El Salvador has proven itself a pioneer in the renewable energy sector for cryptocurrency, having mined 474 Bitcoin valued at $29 million using geothermal power derived from the Tecapa volcano. This initiative, utilizing 300 mining processors, accounts for 1.5 megawatts (MW) out of the state-owned power plant’s 102 MW production capacity, demonstrating the country’s innovative endeavors against environmental questions raised concerning Bitcoin mining’s energy consumption trends.
Taking a trailblazing step in 2021, El Salvador made history by accepting Bitcoin as a legal tender alongside the United States dollar, the first nation globally to do so. The implementation of a geothermal plant for Bitcoin mining followed this groundbreaking move, now contributing to a pool of 5,750 Bitcoins – a robust value of approximately $354 million.
Notwithstanding, the country’s progressive actions have attracted criticism from organizations across the globe, such as the World Bank. Amid intensified scrutiny during the bear market spanning 2022 to 2023, President Nayib Bukele remained firm on his Bitcoin strategy, announcing El Salvador’s plan to purchase one Bitcoin daily, an action seemingly vindicated by his internationally recognized victory in the 2024 presidential election.
The debate surrounding Bitcoin mining and its impact on the environment has stirred controversy within the crypto community. Advocates for greener crypto mining processes, such as Ripple-backed Greenpeace, argue for transitioning Bitcoin mining from the proof-of-work model to the proof-of-stake equivalent. In a bold move, New York Governor Kathy Hochul signed a law in November 2023 placing a two-year moratorium on proof-of-work methods, making it America’s first state to impose such a ban.
In a landmark case, Tesla decided against accepting Bitcoin as payment for its products due to environmental concerns surrounding the mining process, despite the company’s $1.5 billion investment in the cryptocurrency. CEO Elon Musk has expressed potential reconsideration of this decision should over half of Bitcoin mining transition to renewable energy sources – a scenario suggested in several reports noting over 60% of Bitcoin mining currently relies on renewable energy. As of yet, Musk has made no adjustments in Tesla’s Bitcoin payment policy. Meanwhile, the automotive giant is facing legal action over allegations of violating the Clean Air Act.