El Salvador Weekly: Minister Defends Losses

On June 10, El Salvador was down about $38.1 million on its bitcoin investment.

By Friday (June 17), that number had grown to $57.6 million.

That’s $19.5 million out of the Salvadoran treasury in the space of a week, thanks to a plummeting bitcoin amid the first deep freeze of what’s shaping up to look a lot like a Crypto Winter hit.

Of course, those numbers assume the $105 million outlay at an average price of about $46,000 cited by Bloomberg, with bitcoin at about $29,100 last week and $20,600 this week.

According to the news outlet ElSalvador.com, the government of President Nayib Bukele spent an estimated $375 million on the project to make bitcoin a legal tender in the country, if you include the cost of the Chivo Wallet’s $30-per-person bonus intended to incentivize widescale use of bitcoin.

The effort has failed dismally. Only 20% of the population are still using the wallet, and 20% of businesses are accepting the cryptocurrency, despite being legally required to do so.

This kind of story tracking declines in the bitcoin investment have become a weekly staple for a number of local newspapers and other outlets.

The trend finally drew a fairly reasonable response from Finance Minister Alejandro Zelaya, who said in a news conference that he has seen reports that say “El Salvador is being dragged down by a fiscal risk of $40 million.”

With more than a little sarcasm, he added, “Oh my God! Our General Budget of the Nation is almost $8 billion; $40 million does not even represent 0.5% of our budget.”

Besides, he argued, the “alleged loss of $40 million has not occurred, because we have not sold the coins, they have not [been] disposed of.”

That’s what more or less every bitcoin and cryptocurrency supporter is saying now.

Of course, there’s another side to the story, which is that the adoption of bitcoin as legal tender has butchered the country’s bond ratings. That has cost El Salvador quite a lot when borrowing money on the public…

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