SAN SALVADOR (Reuters) – Volcano Energy Group announced Monday that a public-private partnership in El Salvador will pump $1 billion to create one of the world’s largest bitcoin mining farms.
Volcano Energy said in a statement that the project will start with an initial $250 million, backed by “key bitcoin industry leaders” in collaboration with renewable energy developers.
El Salvador’s state bitcoin office retweeted the news on Twitter. The presidential office did not immediately respond to a request for comment.
Volcano Energy said the money will go toward 241 megawatt solar and wind power generation in the northwest municipality of Metapan, which will eventually power a bitcoin mining farm.
Bitcoin mining uses high-powered computers connected to a global network, sucking up massive amounts of electricity in the process. This energy-intensive practice has come under criticism from environmentalists who worry it will exacerbate forest loss and climate change.
The announcement comes two years after Salvadoran President Neb Bukele announced his intention to file a legal tender for bitcoin.
A Reuters report found that adoption among the population was fragile, while the International Monetary Fund warned against adoption due to legal risks, financial fragility and a speculative market.
Bukele and his bitcoin backers said the currency could bring jobs, financial inclusion and foreign investment to the country, one of the poorest in the Western Hemisphere.
Volcano Energy said the government of El Salvador will have a “preferred participation equivalent to 23% of the proceeds” in the project, with private investors owning 27%.
The remaining 50% will be reinvested in infrastructure, the statement said, without elaborating on the general ownership structure.
Tether, a startup operating in a cryptocurrency pegged to the US dollar, participated in the initial investment, it confirmed in a separate statement, without specifying the amount contributed. It lists Jose Lopez, who was involved in a $200 million solar power plant announced last year, as CEO of Volcano Energy, and Max Keizer, a bitcoin influencer, as its president.
Additional reporting by Nelson Renteria in San Salvador and Caylee Madre in Mexico City; Edited by Aurora Ellis
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