On June 5, 2021, El Salvador made waves across the financial space when it was invoice To make Bitcoin legal tender in the country was announced for the first time. Since then, the North American country has gone on to fully implement BTC as legal tender in the country, in addition to investing a significant amount in digital assets as well. Here’s how the country has fared since then.
El Salvador is falling on Bitcoin
Soon after President Nayib Buckle passes the bill and makes Bitcoin legal tender in El Salvador, the country will start buying BTC in large quantities. the The first purchase saw the country purchase a total of 400 bitcoins for $18.724 million At an average price of $46,811 on September 6, 2021, one 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 cryptocurrency using state money, ignoring warnings from financial institutions like the International Monetary Fund (IMF) to stop doing so.
The next purchase took place just one day later on September 7th with 150 purchased for approximately $6.9 million. El Salvador has continued to buy BTC on a near-constant basis ever since, bringing its total BTC balance to 2,381 as of the last June 30, 2022 purchase 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) hasn’t helped her position yet. The country has spent a total of $103,233,360 on BTC purchases since 2021, with an average price of $43,357. At current prices, the value of BTC stocks in El Salvador is approximately $61.3 million, which means that the country incurs a loss of $40 million on its investment in BTC.
BTC adoption in the country
Since September, BTC has served as legal tender in El Salvador, allowing residents to pay for goods and services using the cryptocurrency. However, the adoption was not as fast as expected as the US dollar is still dominant in the country.
Following the official announcement of 2021, there have been reports of protests around the use of BTC as legal tender, with many citing the security and economic risks of using a volatile digital asset as legal tender. Even today, those concerns remain at the forefront of lawmakers’ minds.
BTC retests $26,000 resistance | Source: BTCUSD on TradingView.com
In May, US Senators James Risch, Bob Menendez, and Bill Cassidy introduced a bill requiring El Salvador to report on the adoption of BTC in the country. Called “Cryptocurrency Accountability in El Salvador,” this bill proposes assessing “the risks to cybersecurity, economic stability, and democratic governance in El Salvador.”
President Bukele has not yet responded to this bill which gives 90 days to submit the plan to relevant congressional committees.
On June 5, Reuters mentioned El Salvador has entered into a public-private partnership to invest $1 billion in 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.