The government of Bukele will produce geothermal energy for the electricity needs of the Bitcoin farm, a measure that has caused economic and energy controversy in El Salvador.
One could say that Salvadorans walk on volcanoes: El Salvador’s territory is made up of 90% volcanic material. It is located on the Pacific Ring of Fire and has 23 volcanoes and 5 active volcanic fields. Now, controversial economic measures have been added to the geological eruption.
Before Bitcoin (BTC) came into effect as legal tender, this year on September 7, 2021, President Nayib Bukele said that geothermal energy would be used to generate electricity for cryptocurrency mining, and urged state-owned geothermal renewable energy company LaGeo to build facilities for Mine power supply.
Geothermal power plant in El Salvador.
To generate electricity, steam is extracted from the subsoil, which must be at very high pressure, at temperatures around 150 degrees Celsius, and directed through pipes to drive turbines connected to generators. Pictured here is the geothermal power plant in Avachapan, El Salvador.
The country has two geothermal power plants: one in Ahuachapán, 103 kilometers west of San Salvador, with a capacity of 95 megawatts (MW), and another in Berlin, 106 kilometers east of the capital, with a capacity of 109 MW. Together, they meet the needs of 1.5 million of the nearly 6.5 million Salvadorans.
“These 204 megawatts supply nearly 25 percent of El Salvador’s total energy consumption,” Carlos Martínez Cruz, a professor of electrical engineering at the University of El Salvador, told DW.
Martínez Cruz explained: “The cryptocurrency industry is going through a turning point. This year many miners have left China due to the ban and are migrating.” A mining team, such as the Antminer S19 Pro, consumes about 3,250 watts (W) A, for example, a Bitcoin farm may consumption of 32.5 MW is one third of the geothermal capacity of Avachapan.
“Besides the fact that Bitcoin miners are consuming too much electricity, it is dangerous to supply a geothermal power plant to the Bitcoin industry, because it is not for the energy sector, but for the financial market speculation sector”, the price of cryptocurrencies remains high stable and not backed like other currencies (including USD).
Environmental and Economic Impact
“According to El Salvador’s installed energy capacity, the country produces insufficient electricity. 19.9 percent of energy consumption has to be imported,”said Álvaro Trigueros, director of the Economic Research Department of El Salvador’s Economic and Social Foundation Development Department, FUSADES, in an interview with DW.
“Given that the country is not self-sufficient, mining Bitcoin in El Salvador would result in a disproportionate increase in electricity demand and the country would be forced to import more,” the economist said. Furthermore, he added that Bitcoin mining energy consumption in El Salvador is extremely high and has a negative impact on global warming: “It produces around 90.2 metric tons of CO2 globally, equivalent to the CO2 emissions of countries such as Belgium or Chile.” El Salvador, on the other hand, already consumes more energy than its ecological capacity. of 1.25%.
Nayib Bukele assured that his engineers have discovered a new geothermal well that will generate around 95 megawatts of electricity, which will allow cryptocurrency mining with “100% clean” energy. In this regard, engineer Martínez is skeptical: “The information has not been confirmed,” he said, “Furthermore, it may take up to ten years to bring a new geothermal power plant into operation. And, in general, the cryptocurrency mining industry is looking for a very fast rate of return,”he noted.