A society in which bitcoin is the main currency still seems like a utopian idea, but movements emerging in Latin America are trying to bring this concept a little closer to reality.
The El Zonte beach community in El Salvador has pioneered the adoption of cryptocurrency — something that began long before bitcoin became legal tender in the country — and now a similar experiment is spreading to neighboring Guatemala. Instead of a beach, a lake is the main setting this time.
Like El Salvador, it was a gringo that started the movement in Guatemala. American Patrick Melder launched the Bitcoin Lake project in the spring of 2021 in the city of Panajachel, the largest lakeside community in Atitlán, the deepest in Central America, surrounded by escarpments and three volcanoes.
Patrick Melder and his family visited Panajachel each year to do volunteer work with young people at Centro Educacional Josué. Inspired by the El Zonte experiment, the American saw that bitcoin had the potential to help that community grow. After all, Guatemala shares a similar socioeconomic scenario with El Salvador: a poor country, with scarce job opportunities and high rates of corruption and unbanking.
A Guatemalan named Eiliazar Ajquijay joined the project after understanding the potential of bitcoin and began to spread the word within the community where he was born.
“I met bitcoin with Patrick. He was here last year with a t-shirt that said ‘bitcoin’ and I asked him what that was… that’s when it all started”, said Eiliazar in a conversation with the Bitcoin Portal.
He explains that, unlike El Zonte, the Panajachel experiment is still in its very beginnings, with the focus at this point on getting people to understand what bitcoin is. They teach classes on cryptocurrency, blockchain and mining to children and teens in the community, and they also have a radio show that talks about bitcoin every Monday night.
One of the works of the project is to encourage local businesses to use cryptocurrency as a form of payment. So far, there are 65 different places in Panajachel that accept bitcoin.
“People [da comunidade do bitcoin] come here and help with what they can, some teach English, others help set up cryptocurrency wallets, others donate mining machines to schools. So everything is very popular. We are used to systems and structures, but here it is an organic movement of the crypto community with the residents,” explains Bill Whittaker, bitcoin investor and miner who helps with the Bitcoin Lake mining project.
The start of mining on Bitcoin Lake
Mining seems to be a big bet for Lake Bitcoin, especially the one that uses alternative energy sources that do not generate additional costs for the operation. Eiliazar, for example, went viral in the crypto community by showing how bitcoin is mined even with used cooking oil.
Panajachel’s first bitcoin mining machines (ASICs), used by Eiliazar in his experiment, were brought to Guatemala by two American teenagers, one of them Bill’s daughter.
When the bitcoiner’s daughter was in her final year of high school and needed to do some final work for school, she sought out her father’s help to build a sustainable bitcoin mining project.
“We started looking at all types of green energy, wind and solar. We traveled to Guatemala for a visit because we knew about Patrick Malder’s project. The girls had some ASICs donated by a big US company and they installed the first one in Guatemala, and that started mining in Lake Bitcoin”, he says.
There, Bill also met Eliezer and together they went after the main part of their plan: a diesel engine. When this engine was built by Rudolf Diesel, Bill recalls, it was powered by vegetable oil of different types that can be grown on land — “before big industry got hold of this technology,” the bitcoiner nudged.
“After a lot of searching, we found under mountains of these huge engines, a diesel generator from the 70s that is no longer manufactured. We cleaned it and took it to Panajachel and Eiliazar went looking for cooking oil with residents of the community and some restaurants.”
On top of the bed of a pickup truck, they hooked up an ASIC to the generator, powered with filtered cooking oil, and began mining bitcoin for the first time.
“You could smell chicken in the air, and I swear to God, 90 seconds later, we started mining. Was on the phone with a friend screamin’we’re hashing man!‘” Bill recalls.
A new look at mining
For Bill, the experiment overturns a narrative that any form of bitcoin mining is harmful to the environment. On the contrary, the activity can be beneficial in cases like Bitcoin Lake, helping to give new meaning to something seen as garbage, highly harmful if disposed of incorrectly.
But the main benefit is that mining can also be converted into extra income for the community, since using the generator there is no electricity cost in the activity.
While the project is still too experimental to generate a significant profit, that could change if the scale of the operation is increased, which is why Bill and Eiliazar are trying to bring more machines to Guatemala.
The idea behind this is that if the community finds a way to generate electricity to run the miners, they will be financially incentivized to do so. The plan is to take the thousands of older generation ASICs that are backed up by companies that can no longer profit from these equipment.
“If we can hook up the ASIC to a generator that’s running on used cooking oil, and we’re getting that oil for free, that’s something the community is going to want to help with because they know the profits generated from that will come back to them. People will then wonder what else they can generate energy with. How about leftover food? What if we separate the organic waste and start piling it up to generate raw material through a biodigester?”, envisioned Bill.
For him, this is how a truly circular economy is created beyond the use of bitcoin as a currency: “Their waste is turning into energy that is being used to generate income for the community.”
The future of Guatemala’s crypto community
As the project is still in an embryonic stage, it is unknown if everything Lake Bitcoin proposes to do will come to fruition, but in the view of bitcoiners operating in the region, Guatemala appears to have been tailor-made for a decentralized circular economy experiment.
“Developed countries don’t need to be self-sovereign because there is a social system to help these places maintain themselves. In Central American countries, however, there is not the same safety net, there is no one there to hold people’s hands. Now it’s time for them to rebuild and get rid of the robberies that hold back these countries’ growth,” says Bill.
In his view, bitcoin has a chance of consolidating itself in communities like Panajachel in Guatemala and El Zonte in El Salvador, as the basis for an economy that feeds itself:
“When you ask what this is going to look like in the future, I imagine an economy that works with a new form of money that will be based on sovereignty, consensus and people connecting and working together for the greater good of the community. I refer to this as digital spirituality. Bitcoin connects us and very quickly filters out the crap that is not worth it.”
Eilizer, who grew up in Panajachel, which is one of several villages around Lake Atitlán, believes the project has enough strength and merit to spread to neighboring communities.
“Bitcoin solves a lot of problems that we have here in Panajachel. I think people will look to us as an example and everyone will join in. We have 17 cities around the lake and one of my goals is to go to all of them and educate people about bitcoin, until our mining community is huge in a few years,” envisions the Guatemalan.
Want to trade more than 200 digital assets on the largest exchange in Latin America? Discover the Bitcoin Market! With 3.8 million customers, the MB platform has already handled more than BRL 50 billion in trade in. Create your free account!