El Salvador is a small Central American country that has made history by becoming the first nation in the world to adopt Bitcoin as legal tender. The country's president, Nayib Bukele, is a vocal advocate of the cryptocurrency and has launched several initiatives to promote its use and adoption among Salvadorans. One of these initiatives is Lava Pool, a project that aims to harness the power of volcanoes to mine Bitcoin.
What Is Lava Pool?
Lava Pool is a partnership between Volcano Energy, a Salvadoran renewable energy and mining company, and Luxor Technology, a Bitcoin mining software provider. The project was announced in October 2023 and is expected to launch in early 2024. Lava Pool will be the first Bitcoin mining pool to originate from El Salvador and will use geothermal energy from the country's volcanoes to power its operations.
El Salvador has 22 active volcanoes, which provide a natural source of clean and abundant energy. The country already uses geothermal energy to generate about 25% of its electricity, and plans to increase this share to 40% by 2025. Lava Pool will tap into this resource and use it to run Bitcoin mining machines that validate transactions on the network and earn rewards in the form of new Bitcoins.
According to Volcano Energy, Lava Pool will have a capacity of 95 megawatts, which is equivalent to about 1,400 Bitcoin mining rigs. The project will also use wind and solar energy to supplement the geothermal power and ensure a stable and sustainable supply. Lava Pool will be open to anyone who wants to join and mine Bitcoin, but will prioritize Salvadoran miners and offer them lower fees and better services.
How Will Lava Pool Benefit El Salvador?
Lava Pool is part of El Salvador's broader vision to integrate Bitcoin into its economy and society. The country hopes to leverage the cryptocurrency to boost its financial inclusion, innovation, and development. By creating its own Bitcoin mining pool, El Salvador will be able to participate more actively in the global Bitcoin network and increase its share of the mining rewards. This will generate income for the miners, the government, and the local communities.
Lava Pool will also contribute to the country's environmental goals, as it will use renewable energy sources that have a low carbon footprint and reduce greenhouse gas emissions. According to Volcano Energy, Lava Pool will be one of the greenest Bitcoin mining pools in the world, with an estimated carbon intensity of 0.03 grams of CO2 per kilowatt-hour. This is much lower than the global average of 0.5 grams of CO2 per kilowatt-hour for Bitcoin mining.
Additionally, Lava Pool will support the development of the country's energy infrastructure, as it will create demand for more geothermal, wind, and solar projects. This will create jobs, stimulate investment, and improve the quality and reliability of the electricity grid. Lava Pool will also reinvest part of its profits into social and environmental causes, such as education, health, and conservation.
Lava Pool will pay 23% of its net income to the El Salvador government, as part of a public-private partnership agreement. This income will be used to fund public services and projects, such as the Bitcoin Trust, which provides incentives and assistance to Salvadorans who want to use Bitcoin. The government will also use part of the income to buy more Bitcoin and increase its reserves, which currently stand at over $100 million.
Is Bitcoin Mining Profitable in El Salvador?
Bitcoin mining is a competitive and risky activity that requires a lot of capital, technical expertise, and favorable conditions. The profitability of Bitcoin mining depends on several factors, such as the price of Bitcoin, the difficulty of the mining puzzles, the efficiency of the mining hardware, the cost of electricity, and the fees charged by the mining pool.
To calculate the profitability of Bitcoin mining, one can use online tools such as the Bitcoin Mining Calculator or the CoinWarz Bitcoin Mining Calculator. These tools allow users to enter their mining hashrate, power consumption, electricity costs, and pool fees, and get an estimate of their daily, monthly, and yearly mining revenue and profit.
According to these tools, Bitcoin mining is still profitable in 2023, as the price of Bitcoin remains high and the difficulty of the mining puzzles adjusts to the changing network conditions. However, the profitability varies depending on the type and model of the mining hardware, as well as the location and cost of the electricity.
For example, using the CoinWarz Bitcoin Mining Calculator, a Bitmain Antminer S19 Pro, which is one of the most powerful and efficient Bitcoin mining machines available, can generate a daily profit of $6.68, a monthly profit of $200.40, and a yearly profit of $2,401.60, assuming a hashrate of 110 terahashes per second, a power consumption of 3,250 watts, an electricity cost of $0.10 per kilowatt-hour, and a pool fee of 1%. However, these figures do not include the initial cost of the mining machine, which is around $12,000, nor the maintenance and operational costs, such as cooling, internet, and security.
On the other hand, using the same calculator, a Canaan Avalon 1246 90T, which is a less powerful and efficient Bitcoin mining machine, can generate a daily profit of $1.28, a monthly profit of $38.40, and a yearly profit of $460.80, assuming a hashrate of 90 terahashes per second, a power consumption of 3,420 watts, an electricity cost of $0.10 per kilowatt-hour, and a pool fee of 1%. However, these figures do not include the initial cost of the mining machine, which is around $3,000, nor the maintenance and operational costs.
Therefore, Bitcoin mining profitability depends largely on the choice of the mining hardware, as well as the availability and cost of the electricity. In El Salvador, Bitcoin miners can benefit from the low and stable electricity prices, which are subsidized by the government and range from $0.05 to $0.08 per kilowatt-hour. They can also benefit from the Lava Pool project, which will offer them access to cheap and clean geothermal energy, as well as lower fees and better services.
Conclusion
El Salvador is a pioneer in the adoption and integration of Bitcoin, and Lava Pool is one of its most ambitious and innovative projects. Lava Pool will use the power of volcanoes to mine Bitcoin and generate income for the country, while also supporting its environmental and social goals. Lava Pool will also make Bitcoin mining more accessible and profitable for Salvadorans, who can join the pool and use their own mining machines or rent them from the project. Lava Pool is expected to launch in early 2024 and will be open to anyone who wants to mine Bitcoin with volcanoes.