El Salvador has lost millions of taxpayer dollars due to its failed attempt to embrace cryptocurrency. Now, it says it will open a “bitcoin embassy” in Texas. Despite last year’s cryptocurrency winter, and surveys that showed the overwhelming majority of its citizens had never used bitcoin, the Central American country continues to support bitcoin.
Milena Mayorga is the country’s ambassador in the U.S. She shared the idea of an embassy with Texas Deputy Secretary Joe Esparza. Mayorga believes that the agreement could help ‘expansion in commercial and economic interchange projects’.
Mayorga wrote, “The state of Texas is our new ally.”
It is not the first attempt to establish a bitcoin embassy in El Salvador. The country signed an memorandum to understand with Lugano, Switzerland late last year. This was aimed at supporting bitcoin adoption in both areas and enhancing cooperation in education.
El Salvador will set up a “bitcoin office” to promote bitcoin in the city, and Europe as a whole, as part of the agreement. Lugano made cryptocurrency Tether a “de facto” legal tender in February 2022, just one year after El Salvdor was the first country to recognize Bitcoin as legal currency.
El Salvador is now the only local and international boarding the crypto hype train that has not cooled down since last year’s horrific crypto crash. After months of falling cryptocurrency prices, President Nayib Bukuele declared that El Salvador had ‘bought’ the dip last summer. At an average price of $30744, 500 additional coins were purchased.
Bukele reaffirmed his promise months later, declaring that the country would purchase one bitcoin per day for the foreseeable futur. The price of bitcoin had fallen 73% in the year before, sinking El Salvador’s holdings.
The country has lost tens of thousands of dollars due to all of this investment. According to a Bloomberg analysis, the country’s total 2,381 bitcoins were valued at $41.5 million in November.
This is down 60% from their $105 million value when they were purchased by the government in 2021. Fitch, a credit agency, decided to change El Salvador’s credit rating from CCC (CC) to CC because of its poor performance. This is Fitch’s fourth-worst credit rating, seven points below the AAA gold standard.
Although El Salvador may have embraced the technology, it has not done much to increase its use in the country. The Chamber of Commerce and Industry of El Salvador conducted a March 2022 survey and found that 86% of businesses have never used bitcoin to transact. According to World Bank data, only half (55%) of Salvadorans have internet access.