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El Salvador has mined nearly 474 Bitcoin since 2021, thanks to a geothermal power plant fueled by a volcano. This has brought the government’s total Bitcoin holdings to approximately 5,750 BTC, worth around $354 million.
On May 15, 2024, the country’s “Bitcoin Office,” an official governmental entity, reported that 473.5 BTC, valued at around $29 million, had been mined since September 2021, using a small amount of geothermal energy generated by the Tecapa volcano.
Under the administration of President Nayib Bukele, a well-known Bitcoin enthusiast who was recently reelected for a second term, El Salvador has installed 300 processors specifically for Bitcoin mining within the vicinity of the volcano.
First steps…
🌋#Bitcoin🇸🇻 pic.twitter.com/duhHvmEnym
— Nayib Bukele (@nayibbukele) September 28, 2021
Out of the 102 megawatts produced by the state-owned power plant, 1.5 megawatts are allocated to cryptocurrency mining.
The energy-intensive process of crypto mining involves complex mathematical computations performed by data processing centers, which require substantial energy for both computation and cooling.
El Salvador’s Volcano-Powered Mining is Sustainable
While cryptocurrency miners worldwide have faced increased scrutiny due to their energy consumption and environmental impact, El Salvador’s volcano-powered mining operation presents a unique and more sustainable approach.
In 2021, El Salvador made history by becoming the first country to adopt Bitcoin as legal tender, alongside the U.S. dollar, which it had adopted two decades earlier. This move generated significant controversy and criticism for President Bukele’s government, including from the International Monetary Fund (IMF).
However, the government remains committed to exploring the potential benefits and opportunities that cryptocurrencies can offer to the country’s economy.
Major Public Bitcoin Holders
The U.S. government is one of the largest holders of Bitcoin, mainly due to significant seizures from criminal activities.
As per the latest data, the government’s Bitcoin holdings surpass $12 billion in value. This includes holdings from the Justice Department and the Internal Revenue Service, which keep the Bitcoin in offline, encrypted hardware wallets.
Furthermore, the Chinese government reportedly holds 194,000 BTC that was recovered from the Plustoken scam in 2019. El Salvador’s holdings are currently at 5,750 BTC.
In the corporate sector, MicroStrategy leads with a substantial Bitcoin portfolio. As of the latest updates, MicroStrategy owns approximately 189,150 BTC, significantly bolstered by its CEO Michael Saylor’s personal investments in Bitcoin.
Another notable corporate holder is Marathon Digital Holdings, which has accumulated over 17,381 BTC through its mining operations. The third-largest Bitcoin holding by a public company is Tesla, which holds 9,720 BTC.
Satoshi Nakamoto, the pseudonymous creator of Bitcoin, remains the largest individual holder, with estimates suggesting ownership of around 1.1 million BTC. Other prominent individual holders include the Winklevoss twins with 70,000 BTC and Tim Draper, who acquired 30,000 BTC from a U.S. government auction.
Is BTC Mining Profitable in 2024?
Bitcoin mining profitability in 2024 is largely influenced by several key factors, including the cost of electricity, the efficiency of mining hardware, and the price of Bitcoin itself.
The Bitcoin mining reward halving in April 2024, which reduced the block reward to 3.125 BTC, has significantly impacted profitability. The event has historically led to a need for more efficient operations as the reward for mining a block is lowered.
Data from blockchain.com reveals that the hash rate dropped to its lowest level in over two months, reaching 575 exahash per second (EH/s) on May 10.
The decline in hash rate can be attributed to miners turning off rigs that are no longer profitable, James Butterfill, the head of research at CoinShares, explained in a recent post on X.
Miners are beginning to turn off unprofitable rigs
We write about it here in detailhttps://t.co/8tSQKDY5lk pic.twitter.com/498SvO01Bz
— James Butterfill (@jbutterfill) May 13, 2024
Profitability is also heavily dependent on the cost of electricity and the efficiency of the mining hardware. Miners with access to cheap electricity and efficient hardware are more likely to remain profitable.
Furthermore, the price of Bitcoin is a crucial determinant of mining profitability. If the price of Bitcoin is high, miners can cover their costs and make a profit more easily. Conversely, lower Bitcoin prices can squeeze margins.
All in all, while Bitcoin mining can still be profitable in 2024, it is increasingly becoming an activity best suited for well-capitalized players who can invest in the most efficient technologies and secure low energy costs.
The Bottom Line
Since 2021, El Salvador has mined approximately 474 Bitcoin using geothermal energy from the Tecapa volcano, boosting its total Bitcoin holdings to about $354 million.
The mining operation is powered by a small portion of the 102 megawatts generated by a state-owned geothermal power plant, with 1.5 megawatts dedicated to mining.
President Nayib Bukele seems to be achieving two things here: legitimizing Bitcoin as a form of money, and finding ways to mine Bitcoin without harming the environment.
References
- Bitcoin Explorer (Bitcoin Office)
- Nayib Bukele’s tweet (Twitter)
- Chinese Gov Bitcoin Holdings (DropsTab)
- Total Hash Rate (TH/s) (Blockchain)
- James Butterfill’s tweet (Twitter)
