El Salvador's Bitcoin bill has now been in place for two years, how has the country fared since then?

On June 5, 2021, El Salvador made waves in the financial sector when it first unveiled a bill to make bitcoin legal tender in the country. Since then, the North American country has continued to use BTC as the country’s legal tender and has invested heavily in the digital asset. Here's how the country has performed since then.

El Salvador Gives UpBetBitcoin

Shortly after President Nayib Buckle passed the bill and made bitcoin legal tender in El Salvador, the country will start buying bitcoin in large quantities. The first purchase was made on September 6, 2021, the day before BTC officially became legal tender in the country, and the country purchased a total of 400 BTC at an average price of $46,811 for $18.724 million.

In the coming months, Bukele will double down on his decision to use the country's funds to invest in cryptocurrencies, ignoring warnings from financial institutions such as the International Monetary Fund (IMF) to stop doing so.

The next purchase occurred a day later, on September 7, for 150 units for approximately $6.9 million. Since then, El Salvador has continued to buy BTC on a semi-consistent basis, and as of June 30, 2022, when it last purchased 80 BTC at an average price of $19,000, worth $1.52 million, its total BTC reserves had reached 2,381 at that time.

Total BTC purchases in El Salvador | Source: BuyBitcoinWorldwide

However, El Salvador's dollar cost averaging (DCA) has so far not helped its position. Since 2021, the country has spent a total of $103,233,360 on Bitcoin at an average price of $43,357. At current prices, El Salvador’s BTC reserves are worth about $61.3 million, which means that the country’s BTC investments are losing $40 million.

BTC Adoption in China

Since September, BTC has operated as legal tender in El Salvador, allowing residents to use the cryptocurrency to pay for goods and services. However, adoption has not been as rapid as expected as the US dollar remains dominant in the country.

Following the official 2021 announcement, there were reports of protests against the use of BTC as legal tender, with many pointing to the security and economic risks of using the volatile digital asset as legal tender. Even today, those concerns remain top of mind for lawmakers.

BTC retests $26,000 resistance | Source: BTCUSD on TradingView.com

In May, U.S. Senators James Risch, Bob Menendez and Bill Cassidy introduced a bill requiring El Salvador to report on the country’s adoption of BTC. The bill, called the El Salvador Cryptocurrency Accountability Act, proposes to assess “risks to El Salvador’s cybersecurity, economic stability, and democratic governance.”

President Bukele has yet to respond to the bill, which provides a 90-day window for the plan to be presented to a congressional committee involved in the matter.

On June 5, Reuters reported that El Salvador had formed a public-private partnership to invest $1 billion to create a large bitcoin mining farm. Volcano Energy confirmed this, revealing that the country will initially pour $250 million into the project as it looks to build one of the largest BTC mining farms in the world.