Bitrabo Editorial
Back on June 5, 2021, El Salvador made headlines around the financial world following the announcement of its Bitcoin bill, which made the cryptocurrency a legal tender in the country. Since then, the North American nation has completely implemented BTC as a legal tender, as well as investing significantly in the asset. Here’s what the country has achieved since then.
El Salvador Invested in Bitcoin, But Is It Profitable?
Shortly after President Nayib Bukele passed the bill legalising Bitcoin in El Salvador, the country began buying the currency in large quantities. On September 6, 2021, a day before BTC officially became a legal tender in the country, the country bought a total of 400 BTC for $18.724 million at an average price of $46,811. Bukele later continued this investment, despite warnings from financial institutions like the International Monetary Fund (IMF).
A day later, El Salvador bought 150 BTC for approximately $6.9 million. The country has continued to buy BTC on a semi-consistent basis since then, bringing its total stash to 2,381 as of its last purchase on June 30, 2022, when it bought 80 BTC at an average price of $19,000 worth $1.52 million at that time.
El Salvador's total BTC purchases | Source: BuyBitcoinWorldwide
However, El Salvador’s dollar cost average (DCA) hasn’t helped its position thus far. The country has spent a total of $103,233,360 on its BTC purchases since 2021 at an average price of $43,357. At current prices, El Salvador’s BTC stash is worth around $61.3 million, implying that the country is nursing a $40 million loss on its BTC investment.
BTC Adoption in El Salvador: How Has It Been Going?
Since September, BTC has served as legal tender in El Salvador, allowing residents to buy goods and services using the cryptocurrency. However, the currency’s adoption hasn’t been particularly swift, as the US dollar still dominates in the country.
After the official announcement in 2021, there were demonstrations against using BTC as legal tender, with many citing the security and economic risks of using a volatile digital asset in such a capacity. These concerns linger, and they continue to be prevalent among lawmakers.
BTC retests $26,000 resistance | Source: BTCUSD on TradingView.com
In May, US Senators James Risch, Bob Menendez, and Bill Cassidy introduced a bill calling for El Salvador to report on the adoption of BTC in the country. The Accountability for Cryptocurrency in El Salvador Act proposes to assess “the risks for cybersecurity, economic stability, and democratic governance in El Salvador.”
President Bukele has not yet answered this bill, which allows for a 90-day window for the plan to be submitted to the congressional committee concerned.
On June 5, Reuters reported that El Salvador had entered into a public-private partnership to invest $1 billion in creating a large Bitcoin mining farm. Volcano Energy verified this, announcing that the country would first invest $250 million in the project, attempting to establish one of the world’s largest BTC mining farms.