El Salvador Starts Local Bitcoin Mining Through Volcano Energy Project

Volcano Energy will provide 23% of its net income from mining operations to the government of El Salvador. (photo: twitter @Volcano_Energy)

JAKARTA - El Salvador officially launched its first local Bitcoin mining pool when the Volcano Energy project started mining blocks through Lava Pool in collaboration with Luxor Technology.

This renewable energy project worth 1 billion US dollars (IDR 15.5 trillion) from a Bitcoin-friendly country stole attention in early 2023. Stablecoin issuer Tether is one of the companies investing in this project. The project plans to generate electricity from renewable energy sources in El Salvador to support future Bitcoin mining operations, in the country.

Volcano Energy leverages Luxor's experience in providing Bitcoin mining software and services. The project will also use Luxor's Hashrate Forward Marketplace to reduce market volatility through automated risk management strategies used by other major Bitcoin mining operators.

Statements from Volcano Energy's Chief Strategy Officer, Gerson Martinez, highlight El Salvador's continued efforts to secure prominence as a Bitcoin-adopting country.

"Our vision is to create a vertically integrated energy and Bitcoin mining company that provides added value for investors and all El Salvadorans," Martinez was quoted as saying by Cointelegraph.

Luxor COO, Ethan Vera, said the founding of Volcano Energy and the start of local Bitcoin mining will contribute to Bitcoin's geographic decentralization ethos.

The announcement also mentioned the potential for countries with abundant renewable energy sources to use Bitcoin mining to boost the economics of new energy projects. Mining operations can be “flexible buyers of first and last resort” for energy producers and serve as an alternative source of income.

As a public-private partnership, Volcano Energy will provide 23% of its net revenues from mining operations to the government of El Salvador. Profits from mining will also be reinvested into energy transmission and infrastructure to stimulate economic and technological growth in the Central American country.

The first phase of the Volcano Energy project involves the construction of a 241 megawatt (MW) renewable energy park in Metapán that will consist of 169 MW of solar photovoltaic power and 72 MW of wind power. The long-term goal of the project is to harness the country's abundant geothermal energy.

In a previous exclusive interview with Cointelegraph at the Money20/20 conference in Amsterdam, Tether's Chief Technology Officer, Paolo Ardoino, said that his company's investment aims to diversify the company's interests in energy production while harnessing renewable energy to mine Bitcoin.

Cointelegraph journalist Joe Hall visited El Salvador in 2023, documenting the adoption of Bitcoin as a means of payment in the two years since the country officially made BTC the world's first legal tender.