El Salvador Mines Free Money

El Salvador declared BTC as legal tender. Not as a substitute for the Salvadorian Colon’ but as a parallel currency. BTC is a means of world wide transfer of money and much of Salvadorian economy is based on remittance from abroad. BTC is a means for individuals to save. It’s volatile but it’s property none the less and never has gone to zero. BTC can be borrowed against and lent. My Coinbase account pays 6% if I choose to tie it up, and I can borrow about 10% of my principle value. Not much need of an “emergency account” if I can borrow 100K against 1M BTC using a mouse click. All of this is swell and may make a difference to commerce in El Salvador but how do they mine free money?

El Salvador’s power generation is state owned. The power source is geothermal from Volcanos. El Salvador has many volcanos. BTC is hard currency meaning there is a basis for it’s value. In that respect it is like gold. Gold costs about $900 dollars an ounce to mine. Anything above $900 is profit. Below $900 the mine shuts down. There is therefore an energy equivalent measured in GW which is equivalent to an ounce of gold. Energy is the universal currency. BTC likewise has an energy equivalent. The data looks like it takes 72 terawatts of power to mine 1 BTC, and it takes 10 minutes to mine a BTC. Geo-thermal power generation is 95% efficient in El Salvador. The byproduct is water vapor as in nearly 100% green. So El Salvador turns an abundant natural resource (heat) into money in a highly efficient way to benefit it’s citizens, and the result is portable and enriches a poor country. Effectively El Salvador is turning heat into gold in a way that does not harm the environment.

El Salvador isn’t the only one. Greenland uses abundant geo-thermal and hydro-electricity to mine BTC. Greenland is the worlds largest Island. It is a true land of power. People laughed at Trump for wanting to buy Greenland, but if you can mine BTC for free maybe it’s not that stupid. Greenland has no way to export it’s riches of power as it’s an Island that sits between the Arctic and Atlantic oceans, but I bet Greenland has no trouble exporting BTC. BTC in fact becomes the transmission wires that connects Greenland and those who need what Greenland has to offer. I wonder how many GW of power are used to dry people’s underwear or heat up their coffee or run the refrigerators and A/C?

Imagine how many poor countries are sitting on the gold mine of BTC mining. Imagine the international commerce that natural resource will provide.

4 Replies to “El Salvador Mines Free Money”

  1. I’ve heard of people receiving high yields on their cryptocurrency in various institutions. I’m still not quite sure how they afford to pay such high yields I’m assuming they’re acting as a bank and lending it out I didn’t even higher yield. Have you found any negatives of allowing your cryptocurrency to receive a yield? Such as Time requirements, etc. Is there a threat of loss of the cryptocurrency? Thanks

    1. To short sell anything you need to “own” it. If you don’t own it you can rent it and back up the risk with currency or collateral. So the 6% comes from providing liquidity to the derivative markets. The derivative trader makes (or looses) his money off the spread (total profit – total cost) = net profit. I don’t leverage my BTC presently as I’m in a situation where I’m trying to control my income for tax reasons. Another way to realize yield is to stake something like the ETH 2.0 protocol with your ETH. As to safety, it’s a private but contracted transaction so it’s like corporate bonds. 5% was typical on passbook accounts 40 years ago. It just shows you how you’ve been trained to think that getting 20 points on a bank account is somehow “normal”. In a land where there isn’t banking, crypto banking might be a pretty good deal.

    1. https://www.wsj.com/articles/coinbases-new-customer-incentive-interest-payments-with-a-crypto-twist-11553855400

      You may need a professional account. My point was banks are making all the interest by holding FED reserves. They don’t make loans anymore and pay account holders 10 or 20 bp on a 230 bp guaranteed profit. Crypto’s although not insured are a means for the average guy to access some return. BlockFi is a Gemini product owned by the Winklevoss to promote this kind of lending activity. At some point I’m going to give this a try with a small amount of money and see how it works. There are programs that allow you to “yield farm” various projects to max yield and gain diversity. This video is older but gives some idea of how DiFi and yield farming works. It’s at least as interesting from an investing perspective as property co-ops.

      Let me make it clear I’m not promoting either DiFi or yield farming. I’ve spent some time learning about it, but since I’m not going to invest, the landscape will undoubtedly be different when I pull the trigger so I’ll have to relearn everything then.

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