El Salvador is reaping the benefits of its Bitcoin investment strategy with a profit of $85 million. The country’s Bitcoin treasury is currently valued at over $200 million, following a significant rally in the Bitcoin market. The strategy was initiated by Salvadoran President Nayib Bukele and involves buying Bitcoin on a dollar cost average basis. The approach faced criticism when Bitcoin plummeted to lows of $16,000 after reaching a high of $69,000 in November 2021. However, the portfolio balanced out, and profits surged when Bitcoin crossed $42,600 in February.
The decision for El Salvador to invest in Bitcoin began in September 2021 when the cryptocurrency became legal tender. The country’s first transaction was the purchase of 200 bitcoins, each at a price of $51,769. Despite fluctuations in Bitcoin’s value, the portfolio, which now holds 2,861 BTC, is valued at a substantial $207.3 million.
President Bukele also highlighted other revenue streams contributing to the Bitcoin treasury. These include the revenue from the country’s passport program, income from local businesses converting Bitcoin to USD, profits from Bitcoin mining, and income from government services. Additionally, a migration law passed in December allowed for expedited citizenship in exchange for Bitcoin donations towards governmental social and economic development initiatives. El Salvador entered the Bitcoin mining industry in October through a partnership with Volcano Energy and Luxor Technology.
Acclaimed venture capitalist Tim Draper predicts that should Bitcoin’s value reach $100,000, El Salvador might be able to repay loans owed to the International Monetary Fund. There’s also the possibility of monetary independence. Amid his recent reelection and Bitcoin’s success, President Bukele rebuked the media for focusing on past losses when the cryptocurrency’s value decreased rather than its current profitability.