Adam Back suggests El Salvador should convert mined gold into Bitcoin, enhancing its financial strategy and security

• El Salvador plans to repeal its gold mining ban, potentially unlocking $3 trillion in mineral resources.
• President Bukele aims to transform the economy through responsible mining and environmental restoration initiatives.
• Global gold prices might drop if El Salvador’s large gold reserves are mined and introduced to the market.

El Salvador is poised to reevaluate its stance on gold mining, aiming to revoke a ban that has been in place since 2017.

President Nayib Bukele is planning to propose to the Legislative Assembly the repeal of the ban, opening the country to potentially mine significant gold reserves that, by some estimates, could dramatically transform the nation’s economy.

“If we make a responsible exploitation of our natural resources, we can change the economy of El Salvador overnight, and that is apart from everything we have been doing here all this time. We are going to invest money in recovering our bodies of water,” the president said recently.

President Bukele suggests that responsible mining could quickly revolutionize El Salvador’s economic landscape, complementing ongoing national projects. He has highlighted plans not just to mine gold but also to invest in environmental restoration , particularly in the recovery of the nation’s water bodies, acknowledging the environmental impacts mining has traditionally had.

El Presidente Nayib Bukele confirma que se solicitará la derogación de la Ley contra la Minería. Asimismo, anunció un plan para limpiar el 95% de ríos, que, según estudios, han sido contaminados desde hace años. pic.twitter.com/eY2wYNbh7S

— Radio YSKL 📻 💻 📲 (@radioyskl) December 5, 2024

Financial experts estimate that El Salvador harbors a vast amount of gold worth potentially up to $3 trillion. This wealth, if responsibly mined and managed, could increase the country’s economic prospects by about 8,800%. 

Such a development could fundamentally change the financial fabric of El Salvador, bringing in immense wealth but also presenting significant environmental and social challenges given the historically contentious nature of gold mining in the region.

Critically, the public in El Salvador has been resistant to mining due to environmental concerns, a sentiment strong enough to support the initial mining ban. Despite potential economic benefits, the extraction of large gold reserves could depress global gold prices. 

Pierre Rochard, a bitcoin activist and vice president of research at Riot Platform, suggests that exploiting these reserves could “massively dilute” the global supply of gold, reducing its market price.

mine the gold, buy #bitcoin . another bitcoin mining method.

— Adam Back (@adam3us) December 9, 2024

Further stirring the economic strategy pot, Adam Back, a noted cypherpunk, advised Bukele to convert gold into bitcoin, leveraging the cryptocurrency as a new form of national treasury, enhancing financial security against potential devaluation in gold.

President Bukele’s response to such advice underscores his aggressive stance on utilizing national resources to ensure economic stability and growth.

His approach, aiming to combine resource extraction with technological investment in cryptocurrencies, suggests a pioneering shift towards integrating traditional and crypto assets.