Envisioned in the shape of a perfect circle, like a coin, with a bitcoin-symbol-shaped public square in the middle and a multitude of urban nodes radiating in every direction, the proposed city’s aesthetics aim to resonate symbolically with bitcoiners.
This vision makes sense based on Bukele’s communication and marketing savviness. It could also be a great opportunity for Fr-ee, the architecture and industrial design firm founded by Fernando Romero, as Bitcoin City is a rehash of Romero’s FR-EE City, a 2012 “urban prototype for building new cities in the emerging economies of the 21st century,” as the website describes it.
The emotional, aesthetic foundations of Bitcoin City can be viewed as quite sound among Bitcoiners. But its energy foundations may not be the best possible fit for the Bitcoin edifice Bukele wants to spur — at least in terms of their cost and speed.
The Lead Time For Geothermal Power
The “volcano energy” that Bitcoin City is supposed to tap into is more commonly known as “geothermal energy.” Calling it “volcano energy” sounds, of course, more exciting and it demonstrates once again Bukele’s marketing and branding acumen.
The reason why geothermal energy might not be the best and quickest fit for Bitcoin City has to do with its development time and costs. It can take five to seven years to go through all the phases involved, according to some geothermal project timelines.
In the case of the Colchagua volcano, which is the one near which Bitcoin City would be built, the first phases are underway or have been already carried out, as last June, Bukele tweeted that engineers had already dug a well with 95 megawatts (MW) of geothermal capacity at the site.
Even so, it will likely take at least another two to three years before the plant can start generating electricity, to be used for a bitcoin mining hub around it.
This hints at one big reason why geothermal energy has not been significantly developed in the last few decades, either in El Salvador or in the world in general, even though it avoids the drawbacks of intermittency that solar and wind power suffer. Although it’s cheap to operate and provides almost unlimited hours of operation, geothermal energy has very long lead times and, until all of the technical “i’s” have been dotted and the economic “t’s” have been crossed, results are uncertain. Projects can remain, quite literally, holes in the ground.
Solar and wind power plants can also take time to be developed, but that’s usually due to permitting procedures, not technical difficulties or uncertainties about solar irradiation and wind speeds, and their lead time is generally shorter, about one to two years for utility-scale systems, and less for smaller ones, according to industry interviews.
Issues of time and costs cannot be underestimated in the decisions of public and private investors. Let’s try and paint a simple yet comprehensive picture with broad data that are representative of different renewable energy technologies across the world.
The Relative Costs Of Geothermal Power
In 2020, the average total installed cost of eight new geothermal plants monitored by the International Renewable Energy Agency (IRENA) was $4,486 per kilowatt (kW), ranging from a low of $2,140 per kW to a high of $6,248 per kW.
Focusing on El Salvador, a recent study presented at the last World Geothermal Congress by Salvadoran, Icelandic and Iranian researchers quotes a total cost of $480 million for a 50 MW geothermal plant in the Central American country (table two), or $9,600 per kW.
For comparison, the average total installed cost of solar photovoltaic (PV) projects commissioned in 2020 and monitored in the IRENA database was $883 per kW — about one-fifth the cost per kW of IRENA-monitored geothermal power, or about one-tenth the cost of geothermal power per the World Geothermal Congress study. If we compare it with offshore wind power, its average total installed cost came at $1,355 per kW in 2020 — about one-and-a-half-times cheaper than volcano energy.
Beside development and installation expenses, another important factor is the cost of generating energy once a plant has started production. To do that, let’s look at the levelized cost of energy (LCOE), which measures the average net-present cost of electricity generation for a power plant over its lifetime. It’s a key number used to plan investments and compare different methods of power generation in a consistent way.
The average LCOE of the geothermal projects commissioned in 2020 was $0.071 per kilowatt hour (kWh), broadly in line with values seen over the previous four years. That compares with an LCOE for solar and onshore wind that has been falling rapidly in the last 10 years and that in 2020 was $0.057 per kWh and $0.039 per kWh, respectively.
That means geothermal energy is about 25% more expensive to produce than solar, and about 82% more expensive than onshore wind.
As far as costs and lead times, solar and wind power are the clear winners over geothermal energy, as this IRENA graph shows.
10-year global LCOEs for new, utility-scale renewable power generation technologies, Illustration by IRENA. Source.
The Relative Effectiveness Of Geothermal Power
As mentioned, geothermal power is not intermittent and plants can produce for more hours than solar or wind systems. The measure of how much electricity any given plant produces compared to its theoretical maximum possible output is called the “capacity factor.” It’s an important measure because it indicates how fully a power plant can be used.
Let’s compare the capacity factors of different energy sources, again using IRENA’s data.
In 2020, the global average capacity factor for new geothermal plants was 83%, ranging from a low of 75% to a high of 91%, while the average capacity factor for new, utility-scale solar PV plants was 16.1% and that for onshore wind farms was 36%, per IRENA.
That means the capacity factor, i.e., the effectively available hours of operation, for geothermal plants was five times higher than for solar and 2.3 times bigger than for onshore wind.
The Relative Efficiency Of Geothermal Power
The amount of usable energy that any power generation technology produces compared to its energy input is called “energy conversion efficiency.”
The highest reported conversion efficiency is approximately 21% at an Indonesian geothermal plant, with a global efficiency average of around 12%, according to a 2014 worldwide review of 94 geothermal plants published in the “Geothermics” journal.
Basically, geothermal power is five-times more expensive to develop and install than solar, and around two- to three-times more time consuming, but it can produce five times the energy of solar and more than twice that of wind power per MW, as it can work day and night, winter and summer, doldrums and gale — unlike solar and wind (unless one uses battery systems, the development of which is fast progressing, but that presently can only cover a few hours of consumption every day, as is well known in the industry).
But geothermal energy is also a quarter more expensive to produce than solar, almost twice as expensive as onshore wind and its energy conversion efficiency is around 10 percentage points lower than solar PV, and about three- to four-times lower than wind power.
One can capture the combination of these different factors by looking at the dual efficiency score for renewable energies. The higher the score, the better a technology performs on a wide series of criteria.
This score summarizes economic dimensions as inputs on one side, and energy, environmental and social dimension as outputs on the other, based on data from IRENA, the World Bank and the Yale Center for Environmental Law and Policy, as illustrated in a recent study focusing on Organisation For Economic Cooperation And Development (OECD) countries and published in the “Sustainability” journal.
The authors warn that “reliable data for geothermal energy were available for only three countries, Chile, Mexico, and Turkey [in] 2014, with an efficiency score of 77.9%, 72.8%, and 86.4%, respectively.” These data compare with an average of 92.98% for wind and solar energy in 2016, per the study.
It should be reiterated that in the five to seven years since these data were collected, costs for solar and wind have fallen considerably, while their energy efficiencies have increased, as opposed to geothermal energy, whose costs have increased and whose energy efficiency has remained stable.
Even so, the geothermal energy in the Central American country considered in the study (Mexico) and sharing some of the same tectonic plates and geological formations as El Salvador, has a dual efficiency of less than 73% — more than 20 percentage points below solar or wind’s dual efficiency.
Geological map of El Salvador (detail) with the Colchagua volcano area in the green circle . Illustration by the United States Geological Survey. Source.
Geological map of Mexico (detail). Illustration by United States Geological Survey. Source.
Is Solar A Better Initial Fit For Bitcoin City?
Even if El Salvador has a rainy season from May to October, the area of the Colchagua volcano, in the southeast of El Salvador, is blessed with very high sun irradiation, as the below illustration of El Salvador’s photovoltaic power potential shows.
Colchagua Volcano area in the green circle . Illustration by World Bank Group. Source.
As an example, one only needs to look at the Capella Solar PV-plus storage facility which officially opened in December 2020, providing electricity and power reserve to El Salvador’s grid.
The Capella Solar operation is located in the Usulután department in El Salvador’s southeast — in the same area as the Bitcoin City would be, about 100 kilometers to the west of the Colchagua volcano.
The solar plant is now the country’s largest. It has a 20-year power purchase agreement with local power distributors at an average price of $0.049 per kWh ($49.55 per megawatt hour [MWh]), which is now the cheapest energy in the Salvadoran market. Attached to it, there is a 3.2 MW and 2.2 MWh lithium-ion battery storage system, which provides frequency regulation support to the grid and is the largest system of its type to date in Central America.
Volcano Bonds
President Bukele intends to finance construction of Bitcoin City by issuing a series of so-called “volcano bonds.” worth $1 billion each, carrying a coupon of 6.5%. The name refers to the idea that these 10-year bonds will be backed by bitcoin, both mined with “volcano energy” and bought on the market. Half of the sum would go to buying bitcoin on the market and the other half would pay for the city’s infrastructure, such as the development of bitcoin mining facilities, Bukele has said. The first 10-year bond should be issued this year and others will follow.
As construction is to be funded by volcano bonds, which are to be backed by bitcoin, which are at least in part to be mined with geothermal energy, timing and costs of the energy infrastructure is a key factor both for the long-term sustainability of the city and the upfront financial viability of the project itself.
The biggest bang for El Salvador’s buck would come from mining its own bitcoin with its own renewable energy as soon as possible, as opposed to buying bitcoin on the market. As any miner would attest, access to the cheapest possible energy is the single most important factor in determining the viability of a mining project.
If time and cost are of the essence for bitcoin mining and Bitcoin City, then maybe geothermal energy is not the best possible option.
Developing a geothermal project presents a unique set of challenges when it comes to assessing the resource and how the underground reservoir will react once production starts. Underground resource assessments are expensive and need to be confirmed by test wells. Bukele has said that engineers have already done at least part of this job.
“Much, however, will remain unknown about how the reservoir will perform and how best to manage it over the operational life of the project,” IRENA has stated. “In addition to increasing development costs, these issues mean geothermal projects have very different risk profiles compared to other renewable power generation technologies, in terms of both project development and operation.”
Mix It Up
Research focusing on the relationships between energy flows and urban development has shown that “intensive and diversified energy sources build up the structure and enhance metabolism in urban areas,” according to a study published in “Ecological Modelling.”
As geothermal energy is home grown in El Salvador, as well as less polluting, more available than many other sources and directly usable both for thermal and electric energy generation, it’s certainly worth pursuing, but not necessarily as a first choice. It would probably work better as a component of a wider renewable energy mix.
One should be able to install a utility-sized solar PV field in about a year and start mining bitcoin much sooner than in the two to three years minimum that a geothermal project would take. That headstart could make a big difference in making the financial foundations of volcano bonds sounder and Bitcoin City more likely to succeed.
This is a guest post by Lorenzo Vallecchi. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
The founder of the decentralized exchange, dYdX, asserts that individuals involved in cryptocurrency development should direct their efforts toward international markets beyond the United States for the upcoming five to ten years.
Antonio Juliano conveys to his audience of 49,400 on the social media platform X that the prevailing regulatory uncertainty within the United States does not merit the associated challenges or concessions.
Juliano contends that it would be more prudent for cryptocurrency developers to establish their products in alternative countries and subsequently re-enter the United States from a position of strength.
“Cryptocurrency developers would be well-advised to temporarily discontinue catering to the US market and instead seek re-entry in a span of 5-10 years. The complications and compromises involved do not warrant the endeavor. Moreover, a substantial portion of the market exists overseas. It is recommended to innovate in those regions, ascertain product-market fit, and then return with greater bargaining power…
The paramount objective shared among all stakeholders is to secure a significantly more potent product-market fit for cryptocurrency. The pursuit of a robust product-market fit does not necessitate flawless distribution. A multitude of substantial overseas markets present avenues for experimentation.”
Juliano articulates that advocating for more amiable cryptocurrency regulations demands time, although the process could be expedited if developers manage to introduce products that elicit consumer demand.
“However, this perspective does not undermine the importance of efforts to influence US cryptocurrency policy. On the contrary, such endeavors are absolutely vital. Given the protracted timeframe required (in anticipation of re-entry), and considering that much of the world takes cues from the United States, it becomes evident that our progress in shaping policies hinges upon achieving global-scale product usage.”
The dYdX founder proceeds to emphasize that, with time, American citizens will come to realize that cryptocurrency is inherently aligned with US values and principles.
“The tenets of cryptocurrency closely align with American values. What concept could be more quintessentially American and reflective of capitalist ideals than a financial system conceived for the people, driven by the people, and answerable to the people? This, indeed, constitutes the very essence of our endeavor.”
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
Bloomberg Intelligence’s senior macro strategist, Mike McGlone, is conveying a pessimistic outlook for Bitcoin (BTC) in the immediate future.
During a recent interview on Kitco News, McGlone underscored that Bitcoin is currently displaying bearish signals even amidst the ascent of other high-risk assets.
“In the event of a downturn, adhering to a rule prevalent in bear markets, resources across the board could witness a reduction in value, and Bitcoin will not be an exception.
A crucial observation is the necessity for Bitcoin to exhibit divergent strength at a certain juncture, akin to the behavior of treasury bonds and gold in a deflationary economic environment. Regrettably, this pattern has not materialized.
After attaining its peak towards the conclusion of Q1, reaching approximately $31,000, driven by optimism and the influence of exchange-traded funds (ETFs), Bitcoin subsequently retraced to $25,000 or approximately $26,000. Presently, it is manifesting divergent weakness in contrast to the concurrent upsurge in the stock market.”
According to McGlone’s analysis, the ongoing “economic reset” implies a continuation of Bitcoin’s recent downward trend, although he anticipates that the premier cryptocurrency will ultimately attain a six-figure valuation.
“While I believe that Bitcoin will eventually achieve a valuation of $100,000, the onset of a global economic reset, as I anticipate, characterized by a standard deflationary recession leading to a decline in the housing and stock markets, analogous to the conditions of 2008—though arguably exacerbated due to the ongoing removal of liquidity from the system—Bitcoin’s role as an influential precursor comes to the forefront.
This underscores my point that Bitcoin has recently been taking on the role of a harbinger of trends. Its value ascended briefly to around $31,000, only to subsequently trend downwards. From my perspective, it serves as a leading indicator for a majority of high-risk assets.”
As of the time of writing, Bitcoin is trading at $26,079.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
Shiba Inu’s (SHIB) Latest Layer-2 Scaling Solution Nears Public Relaunch Following Recent Technical Challenges
Shytoshi Kusama, the enigmatic lead developer behind the SHIB project, has shared in a recent blog post that significant progress has been made in addressing the technical setbacks that temporarily halted the operation of Shibarium, SHIB’s new layer-2 scaling solution. The initial release of Shibarium encountered network issues that prompted its temporary closure. However, Kusama assured the community that diligent testing and parameter adjustments have led to notable improvements.
Kusama elaborated, stating, “After extensive testing and parameter refinements aimed at achieving a ‘ready’ status, Shibarium has undergone enhancements and optimization. While still undergoing testing, it is now successfully producing blocks.” Additionally, to prevent a recurrence of the past network overload, Kusama revealed the implementation of a new monitoring system and supplementary fail-safe measures. These include rate limiting at the RPC (remote procedure call) level and an automated server reset mechanism in the event of another surge in traffic.
With these advancements in place, the team is on the verge of reopening Shibarium to the public. As part of this progression, more network validators will be integrated into the ecosystem on August 23rd. Kusama emphasized the significance of this step, remarking, “Tomorrow, additional validators will become operational, expanding the options available for staking BONE. This will allow for a distribution of rewards earned through their roles within our community. As testing concludes, we will once again prepare for public utilization.”
Shibarium’s previous technical difficulties were attributed to an overwhelming influx of users and transactions during its initial launch. As of the current writing, SHIB is trading at $0.00000798, marking a 0.4% increase over the past 24 hours.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
FTX’s co-founder, Sam Bankman-Fried, is currently seeking a temporary release from incarceration. The purpose behind this endeavor is to engage in collaborative strategizing with his legal representatives within the confines of the federal courthouse situated in Manhattan.
In a formal letter dispatched to US District Judge Lewis Kaplan on a Friday, Bankman-Fried’s legal team expounded that their client’s capacity to effectively scrutinize the extensive legal documents pertaining to his case has been significantly curtailed during his time spent incarcerated at the Metropolitan Detention Center (MDC) in Brooklyn.
Christian Everdell, the attorney representing Bankman-Fried, divulged that the government recently disseminated a voluminous three-quarters of a million pages of Slack communications. These were originally due several months prior. Expressing the urgency of the situation, Everdell articulated, “Only last week did the government furnish an aggregate of approximately seven hundred and fifty thousand pages of Slack communications that were originally stipulated for release months ago. Given the current timeline, it is a futile endeavor for Mr. Bankman-Fried to endeavor to review these materials.”
He underlined the pivotal necessity for Bankman-Fried to collaborate meticulously with his legal team, emphasizing his dire need to avail himself of an internet-enabled laptop within the courthouse premises. Such a resource would undoubtedly expedite the process of comprehensive document review, an imperative undertaking in light of his impending fraud trial scheduled for the forthcoming October.
In riposte to Bankman-Fried’s plea for reprieve, the prosecuting body voiced apprehensions regarding his adherence to the prerequisites concerning his planned defense strategy. Notably, they underscored that Bankman-Fried is yet to furnish the complete gamut of essential information regarding the counsel upon which he predicated his actions.
The prosecutors proffered caution that unless Bankman-Fried promptly discloses the minutiae regarding the counsel he received and the provenance thereof, any attempt to interject such a defense during the trial should be summarily proscribed.
Although the prosecutors extended an offer to facilitate the transfer of documents onto hard drives for Bankman-Fried’s perusal within the MDC premises, a viable laptop-based solution was deemed unattainable. Initially, the notion of relocating Bankman-Fried to a more compact, upstate correctional facility where he could access an internet-enabled laptop was contemplated by the prosecutors. However, this proposal was met with resistance from prison officials.
Regarded for its starkly onerous conditions, the Metropolitan Detention Center has cultivated a notorious reputation among its inmate population.
Bankman-Fried’s Incarceration Stemming from Unsanctioned Internet Utilization
As documented, Judge Kaplan sanctioned the re-imprisonment of the beleaguered cryptocurrency luminary, citing alleged instances of witness tampering.
In that juncture, Judge Kaplan pronounced that a strong prima facie case existed indicating that the accused had endeavored to tamper with witnesses on no fewer than two separate occasions.
The decision was additionally influenced by Bankman-Fried’s unsanctioned use of the Internet while released on bail under the guardianship of his parents at their abode located in California.
Judge Kaplan discerned that Bankman-Fried had indulged in excessive communication with various individuals via electronic correspondence, even resorting to the utilization of a virtual private network.
Concurrently, the disgraced progenitor of FTX is simultaneously grappling with novel allegations brought forth by the Department of Justice (DOJ). These allegations encompass the misappropriation of customer deposits, including the purported embezzlement of said funds.
An indictment filed on the most recent Monday delineates that Bankman-Fried stands accused of diverting and embezzling customer deposits from the FTX platform. The illicitly obtained funds were purportedly channeled towards political campaign contributions, collectively amassing a substantial sum exceeding one hundred million dollars, in advance of the 2022 US midterm elections.
The indictment further posits that despite Bankman-Fried’s intimate knowledge of FTX’s fiscal insufficiencies, he continued to channel the purloined funds into personal investments, acquisitions, and political campaign contributions.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
The U.S. Securities and Exchange Commission (SEC) is taking significant steps towards pursuing an appeal in their recent legal battle against Ripple, indicating a potential shift in the course of the lawsuit.
James K. Filan, an experienced defense attorney specializing in crypto-related legal matters, has shed light on the latest developments. District Judge Analisa Torres has initiated a structured process for considering the SEC’s request to present an interlocutory appeal—a move that would allow the SEC to contest certain aspects of the ongoing case.
It’s important to note that this preliminary step does not guarantee the authorization of an interlocutory appeal; rather, it signifies that the SEC has been given the opportunity to formally request such an appeal.
Judge Torres has outlined the timeline for this process in her official order. The SEC is expected to file their motion for the appeal by August 18th. Subsequently, Ripple is given until September 1st to submit their opposition papers. If the SEC deems it necessary, they have until September 8th to file a reply.
The news of these developments had an immediate impact on the cryptocurrency market. Following the announcement of the judge’s order, the value of XRP experienced a sharp decline. The price, which had been trading at approximately $0.571, dropped to around $0.499 at the time of writing. This decrease of over 12% aligns with the broader trends observed across the cryptocurrency landscape.
The legal clash between the SEC and Ripple began when the regulatory agency filed a lawsuit against the San Francisco-based payments company in late 2020. The SEC alleged that Ripple had engaged in the sale of XRP without registering it as a security.
In a significant turn of events last month, Judge Torres issued a ruling that had mixed implications for both parties. She determined that Ripple’s automated programmatic sales of XRP, which occurred on the open market, could not be classified as securities offerings—a pivotal point of disagreement between the SEC and Ripple.
However, the judge did uphold a key aspect of the SEC’s argument. She agreed with the agency’s assertion that Ripple’s direct sales of XRP to institutional buyers indeed amounted to a securities offering, reinforcing the complexity of the case.
As the legal battle continues to unfold, the spotlight remains on the actions and responses of the SEC and Ripple, and how their ongoing dispute could shape the future regulatory landscape for cryptocurrencies and digital assets.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.