El Salvador’s decision to embrace the flagship cryptocurrency Bitcoin ($BTC) as legal tender is seemingly yielding dividends, as the nation’s cryptocurrency holdings are now $83 million in profit.
El Salvador is a very compact country, covering approximately 21,041 square kilometers (8,124 square miles). This makes it the smallest country in mainland Central America, roughly comparable in size to the U.S. state of New Jersey.
Its developing economy is transitioning from a reliance on agriculture to a greater focus on manufacturing and services, with the U.S. dollar being its official currency after being adopted in 2001. In 2021, the country made Bitcoin legal tender to attract investment and modernize its financial system in a move led by President Nayib Bukele.
According to the Nayib Bukele Portfolio Tracker website, El Salvador’s crypto treasury has benefited significantly from Bitcoin’s recent price surge. Bukele’s strategy, which initially faced criticism for its perceived recklessness, saw the country buy Bitcoin throughout 2021 and early 2024 at an average cost of $42,600 per coin.
This “dollar-cost averaging” approach positioned El Salvador to weather the significant price drops experienced in late 2021, with the portfolio breaking even in February as prices started to rise.
The nation’s current Bitcoin holdings, totaling 2,861 BTC, are valued at approximately $205.6 million at the time of writing, with Bitcoin trading above the $72,000 mark. President Bukele, on social media, acknowledged the $85 million profit while highlighting additional Bitcoin-related revenue streams for El Salvador.
These include revenue from the country’s passport program, income from converting BTC to USD for local businesses, mining revenue, and revenue generated for government services paid in BTC.
The Bitcoin adoption strategy extends beyond immediate financial gains. El Salvador, in December 2023, approved a law granting expedited citizenship to foreigners who contribute Bitcoin to government social and economic programs, in an initiative aiming to attract foreign investment and stimulate economic growth.
Despite the potential for profit, President Bukele affirmed El Salvador’s commitment to not sell its Bitcoin holdings, emphasizing the principle that “1 BTC = 1 BTC.” This statement reflects a belief in the inherent value of Bitcoin, independent of its current market price.
Featured image via Unsplash.
