El Salvdor’s President Nayib Bukele wants you to feel the bit. This was his catchphrase as he took the stage at a beach resort in Mizata, El Salvador to announce the construction of “Bitcoin City” on Saturday. According to Bukele, the city will be a tax haven for the crypto-rich built with Bitcoin-backed bonds mined using the geothermal power of a nearby volcano.
Bukele went full supervillain for the announcement of the new tax haven. Before he took the stage, a video played on a giant screen displaying a “metaverse”-style avatar of the president and a CGI UFO. As the UFO whizzed through space, smoke and fireworks blasted through the air. Bukele ascended the stage dressed in a white shirt and khakis with a white baseball cap turned around on his head while AC/DC’s “You Shook Me All Night Long” blared to signal his entrance.
“Invest here and make all the money you want,” Bukele said during his presentation. “This is a fully ecological city that works and is energized by a volcano.” Slides behind the presentation displayed plans for a circular city meant to resemble the symbol for Bitcoin. According to Bukele, the city wouldn’t levy any tax at all, save a value added tax (VAT) that would be used to issue bonds and take care of city services. Bukele estimated that infrastructure would cost 300,000 bitcoins, or roughly $17 billion.
Bukele’s presentation married the worst parts of Silicon Valley hype and his own millennial brand of burgeoning authoritarianism. The El Salvadoran president, who once called himself the “world’s coolest dictator,” pushed a law through making Bitcoin legal tender. His regime and the Bitcoin Law have sparked protests and backlash, and police even allegedly arrested one prominent critic of the law without charge. His Bitcoin City scheme is less about building a cool town powered by a volcano and more about offering rich people a place to “invest” without paying any taxes. Bitcoin City, should it be constructed, could become the world’s premiere tax haven for crypto weirdos.
El Salvadoran president explaining how there will be taxes in Bitcoin City. Image: Press Secretary of El Salvador Youtube.
He’s not the first to attempt such a scheme. Miami Mayor Francis Suarez wants to turn his city into a crypto utopia by issuing bitcoins to citizens mined through nuclear power. Under his rough plans, the city would stop charging taxes and cover its costs entirely through bitcoin. Eric Adams, the new mayor of New York City, is also all in on cryptocurrency though his plans are even less concrete than those of Suarez and Bukele. Puerto Rico, which does not collect capital gains taxes, is another destination for the wealthy crypto investors such as Facebook whistleblower Frances Haugen.
An intractable facet of the cryptocurrency world is a libertarian streak wherein people think government is bad and so are taxes. This has led to a rise in places around the world seeking to be the place where people park their crypto wealth. As the taxman cracks down on crypto in the United States and China attempts to eliminate the digital currencies altogether, the competitive frenzy to be the tax haven of choice for the discerning crypto-bro will only increase.