Yawning through the second year of Bitcoin in El Salvador
September 7 is the second anniversary of Bitcoin becoming legal tender in El Salvador along with the US dollar. This past year has seen Bitcoin fade from relevance for the vast majority of Salvadorans, and has seen the Salvadoran government cease to promote its use as a currency for daily transactions.
President Nayib Bukele has not tweeted or posted anything in Spanish about Bitcoin in the past year. He did not mention Bitcoin in speeches to the nation last independence day, September 15, or in his state of the nation report on the fourth year of his presidency. There is no promotion of the use of Bitcoin as a currency coming out through the social media arm of the office of the president.
You will look in vain on the website of the Central Reserve Bank of El Salvador for any reports related to Bitcoin, despite the cyber-currency being legal tender in the country along with the US dollar. You will also not find recent discussions, promotion or programs related to Bitcoin on the website of El Salvador's Ministry of the Economy.
The twitter account of Chivo Wallet, the government sponsored Bitcoin wallet, has not posted anything since June 2022, and its Facebook account has not had a post since September 2022.
It has been 22 months since Bukele announced in a spectacle that the country would be issuing a $1 billion "Bitcoin volcano bond." Today there is no sign of such a bond coming to market. No dirt has been moved to build the futuristic Bitcoin City which was to be the fruit of the bond offering.
Bitcoin continues to be unpopular among the Salvadoran people. A recent poll from Universidad Francisco Gavidia found the Bitcoin initiative continues to be the least popular program advanced by Bukele.
There has been an ongoing drop in sending remittances from abroad using transfers from Bitcoin wallets. Crypto currency represents only 1.6% of the remittance flow.
Bukele's investments of the country's cash reserves in Bitcoin have also failed to prosper. During the first year of the Bitcoin gambit, Bukele would announce by tweet to the investing world his purchases of Bitcoin. Having failed to achieve any gains, but only holding millions of unrealized losses, Bukele no longer touts his Bitcoin investments. The price of Bitcoin (today around $25,722 USD) remains more than 45% below its price from two years ago. The price never came close to the $100,000 prediction made by Nayib Bukele in January 2022.
My analysis of the investments in Bukele's tweets:
(An analysis which did assume Bukele bought one Bitcoin every day starting November 17, 2022, through June 27, 2023, found that the purchases had narrowed those losses to approximately $27 million).
Yes, there are still a group of English-speaking ex-pat crypto-enthusiasts who get together along the beach at El Zonte, congregating at the Palo Verde boutique hotel, and there are the tourists who marvel that they can find someplace to buy a coffee or a pupusa with their smartphone and Bitcoin rather than cash or a credit card.
For example, these crypto-optimists were tweeting excitedly this week that El Salvador will supposedly introduce Bitcoin education in all its schools during 2024. But if you looked a little further, there was only a statement that 150 teachers were being trained for a national school system with an enrollment of 1.2 million students. Perhaps more tellingly, there was no mention of this initiative on the Ministry of Education website or its social media.
This year did see an announcement of a proposed $1 billion investment to build out a bitcoin mining operation fueled by solar and wind energy in El Salvador. (Volcanos as energy were not mentioned). Count me as very skeptical about this one.