The visit of HH Prince Sheikh Tamim bin Hamad Al-Thani of Qatar to El Salvador today September 13th 2023 has raised questions that bitcoin mining could be part of the discussions The news of the visit sparked the interest and imagination of some influencers and enthusiasts in the crypto community. Could Qatar be part of El Salvador’s bitcoin mining project? Some believe that this could be part and parcel of the discussions while others don’t. So what is the commotion all about?
The visit of Qatar’s Prince comes as a response to an invitation from the President of EL Salvador. As per official releases, the Prince will discuss ways to enhance bilateral relations and cooperation in various fields, in addition to exchanging views on various regional and international issues of common interest. In addition a number of agreements and memorandums of understanding will be signed in various areas of cooperation.
Following this announcement, a tweet by Bitcoin Archive stated, “The Emir of Qatar will meet with President Bukele in El Salvador this week. Imagine Qatar adopting Bitcoin and also mining with flared gas,” garnered huge engagement and interest. How plausible this statement and how realistic it is will have to be seen to be believed.
Well let’s see how possible this scenario really is.
El Salvador
First El Salvador has been at the forefront of crypto adoption making headlines in 2021 as the first country to adopt Bitcoin as a legal tender alongside the U.S. dollar. The decision of El Salvador President Nayib Bukele raised concerns with the IMF, World Bank and the wider international financial sector, yet El Salvador’s President stood by it.
The El Salvador government went even further when Volcano Energy group announced in June of this year that El Salvador was entering into a public private partnership worth $1 billion to create the world’s largest Bitcoin mining farms
As per the news, the project would start with an initial $250 million, backed by key Bitcoin industry leaders such as Tether in collaboration with renewable energy developers. The 241 MW Bitcoin mine would be located in Metapán region of El Salvador, and would be powered with 169 MW of solar and 72 MW of wind energy to bring computing power of over 1.3 exahash/second (EH/s.
When announced it was also noted that the El Salvador government would play a crucial role in planning and execution and had secured a preferred participation equivalent to 23% of revenues. The outside investors would own 27% of the venture and the remaining 50% would be “reinvested” to expand energy production and mining capacities.
So obviously El Salvador is seen by many as a strong proponent of Bitcoin and crypto in general, but will that actually translate into an agreement with Qatar?
Qatar
As for Qatar it rests on the other side of the spectrum when it comes to Bitcoin and cryptocurrencies. Qatar’s central bank had banned and warned on several occasions from dealing with Bitcoin or any other cryptocurrency because of its volatile nature and because of crypto’s use in financial crimes.
Yet despite the warnings, crypto trading and investing in Qatar flourished to the point where Qatar’s Ahli Bank in May 2023 warned customers once again against trading, buying and selling virtual assets and currencies through accounts and banking services, citing the reasons as being associated with high risks.
A Triple A report in January 2023 put Qatar’s crypto ownership at 0.9 percent of the population with major international and regional exchanges serving clients in Qatar.
In A FATF report in May 2023, they mentioned that Qatar needs to work more on improving its risk understanding, implementation of TFS (Targeted Financial Transactions) and NPO (Nonprofit organizations) preventive measures for virtual assets, and virtual asset service providers. As mentioned in their report, “ Qatar has a very strong level of compliance with the FATF Standards, with only minor improvements needed in relation to risk understanding, implementation of TFS and NPO preventive measures, VAs and VASPs, wire transfers, transparency for legal persons and arrangements and cross-border movements of cash and BNIs.
While these statements may have killed any chance for legalization of crypto in Qatar, it has not stopped Qatar from moving forward with its blockchain and digital asset strategy with Qatar announcing the launch of its digital assets Lab in October.
So would Qatar jeopardize its position visa vie FATF or its blockchain and digital assets strategy by signing an agreement with El Salvador for Bitcoin mining? The answer is a plausible no.
We might likely see green hydrogen projects in El Salvador similar to initiatives taken a couple of years ago by Qatar Energy and Royal Dutch Shell in the UK, or Qatar Energy’s agreement with Korea’s Hydrogen Convergence Alliance (H2Korea) to accelerate cooperation for hydrogen-related technologies worldwide.
On the other hand if the governmental leaders of UAE or Oman had planned visits to El Salvador, that would spark excitement given the advancements both countries are making when it comes to crypto mining datacentres.
