El Salvador has taken another step towards embracing Bitcoin by launching its first local Bitcoin mining pool. The Volcano Energy project, which aims to generate electricity from renewable sources to power Bitcoin mining operations in the country, has partnered with Luxor Technology to operate its mining pool called Lava Pool.
The $1 billion renewable energy project in El Salvador gained attention in 2023 when Tether, the stablecoin issuer, invested in the initiative along with other companies. The goal of the project is to harness the potential of renewable energy and use it for Bitcoin mining, taking advantage of the country’s abundant renewable energy sources.
Luxor Technology, with its experience in providing Bitcoin mining software and services, will support Volcano Energy in its mining operations. Additionally, Luxor’s Hashrate Forward Marketplace will help mitigate market volatility through automated risk management strategies, similar to those used by other major Bitcoin mining operators.
Gerson Martinez, the chief strategy officer of Volcano Energy, expressed the vision of creating a vertically integrated energy and Bitcoin mining company that benefits both investors and the citizens of El Salvador. The launch of the mining pool signifies El Salvador’s efforts to establish itself as a Bitcoin-adopting nation-state.
Ethan Vera, the chief operating officer of Luxor, emphasized that the establishment of Volcano Energy and the start of local Bitcoin mining contribute to Bitcoin’s ethos of geographical decentralization. This move also highlights the potential for countries with renewable energy sources to improve the economics of new energy projects through Bitcoin mining. Mining operations can act as a flexible buyer of energy and provide an alternative revenue stream for energy producers.
As a public-private partnership, Volcano Energy plans to contribute 23% of its net income from mining operations to the El Salvador government. The mining profits will be reinvested in energy transmission and infrastructure to stimulate economic and technological growth in the country.
The Volcano Energy project’s first phase involves the construction of a 241-megawatt renewable energy park in Metapán, including photovoltaic solar energy and wind power. The long-term goal is to tap into the country’s abundant geothermal energy resources.
This development further solidifies El Salvador’s commitment to embracing Bitcoin and utilizing renewable energy for mining. In 2023, El Salvador became the first country to officially make Bitcoin legal tender. The country’s progress in adopting Bitcoin as a means of payment has been documented by journalists, showcasing the potential of digital currency in everyday transactions.
The partnership between Volcano Energy and Luxor Technology represents a significant step towards sustainable and decentralized Bitcoin mining. By utilizing renewable energy sources and innovative mining strategies, El Salvador is paving the way for other countries to explore similar initiatives and benefit from the economic and environmental advantages of Bitcoin mining.