El Salvador, known for its proactive stance on Bitcoin, is back in the news with the launch of Lavapool, a Bitcoin mining pool powered by renewable energy.

Two companies, Volcano Energy, an energy producer in El Salvador, and Luxor Technology, a mining pool and software developer, recently announced the inception of Lavapool. This El Salvador-based Bitcoin mining pool pledges to contribute 23% of its earnings to the nation's government. The collaboration is accompanied by bold statements:

"Lavapool exemplifies the advantages El Salvador gains from being a pioneering nation in the Bitcoin ecosystem," states Volcano Energy's CSO, Gerson Martinez. Volcano Energy envisions itself as "a vertically integrated energy and Bitcoin mining company." Luxor's COO, Ethan Vera, emphasizes Lavapool's commitment to reinforcing the ethos of Bitcoin mining, which revolves around "geographical decentralization."

Does this move realize President Nayib Bukele's plan from June 2021 to harness the country's abundant geothermal resources for mining? Will Bitcoin, as long promised, fund the expansion of renewable energy?

The situation is a tad more intricate. Firstly, Volcano Energy isn't a state energy provider but a startup led by Max Keiser, an early Bitcoin adopter known for his vibrant appearances at Bitcoin conferences. He now advises El Salvador's President. Volcano Energy's funding includes an investment from Tether, the issuer of the eponymous stablecoin, which reportedly participated in a billion-dollar investment in June 2023. However, only $250 million seems to have been disbursed so far.

Contrary to what its name suggests, Volcano Energy doesn't derive its power from the country's geothermal volcanic sources but from wind and solar energy. As stated by Volcano Energy in June, "Power generation is split between 169 Megawatts of photovoltaics and 72 Megawatts of wind power." This sets the stage for "establishing one of the world's largest mining farms, starting with more than 1.3 EH/s."

For context, Bitcoin miners currently produce about 413 Exahash and consume around 14.8 Gigawatts. Lavapool would thus account for 0.3% of the hash rate but require 1.6% of the power. These figures appear inconsistent, which could be attributed to various reasons.

Lavapool's earnings will be distributed as follows: 23% to the El Salvador government, 27% to investors, and 50% reinvested into expanding power and mining capacities. This expansion includes tapping into geothermal energy sources, though Volcano Energy remains somewhat ambiguous on this front.

While some media outlets might have misrepresented or exaggerated certain aspects of this announcement, the core remains intriguing and doesn't require any embellishment. Moonbitx observes that with Volcano Energy, a mining provider is, for the first time on a significant scale, establishing its renewable power supply.

This development underscores a promise becoming a reality: Mining is indeed incentivizing the exploration of renewable energy sources. It's happening!