Nestled along the Pacific coastline of Central America, El Salvador—a country historically known for coffee exports and volcanic landscapes—has become the unlikely pioneer of a digital revolution. Under the bold and charismatic leadership of President Nayib Bukele, El Salvador became the world’s first country to adopt Bitcoin as legal tender in 2021.
What began as a symbolic experiment has evolved into a cornerstone of the nation’s economic strategy, drawing both global applause and criticism in equal measure. Now, three years on, El Salvador isn’t just holding onto Bitcoin—it’s doubling down.
The Nation That Won’t Flinch
While the International Monetary Fund (IMF) has urged caution, warning about the risks posed by Bitcoin’s volatility, President Bukele has responded with unwavering optimism and relentless action. In March 2025, his government revealed that El Salvador had increased its national Bitcoin reserves to over 6,102 coins, worth approximately $550 million at the time.
This strategic move came even after the country secured a $1.4 billion loan from the IMF—a deal that some believed would discourage further Bitcoin investment. Instead, El Salvador reassured the IMF that its Bitcoin activities remained within agreed financial guardrails.
A government statement emphasized that the purchases were made using surpluses from the nation’s mining operations and not IMF funds. Bukele himself tweeted, “We aren’t gambling—we’re investing in the future.” And that future, as imagined by Bukele, is dazzling.
Bitcoin City: Where Ambition Meets the Earth’s Core
Few projects exemplify Bukele’s vision more than Bitcoin City—a proposed tax-free, eco-powered metropolis shaped like a coin and fueled by geothermal energy from the nearby Conchagua volcano. The plan includes residential neighborhoods, shopping districts, and an airport—all running on cryptocurrency infrastructure. Investors would enjoy zero income and capital gains tax, drawing a stark contrast to traditional tax models.
But dreams as big as this are rarely free from conflict. Environmentalists have raised the alarm, pointing to possible deforestation, habitat loss, and displacement of indigenous communities. In one heart-wrenching account from The Guardian, a local family lamented the transformation of their home into a “cemetery of mangroves” as development loomed.
Despite these criticisms, the government insists the project will generate jobs, attract investment, and boost regional development in an area long plagued by poverty and underinvestment. Bukele’s administration has pledged to carry out environmental impact assessments and work with affected communities—though skeptics argue the process lacks transparency.
An Uneasy Relationship With the IMF
El Salvador’s pivot to Bitcoin has put it at odds with the IMF, whose role as a financial lifeline for developing nations gives it significant leverage. Yet in a 2023 assessment, even the IMF conceded that the predicted fallout from the Bitcoin law—banking instability, inflation, and investor withdrawal—had largely not materialized.
Still, the IMF remains cautious. In a recent statement, it encouraged El Salvador to “limit the scope of the Bitcoin law” and enhance regulatory oversight of crypto transactions to avoid potential risks. The Salvadoran government responded by amending its legislation: while Bitcoin remains legal tender, businesses are no longer required to accept it. This compromise, experts say, was key to maintaining IMF support while preserving the country’s crypto-friendly identity.
The People’s Perspective: Hope, Hesitation, and Hurdles
Despite the ambitious narrative at the top, public adoption of Bitcoin in El Salvador tells a more nuanced story.
While early excitement surged with the launch of the government-backed Chivo Wallet and $30 Bitcoin giveaways to every citizen, enthusiasm quickly faded. Technical glitches, price crashes, and limited merchant adoption eroded confidence. A 2023 national survey revealed that less than 20% of the population used Bitcoin regularly, with the majority preferring U.S. dollars for daily transactions.
Still, hope flickers.
Among young Salvadorans, particularly in urban centers, Bitcoin represents opportunity—a chance to participate in a global economy from their smartphones. Freelancers and tech workers are increasingly using crypto to bypass high remittance fees and access international markets. For these individuals, Bitcoin isn’t a gamble; it’s a tool for empowerment.
The government is now ramping up its crypto education programs, establishing blockchain academies, and integrating digital finance training into school curricula. “We must build a generation of digital citizens,” Bukele recently stated, “so they can thrive in a world where financial borders are vanishing.”
Mining From the Magma
El Salvador is transforming its natural landscape into a powerful ally in its Bitcoin strategy. Once considered a geological liability, the country’s volcanic activity is now a strategic advantage. Tapping into this natural resource, El Salvador is using geothermal energy—a clean, sustainable, and abundant power source—to drive its Bitcoin mining operations.
The initiative began with the LaGeo geothermal facility, a government-run plant that pioneered the use of volcanic energy for mining. Since then, additional geothermal projects have been planned and are underway. These power plants not only energize the crypto mining infrastructure but also feed electricity into the national grid, helping to cut down on fossil fuel use and easing electricity costs for the average household.
By integrating eco-friendly energy with emerging financial technologies, El Salvador showcases a rare synergy—where environmental sustainability and digital innovation go hand in hand. It’s a promising glimpse of how natural forces can power a country’s leap into the future.
The Global Ripple Effect
El Salvador’s Bitcoin experiment has sparked interest far beyond its borders. Politicians in Argentina, Paraguay, and even the U.S. have watched closely, some applauding Bukele’s courage while others criticize the lack of guardrails.
Regardless of one’s stance, El Salvador has forced a conversation: Can digital currencies coexist with global financial institutions? Can small nations leapfrog development stages through strategic tech adoption?
Time will tell.
But what cannot be denied is that El Salvador has already shifted the global narrative. What was once dismissed as a risky political stunt is now being studied by economists, policymakers, and technologists around the world.
As Diana Gabaldon might write, “History is not written by those who sit quietly—it is etched by those who dare to leap.” El Salvador has leapt, and the world is watching.
Sources:
The Guardian
Reuters
Crypto News
