Max Keiser is a very enigmatic individual in the cryptocurrency space who is often right about what the future may hold for Bitcoin. For example, many initially considered his idea of establishing “mining-backed volcano bonds” in El Salvador impossible, yet it is a reality today. Another example of how the people within the Bitcoin space don’t make bold claims willy-nilly.
Max Keiser Was Right All Along
Flashback to early June 2021. News broke of El Salvador making Bitcoin legal tender, creating a global precedent for other countries to follow. However, the nation is weighed down by the negative sentiment of the International Monetary Fund (IMF) and how that institution judges the legal tender status of Bitcoin as a “mistake.” Moreover, the IMF would not look favorably upon this decision if the El Salvadorean government went through with their Bitcoin plans, which they did in recent months.
At the time, Max Keiser offered some interesting comments on the situation. As El Salvador was in talks with the IMF over a $1 billion program, the decision to legalize Bitcoin was a tricky one. However, Keiser floated the idea of having the Bitcoin community arrange a loan to the tune of $1 billion. Exercising this option would mean El Salvador could bypass the IMF entirely while still getting the financial ducks in a row.
I’m sure #Bitcoiners can arrange a $1 billion lending facility stop-gap for El Salvador. The IMF can go f*** themselves. https://t.co/oHxwkpeCx1
— Max Keiser (@maxkeiser) June 10, 2021
President Bukele of El Salvador saw merit in the idea, especially after considering how Bitcoin mining would work in the country. El Salvador has tremendous hydro and volcanic energy that could be put to good use on this front. After looking into the matter, the government decided to introduce mining-backed volcano bonds.
Initial mining efforts conducted in late October confirmed this plan is viable. A container with mining hardware exists at the Rio Lempa Hydroelectric plant, which generates Bitcoin every day. As there is always a surplus of renewable energy, the process becomes self-sustainable. It is a welcome development after China cracked down on all crypto mining in June 2021. Moreover, it ensures more mining power operates solely on renewable energy, thwarting any critics.
Moreover, the government plans to issue $1 billion in tokenized 10-year bonds. El Salvador officials will convert these volcano bonds to Bitcoin (50%) and money for infrastructure and Bitcoin mining (50%). Finally, after five years, the government will start selling its Bitcoins and offer an additional dividend to investors. Protections confirm the annual percentage yield will be as high as 146%, putting one Bitcoin at $1 million in 2026. That is in line with predictions made by Max Keiser over the years.
Will The Plan Work?
Many considered the vision by Max Keiser in June a “joke,” but it has become a reality less than six months later. The bigger question is whether this ambitious plan in El Salvador can work. The infrastructure to mine and acquire geothermal energy is in place, and mining Bitcoin is underway. Moreover, the governments signed a deal with the Liquid Network team to issue the $1 billion in tokenized bonds. Through the five-year lockup, the bonds take out $500 million in BTC off the market for five years, making Bitcoin scarcer than ever before.
This ambitious plan can make El Salvador the next-generation financial center of the world. If successful, it will set another precedent for other countries to follow. There is still a first-mover advantage to embracing Bitcoin as legal tender and using renewable energy for government-oriented mining efforts. Any investors in the volcano bonds receive permanent residents in El Salvador and will be fast-tracked to citizenship.
The bullish outlook on Bitcoin by people like Max Keiser has made the leading cryptocurrency a global phenomenon. El Salvador wants to establish the worldś first Bitcoin City, a place with no income tax but only 10% VAT. Bitcoin City will be built near the Concagua volcano, providing energy for mining.
