Since 2021, El Salvador has mined 474 Bitcoin, worth approximately $29 million, using geothermal energy from the Tecapa volcano. This initiative utilizes 300 mining processors and allocates 1.5 megawatts (MW) out of the 102 MW produced by the state-owned power plant.

This move positions El Salvador as a leader in renewable energy mining, especially significant amid growing concerns about Bitcoin mining’s environmental impact due to its heavy reliance on electricity and fossil fuels.

Bitcoin mining and its environmental footprint have long been contentious issues within the cryptocurrency industry. Environmental groups, including the Ripple-supported Greenpeace, have advocated for Bitcoin to transition from a proof-of-work to a proof-of-stake model to reduce its environmental impact. In line with these concerns, New York Governor Kathy Hochul enacted a two-year moratorium on proof-of-work mining on November 22, 2023, making New York the first U.S. state to impose such a ban. 

Tesla CEO Elon Musk has also been vocal about Bitcoin’s environmental impact. After Tesla invested $1.5 billion in Bitcoin, Musk announced plans to accept Bitcoin for Tesla purchases. However, he quickly reversed this decision, citing the negative environmental effects of Bitcoin mining. Musk stated that he would reconsider only if over 50% of Bitcoin mining utilized renewable energy.

Despite reports suggesting that over 60% of Bitcoin mining now relies on renewable energy, Musk has not acknowledged these reports or reinstated Bitcoin as a payment option. Meanwhile, Tesla faces a lawsuit for repeatedly violating the Clean Air Act by releasing pollutants from its Fremont factory.

El Salvador’s Bitcoin journey began in September 2021 when it became the first country to adopt Bitcoin as legal tender. Initially, this move seemed advantageous as Bitcoin was in a bull market, with prices reaching new highs frequently. However, the onset of a bear market in the second quarter of 2022 cast doubts on the prudence of these early Bitcoin purchases, which appeared to result in significant losses.

The bear market from 2022 to 2023 heightened scrutiny of President Bukele’s Bitcoin strategy. Despite the criticism, Bukele remained steadfast in his commitment to Bitcoin. On November 16 of 2022, he announced that El Salvador would begin purchasing Bitcoin daily starting November 17, marking a renewed commitment nearly three months after the country’s last Bitcoin purchase in July 2022.

El Salvador’s experiment with Bitcoin continues to be a bold and controversial endeavor, reflecting both the potential and risks of integrating cryptocurrency into a national economy. The country’s pioneering use of geothermal energy for Bitcoin mining highlights a significant step towards more sustainable practices in the industry. However, the long-term impact of these initiatives remains uncertain amidst ongoing environmental and economic challenges.

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