What is the break-even point for Nayib Bukele's Bitcoin Experiment?

 

 

Six months ago Bitcoin became a legal tender in El Salvador, thanks to the Bitcoin Law that was passed by the Salvadoran Congress. The law allowed Nayib Bukele to purchase Bitcoins at will, and people in El Salvador are worried about how much money is being used in buying crypto assets, to the point that even the IMF urged El Salvador to drop Bitcoin as a legal tender.

But, how much money has been used to adopt Bitcoin in El Salvador?

I've done some calculations, and it is not $70 millions, as stated by some Reddit users. Warning: The data has been gathered from press releases and tweets because the Nayib Bukele Administration is not releasing any financial data.

Nayib Bukele confirmed a couple of weeks ago that the Chivo Wallet has 6.5 million users. If you multiply the amount the users with the $30 dollars airdrop, you can calculate that the government spent over $195 million dollars to buy Bitcoin: 

Source: https://diarioelsalvador.com/chivo-wallet-incorpora-a-4-millones-de-nuevos-usuarios-en-el-salvador/181251/ 

One of the key advantages of the Chivo Wallet was that you could withdrawn or deposit money in the Chivo ATMs. Last year, over 1,500 Athena ATMs were purchased, costing us one million dollars (shipping and installation not included): 

Sources: 

https://mobile.twitter.com/nayibbukele/status/1405299636013764610?lang=en 

https://www.reuters.com/technology/athena-says-will-install-1500-cryptocurrency-atms-el-salvador-2021-06-25/

There were some rumors about the Chivo Wallet using Algorand rails to build the payments infrastructure. It turned out to be true: back in September the Salvadoran government awarded a contract to Koibanx, for an undisclosed amount: 

Source: https://www.algorand.com/resources/ecosystem-announcements/el-salvador-signs-agreement-with-koibanx-to-develop-its-blockchain-infrastructure-on-algorand 

There is no way to find out how much money is Koibanx going to get with this agreement. I can only speculate that it could be between $200,000 dollars and $5.3 million dollars.

Congress approved another $150 million dollars to create FIDEBITCOIN trust fund:

Source: https://www.asamblea.gob.sv/node/11510 

$4 million dollars spent withdrawn from the FIDEBITCOIN to build the Chivo Pets Hospital: 

Source: https://mobile.twitter.com/nayibbukele/status/1447017312893161478?lang=en 

Note: Nayib Bukele claims the money came from Bitcoin earnings, however he did not sell any Bitcoin, he replaced the FIAT with the price of Bitcoin 

Total money invested in the Bitcoin Law so far: 

USD $420,000,000 

$420 million dollars allocated for the implementation of the Bitcoin law. In contrast, only 130 million dollars are allocated to improve our schools infrastructure: 

Source: https://www.asamblea.gob.sv/node/11682 

Note: Education budget is USD $1,470,000,000 which most of it is spent on teachers salaries, first lady projects, and internet connectivity 

If you want another comparison, only  $13 million dollars are allocated for the Ministry of Environment and Natural Resources.

Source: https://www.asamblea.gob.sv/node/11822

Currently El Salvador has 1,801 Bitcoin in its reserves. In order to break-even, with all the money spent for the implementation of the Bitcoin Law, the price of each Bitcoin must be: 

USD $234,000.00

 Is it possible? Yes it is possible, and more realistic than the one million dollar per Bitcoin projection for the Volcano Bonds.