energy. The project’s overarching objective is to ultimately harness the plentiful geothermal energy resources available in the country.
Luxor’s Hashrate Forward Marketplace is set to provide Volcano Energy with established hedging strategies, similar to those embraced by prominent players in the Bitcoin mining industry. These strategies will serve as a safeguard for Lava Pool, helping it navigate the challenges posed by market volatility.
This collaboration intends to further advance El Salvador’s initiatives to incorporate Bitcoin into its energy ecosystem. Bitcoin miners can contribute to the viability of new energy ventures by using the country’s renewable energy resources.
They can generate revenue for such projects, especially from remote areas, while also offering adaptable load management capabilities to bolster the grid during peak demand or periods of stress.
“Lava Pool is another example of El Salvador’s first mover advantage as a nation-state in the Bitcoin ecosystem,” said Volcano Energy’s CSO, Gerson Martinez.
“Our vision is to create a vertically integrated energy and bitcoin mining company whose value is accretive to investors and to all Salvadoran citizens. We are thrilled to launch Lava Pool in partnership with Luxor Technology, an industry leader in developing bitcoin mining products and services for miners—from plebs to nation states.”
Furthermore, El Salvador plans to channel the proceeds generated from Bitcoin mining into the improvement of energy transmission and distribution infrastructure, fortifying the country’s energy systems. This multifaceted strategy not only bolsters energy security but also lays the groundwork for economic expansion, technological progress and a sustainable future.
We are Volcano Energy, a Bitcoin revolution. 🌋 Watch this video to learn more about this exciting revolution. 👇 #VolcanoEnergy
Somos Volcano Energy, una revolución de Bitcoin. 🌋 Mira este video para conocer más sobre esta emocionante revolución. 👇#VolcanoEnergy pic.twitter.com/G11rjfomZX
— Volcano Energy 🇸🇻🌋🔌 (@Volcano_Energy) October 10, 2023
El Salvador has been moving in this direction since June 2021
In June 2021, El Salvador made international headlines by becoming the first country in the world to officially embrace Bitcoin as legal tender. The groundbreaking move was spearheaded by the country’s President, Nayib Bukele, and marked a bold step in integrating cryptocurrencies into a nation’s financial and economic infrastructure.
This decision allows Salvadorans to use Bitcoin for everyday transactions, from purchasing goods and services to paying taxes and receiving salaries. It was seen as a potential means to enhance financial inclusion, enable faster and cheaper cross-border remittances and attract cryptocurrency-related businesses to the country.
However, the move also sparked debates and concerns about the practicality and risks associated with adopting a highly volatile digital asset as a national currency.