On June 5, 2021, El Salvador made waves across the financial space when its bill to make Bitcoin a legal tender in the country was first made public. Since then, the North American country has gone on to completely implement BTC as a legal tender in the country, as well as invest a significant amount in the digital asset as well. Here’s how the country has fared since then.
El Salvador Down On Its Bitcoin Bet
Shortly after President Nayib Buckle passed the bill and made Bitcoin a legal tender in El Salvador, the country would begin buying BTC in large quantities. The first purchase saw the country buy a total of 400 BTC for $18.724 million for an average price of $46,811 on September 6, 2021, a day before BTC officially became legal tender in the country.
In the months that followed, Bukele would double down on his decision to invest in the cryptocurrency using the country’s funds, disregarding warnings from financial institutions like the International Monetary Fund (IMF) to stop doing so.
The next purchase happened just a day later on September 7 with a purchase of 150 for approximately $6.9 million. El Salvador has continued to purchase BTC since then on a semi-consistent basis since then, which has brought its total BTC stash to 2,381 as of its last purchase on June 30, 2022, of 80 BTC at an average price of $19,000 worth $1.52 million at the time.
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 around $61.3 million, meaning the country is nursing a $40 million loss on its BTC investment.
BTC Adoption In The Country
Since September, BTC has operated as a legal tender in El Salvador, allowing residents to pay for goods and services using the cryptocurrency. However, the adoption has not been as swift as expected as the US dollar remains dominant in the country.
Following the 2021 official announcement, there were reports of protests about the use of BTC as a legal tender, with many citing the security and economic risks of using a volatile digital asset as a legal tender. And even today, those concerns remain at the forefront of the minds of lawmakers.
BTC retests $26,000 resistance | Source: BTCUSD on TradingView.com
In May, US senators James Risch, Bob Menendez, and Bill Cassidy introduced a bill to require El Salvador to report on the adoption of BTC in the country. This bill called the Accountability for Cryptocurrency in El Salvador Act proposes to assess “the risks for cybersecurity, economic stability, and democratic governance in El Salvador.”
President Bukele is yet to respond to this bill which has given a 90-day window for the plan to be submitted to the committees of Congress involved in the matter.
On June 5, Reuters reported that El Salvador entered into a public-private partnership to invest $1 billion into creating a large Bitcoin mining farm. Volcano Energy confirmed this, revealing that the country will first put $250 million into the project as it looks to build one of the largest BTC mining farms in the world.
