El Salvador’s President Nayib Bukele has announced that starting in 2025, the country will not use foreign debt to finance its national budget. This decision is believed to play a significant role in the nation’s financial independence, with Bitcoin 
$94,091 being a key component of this strategy.
Bitcoin Strategy and Economic Freedom
During his Independence Day speech on September 15, Bukele revealed that his government would refrain from acquiring foreign debt to present the 2025 budget. Stacy Herbert, Director of the El Salvador National Bitcoin Office, emphasized this development by stating, “El Salvador is progressing towards true freedom.”
Herbert referenced a prediction by Ark Invest CEO Cathie Wood, who forecasted that the country’s use of Bitcoin as a primary reserve asset could lead to a tenfold increase in gross domestic product over the next five years.
Official Acceptance of Bitcoin and Mining
In September 2021, El Salvador became the first country to officially recognize Bitcoin as legal tender, laying the groundwork for President Bukele’s Bitcoin initiative. In November 2022, the government launched the “1 BTC a Day” initiative, aiming to acquire one Bitcoin daily. Current data shows that the country holds 5,875 Bitcoins, valued at approximately $345 million.
Additionally, the Salvadoran government is utilizing geothermal energy from volcanoes for Bitcoin mining. This method is a cost-effective solution compared to traditional electricity usage, offering significant profit potential.
Foreign Investments and Private Bitcoin Banks
The government aims to attract foreign investments by leveraging Bitcoin. In June, Bukele proposed the establishment of private Bitcoin banks that would provide investors with easier access to Bitcoin with fewer restrictions compared to traditional banks.
Holding Bitcoin has proven lucrative for large-scale investors, as seen in El Salvador. Michael Saylor, co-founder of MicroStrategy, is another prominent figure making substantial Bitcoin investments, which have yielded positive results for the company. Since adopting a Bitcoin strategy in 2020, the company’s shares have seen significant increases, even transforming MSTR into a proxy Bitcoin ETF.
Last week, MicroStrategy made its largest single purchase to date, acquiring $1.11 billion worth of Bitcoin. Following this acquisition, the company’s shares closed the week up over 18%.
El Salvador’s decision to forego foreign borrowing highlights Bitcoin’s potential impact on national economies. The country’s adoption and mining activities are seen as crucial steps towards financial independence. It remains to be seen whether other countries and companies will follow this strategy.
