On June 5, 2021, El Salvador caused a stir across the financial sector when its bill to make Bitcoin legal tender in the country was first published. Since then, the North American country has fully adopted BTC as legal tender in the country and has also invested a significant amount in the digital asset. It has been like this in the country ever since.
El Salvador is resetting its Bitcoin bet
Shortly after President Nayib Buckle passed the law and made Bitcoin legal tender in El Salvador, the country began buying BTC in bulk. In the first purchase, the country bought a total of 400 BTC for $18.724 million on September 6, 2021 at an average price of $46,811, a day before BTC officially became legal tender in the country.
In the months that followed, Bukele reiterated his decision to invest in cryptocurrency with state funds, ignoring warnings from financial institutions like the International Monetary Fund (IMF) to stop.
The next purchase came just a day later, on September 7, with a 150 purchase for about $6.9 million. Since then, El Salvador has been buying BTC semi-continuously, bringing its total BTC stash to 2,381 BTC since its last purchase on June 30, 2022, from 80 BTC at an average price of $19,000 worth $1.52 million has then.
El Salvador’s Total BTC Purchases | Source: BuyBitcoinWorldwide
However, El Salvador’s Dollar Cost Average (DCA) has not helped its position so far. The country has spent a total of $103,233,360 on its BTC purchases since 2021, at an average price of $43,357. At current prices, El Salvador’s BTC stash is worth about $61.3 million, meaning the country is taking a $40 million loss on its BTC investment.
BTC launch in the country
Since September, BTC has been legal tender in El Salvador, allowing residents to use the cryptocurrency to pay for goods and services. However, the rollout has not been as quick as expected as the US dollar remains dominant in the country.
Following the official announcement in 2021, there were reports of protests against using BTC as legal tender, with many citing the security and economic risks of using a volatile digital asset as legal tender. And even today, these concerns are at the forefront of legislators.
BTC is retesting the $26,000 resistance | Source: BTCUSD on TradingView.com
In May, U.S. Senators James Risch, Bob Menendez, and Bill Cassidy introduced legislation that would require El Salvador to report on BTC adoption in the country. This bill, called the Accountability for Cryptocurrency in El Salvador Act, proposes to assess “the risks to cybersecurity, economic stability and democratic governance in El Salvador.”
President Bukele has yet to respond to the bill, which will give 90 days for the plan to be submitted to congressional committees dealing with the matter.
On June 5, Reuters reported that El Salvador had entered into a public-private partnership to invest $1 billion to build a large-scale Bitcoin mining farm. Volcano Energy confirmed this, announcing that the country will initially pour $250 million into the project to create one of the largest BTC mining farms in the world.
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