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The Powerhouse of Central America
by Mike Hobart
“El Salvador stays winning.” – Nico
Energy is the source of all human flourishing, without it nothing can be accomplished. Whether that’s the production of energy in the form of commodities like oil & gas, or in the utilization of energy resources to produce power, both are requirements. Modern communities and economies need energy to produce power as well as goods and services. This also marks one of the most difficult hurdles for developing regions; how do you get your hands on the energy so that you may grow and improve?
El Salvador has been made famous in recent years for a number of reasons. The move to establish Bitcoin as legal tender generated the most controversy as the news rippled across the globe and through financial circles. To dare to seek success outside of the current BIS and IMF regime appeared to be so rebellious and risky to the rest of the world.
Then the move to revitalize a geothermal power plant that uses heat generated by a nearby volcano and utilizing bitcoin miners in the process seemed to generate more confusion about the country. With its fair share of discussions around the perceived safety risks of relying on a volcano to generate power on top of investing in infrastructure capex to incorporate bitcoin mining into the power generation and distribution stack. On top of the general confusion and aversion to anything remotely related to bitcoin by mainstream media outlets and economic elitists. The public outcry against what El Salvador chooses to do within their country that is not resulting in harm or damage to their communities is quite entertaining.
Don’t forget the impressive operation performed by El Salvador to rangle-up a large number of criminals that had been plaguing the country since the 70s, restricting local development with unsafe conditions and keeping communities in their grip of power.
We have another victory to add to the list of successes for the small Central American country, one that has seen little light-of-day.
The Winningest of Bitcoin Nations
Energía del Pacífico completed a 380-MW natural gas fueled power plant in May of 2022. Utilizing liquid natural gas, stored on a permanently anchored offshore floating storage regasification unit (FSRU) off the Port of Acajutla, El Salvador is now providing consistent and reliable power to their citizens. This local energy supply and power production project has reduced power costs by 70% as El Salvador was reliant upon imports for their electricity, amounting to 25% of their demand. What’s more, this power plant also boasts transmission to the Central American Electrical Interconnection System (SIEPAC) that allows for power distribution to 6 other Central American nations.
The Modern Infrastructure Playbook
Now that reliable power provisions are being expanded throughout the country, it behooves El Salvador to learn from ERCOT in the US. Rather than go through the same timeline as developed nations in incorporating bitcoin mining into the electrical grid to take advantage of their flexible load for demand balancing, El Salvador is in a prime position to utilize this approach rapidly and develop these kinds of projects alongside the expansion of power distribution infrastructure. Better to develop these alongside each other and take advantage of as much synergy as possible, than to build one and incorporate the other later.
By expanding bitcoin mining operations alongside their new natural gas power plant El Salvador can keep demand for power much more consistent than the traditional ebbing & flowing power supply & demand relationship. Allowing for maintaining consistent power facility uptime and not having to rely on a peaker plant relationship where taxpayers are paying for these plants to literally remain idle before their expensive power is relied upon in moments of need. All while allowing miners to earn revenues, provide more high paying jobs to the region, justify expansion of local internet infrastructure, and provide a swelling of tax revenue back into the local communities.
If El Salvador adopts this strategy, and I am very confident they will, and you take into account the prior victories listed above, I see no reason why El Salvador will not become the literal powerhouse of Central America. Also meaning, that the United States of America is most incentivized to provide assistance to El Salvador and our other Central and South American neighbors who wish to embark on such important infrastructure projects. We are neighbors on this planet, and we should be working together to help each other seek success.