El Salvador’s government seems to be going all-in with Bitcoin. Coindesk and BBC News report President Nayib Bukele has laid out plans to build a “Bitcoin City” near a volcano along the Gulf of Fonseca. The city will have support crypto mining, and there will be no capital gains income, payroll, or proper taxes, just value-added tax.

The city will be developed in a coin shape. While it should pack all amenities one would expect from a city, people in La Unión would be able to travel in the new development. Bukele didn’t confirm the timeline for the creation of the city.

A city for Bitcoin enthusiasts

However, he simultaneously revealed a $1 billion US “Bitcoin bond” where half would be used to build energy and mining infrastructure, while the rest will come in handy to buy more of the digital currency.

Samson Mao, strategy chief for bond developer Blockstream, said the country would start selling crypto holdings after five years, and bondholders will get an extra dividend. With an initial 6.5 percent yield, this could represent a significant windfall for El Salvador if all goes as planned.

Churning Bitcoin from volcanoes

The move is a big gamble for a country with a GDP of just over$24.6 billion in 2020. Bukele’s administration is counting on Bitcoin to boost economic growth but it’s unclear if the residents will be attracted towards a Bitcoin-oriented city even with tax incentives. This is new territory for cryptocurrency, and there’s no guarantee the project will receive enough support.

El Salvador that previously announced that it will consider Bitcoin as an alternative currency, started mining the cryptocurrency from a volcano. The so-called “volcanode” has already produced 0.00599179 bitcoin, or about $269, as per a tweet by President Nayib Bukele. “We’re still testing and installing, but this is officially the first Bitcoin mining from the volcanode,” Bukele wrote.