El Salvador Delays Volcano Bond Issue, Unveils State-owned Company Backing

The country’s so-called “volcano bonds,” named after the source of power for bitcoin mining operations, are delayed until as late as September, sources say

share

key takeaways

  • El Salvador is changing its approach to the bond issuance, delaying and modifying the previously announced plan
  • The successful roll out of bitcoin mining is seen as key for President Nayib Bukele’s government as prospects for International Monetary Fund funding are slim

El Salvador has postponed the issue of its highly anticipated volcano bonds, which were originally slated to be issued by March 20, according to Finance Minister Alejandro Zelaya. 

Nayib Bukele, El Salvador’s president, introduced the bitcoin-backed bonds in November 2021. They are supposed to raise $1 billion for the Central American nation’s “bitcoin city,” a community at the foot of the Conchagua volcano, complete with mining operations and low taxes, Bukele promised.

Zelaya told bondholders earlier this month that the bitcoin bonds will now be backed by La Geo, a state-owned thermal company, according to Nathalie Marshik, head of emerging markets sovereign research at Stifel Financial.

Zelaya had previously stated that the war in Ukraine might impact timing of the bond issuance, with market appetite for risky assets dwindling.

The bonds will be issued on the Liquid Network, a Bitcoin layer-2 established by Blockstream. While Blockstream is providing the technology, it is not working directly with the El Salvador government on the bonds, a spokesperson from the company said.

Launching the bond is still essential for combating El Salvador’s slim loan prospects and mounting debt, Marshik said. The International Monetary Fund has made clear its disdain for the adoption of bitcoin as legal tender.

The postponement comes as speculation around other Latin American countries leaning into digital assets swells. Honduras or Malaysia may become the second nation after El Salvador to adopt bitcoin as legal tender, according to news reports.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens