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Salvadoran President, Nayib Bukele speaks during an event in May 2021. El Salvador become the first country to adopt bitcoin as legal tender in June.

Camilo Freedman | SOPA Images | LightRocket | Getty Images

It has been more than a year since El Salvador made history by becoming the first country to make bitcoin legal tender, and so far, 37-year-old resident Edgardo Acevedo has found the nationwide crypto experiment to be relatively anticlimactic.

“I don’t think anything has changed, except that the country is more recognized than before, but the economic life of Salvadorans remains the same or worse than a few years ago,” said Acevedo, a development engineer working in the capital city of San Salvador.

Acevedo, who is also known by the pseudonym Ishi Kawa, tells CNBC that while bitcoin has become a topic of conversation, adoption remains low, and he has personally found that there are very few businesses that accept the world’s biggest cryptocurrency — and even fewer Salvadorans who wish to pay in the digital token.

“What has improved is the issue of violence and crime, but economically, I can say that nothing has changed,” he said.

It has been a rocky time, with the project not living up to the grand promises made by the country’s popular and outspoken president Nayib Bukele.

The use of bitcoin in El Salvador appears to be low, as the currency has lost about 60% of its value since the experiment started and the country still faces plummeting economic growth and a high deficit. El Salvador’s debt-to-GDP ratio — a key metric used to compare what a country owes with what it generates — is set to hit nearly 87% this year, stoking fears that the nation isn’t equipped to settle its loan obligations.

Data from Bloomberg Economics shows that El Salvador tops its ranking of emerging market countries that are vulnerable to a debt default. Even as it retires some of its outstanding debts, the country’s domestic and multilateral loan obligations pose a real threat, in part because the world’s biggest lenders aren’t too keen to give cash to a country betting its future on one of the most volatile assets on the planet.

Pair these economic woes with a renewed war on gang violence and the country is barreling toward uncertainty.

“The government claims the developments as a success, but most local commentators and international watchers are underwhelmed,” Rachel Ziemba, founder of Ziemba Insights, told CNBC.

El Salvador's new bitcoin wallet could totally disrupt the remittance process

Bitcoin uptake appears low

When El Salvador’s Bitcoin Law came into effect Sept. 7, 2021, Jaime Garcia was hopeful that it would fix a few big problems with the way that Salvadorans send, receive and spend money.

As part of the law, prices are now sometimes listed in bitcoin, tax contributions can be paid with the digital currency, and exchanges in bitcoin will not be subject to capital gains tax. But crucially, Bukele promoted the law as a way to expand financial inclusion — which is no small thing for a country where approximately 70% of the population does not have access to traditional financial services, according to the Bitcoin Law.

To help facilitate national adoption, El Salvador launched a virtual wallet called “chivo” (Salvadoran slang for “cool”) that offers no-fee transactions, allows for quick cross-border payments, and requires only a mobile phone plus an internet connection. It aimed to bring users onboard quickly, both to scale bitcoin adoption and to offer a convenient onramp for those who had never been a part of the banking system.

Bukele tweeted in January that about 60% of the population, or 4 million people, used the chivo app, and more Salvadorans have chivo wallets than traditional bank accounts, according to a Sept. 20 research note from Deutsche Bank. Still, only 64.6% of the country has access to a mobile phone with internet, that note says.

But a report published in April by the U.S. National Bureau of Economic Research showed that only 20% of those who downloaded the wallet continued to use it after spending the $30 bonus. The research was based upon a “nationally representative survey” involving 1,800 households.

Garcia, who lives in the Canadian province of Saskatchewan, fled El Salvador when he was 11 after rebels bombed his house, but he keeps in close touch with family and friends who stayed behind — and he sometimes sends money back home, too.

“There are pockets where bitcoin is popular, like in El Zonte, but it’s clear that adoption is not massive,” said Garcia.

“Big chains like McDonald’s, Starbucks, and most merchants at a mall will accept bitcoin — but are people using it? Not too much locally,” he said. “It’s mostly tourists using bitcoin.”

A survey by the El Salvador-based El Instituto de Opinion Publica, a public opinion think tank, found that 7 in 10 Salvadorans do not think the Bitcoin Law has benefited their family economy.

Another survey by the institute found that 76 out of 100 small and medium-size enterprises in El Salvador do not accept bitcoin payments.

“Bitcoin’s first year in effect has transcended from a commercial expectation to an irrelevant topic for traders,” said Laura Andrade, director of El Salvador’s Universidad Centroamericana, according to a CNBC translation of her Spanish-language comments.

Andrade said many large corporations are still advertising that they’re taking payments in bitcoin but are making excuses to not accept the cryptocurrency including saying their system does not work or the bitcoin wallet is out of service.

“The foregoing is evidence that this cryptocurrency, in reality, never had penetration in national commerce,” Andrade said.

“There seems to be evidence that most people used it primarily to get the free money from the government but have not used it on an ongoing basis given volatility and fees,” Ziemba said.

Meanwhile, those who did use the government’s crypto wallet reportedly had technical problems with the app. Other Salvadorans fell prey to schemes involving identity theft, in which hackers used their national ID number to open a chivo e-wallet, in order to claim the free $30 worth of bitcoin offered by the government as an incentive to join.

survey published in March by the Chamber of Commerce and Industry of El Salvador found that 86% of businesses have never made a sale in bitcoin, and only 20% of businesses take bitcoin, despite the Law’s mandate that all merchants accept the cryptocurrency.

“They gave people the wallets, they forced businesses to accept them, but essentially, in my opinion, it’s a big nothing burger,” said Frank Muci, a policy fellow at the London School of Economics, who has experience advising governments in Latin America. “Nobody really uses the app to pay in bitcoin. People that do use it, mostly use it for dollars.”

The experiment also involved building a nationwide infrastructure of bitcoin ATMs, but they’re too far away for many people to use.

Another hope for the chivo wallet was that it would help save hundreds of millions of dollars in remittance fees. Remittances, or money sent home by migrants, account for more than 20% of El Salvador’s gross domestic product, and some households receive over 60% of their income from this source alone. Incumbent services can charge 10% or more in fees for those international transfers, which can sometimes take days to arrive and require a physical pickup.

But in 2022, recent data shows that only 1.6% of remittances were sent to El Salvador via digital wallets. According to the Deutsche Bank report from September, part of the reason bitcoin transfers haven’t caught on has to do with the complications of buying and selling bitcoin for dollars. The report notes that “people who send and receive remittances frequently use informal brokers to convert local currency to and from bitcoin” and extremely volatile prices make buying and selling the cryptocurrency a complex task requiring technical know-how.

“This is a new money, a new way of doing things for a population that is very comfortable with dollars. This is a population that is largely unbanked and would rather deal with hard cash that they can see and feel,” Garcia said.

Miles Suter, the crypto product lead at Cash App, told CNBC on a panel at the Messari Mainnet conference in New York that the government’s 90-day rollout of the chivo wallet and nationwide adoption of bitcoin was “rushed” and that there are still a lot of problems.

“You shouldn’t mandate the acceptance of a specific currency,” said Suter, who spent six months in El Salvador in the runup to the passing of the Bitcoin Law. However, Suter added that the media perception is worse than how things are actually going on the ground.

“I saw and experienced lives being changed by having access to a new emerging monetary standard,” he said.

A look at El Salvador's crypto experiment after making bitcoin its national currency

‘Sleepwalking into a debt default’

Well before Bukele wagered that bitcoin would bandage over longstanding economic vulnerabilities, the country was in a lot of trouble.

The World Bank projects that the Salvadoran economy will grow by 2.9% this year and 1.9% in 2023, down from 10.7% in 2021. But that growth itself was a bounce-back from an 8.6% contraction in 2020.

Its debt-to-GDP ratio is almost 90%, and its debt is expensive at around 5% per year versus 1.5% in the U.S. The country also has a massive deficit — with no plans to reduce it, whether through tax hikes or by substantially cutting spending.

In a research note from JPMorgan, analysts warn that El Salvador’s eurobonds have entered “distressed territory” in the last year, and S&P Global data reportedly shows that the cost to insure against a sovereign debt default is hitting multiyear highs.

Both JPMorgan and the International Monetary Fund warn the country is on an unsustainable path, with gross financing needs set to surpass 15% of GDP from 2022 forward — and public debt on track to hit 96% of GDP by 2026 under current policies.

El Salvador faces a heavy mix of multilateral and domestic debts, including imminent debt repayment deadlines in the billions of dollars, such as an $800 million eurobond that matures in January.

“The domestic debt is very large, relatively short duration and needs to be rolled over frequently,” said Muci, who previously worked at the Growth Lab at the Harvard Kennedy School of Government.

El Salvador has been trying since early 2021 to secure a $1.3 billion loan from the IMF — an effort that appears to have soured over Bukele’s refusal to heed the organization’s advice to ditch bitcoin as legal tender.

Rating agencies, including Fitch, have knocked down El Salvador’s credit score, citing the uncertainty of the country’s financial future given the adoption of bitcoin as legal tender. That means that it’s now even more expensive for Bukele to borrow much-needed cash.

Beyond the fact that global lenders don’t want to throw money at a country that is spending millions in tax dollars on a cryptocurrency whose price is prone to extreme volatility, the IMF’s largest shareholder, the U.S., is targeting Salvadoran officials as part of wider international sanctions against “corrupt actors.”

The president’s efforts to consolidate power have also driven up this risk premium for global lenders.

Bukele’s New Ideas party has control over the country’s Legislative Assembly. In 2021, the new assembly came under fire after it ousted the attorney general and top judges. The move prompted the U.S. Agency for International Development to pull aid from El Salvador’s national police and a public information institute and reroute the funds to civil society groups.

Additionally, El Salvador can’t print cash to shore up its finances. El Salvador ditched its local currency, the colon, in favor of the U.S. dollar. Only the Federal Reserve can print more dollars. Meanwhile, its other national currency, bitcoin, is revered for the fact that it, too, is impossible to mint out of thin air.

“One of the big issues has been the fact that the bitcoin gimmick has distracted from the fiscal and economic challenges of the country and made it more difficult for the country to access IFI lending and preferential terms,” Ziemba said.

Ziemba added that there have been some swaps with major crypto firms that allowed the country to raise cash to pay off the debt due this year, and perhaps early next year, but the long-term debt sustainability remains a challenge.

“They’ve spooked the bejesus out of financial markets and the IMF,” said Muci, who tells CNBC that nobody wants to lend money to Bukele unless it’s at “eye-gouging rates” of 20% to 25%.

“The country is sleepwalking into a debt default,” Muci said.

El Salvador is using volcano power to mine bitcoin

Tourism and presidential popularity solid

On the day the Bitcoin Law took effect, Bukele revealed that the country had begun to add bitcoin to government coffers. Since then, the price of the cryptocurrency has plunged more than 60%, stoked by rising interest rates and failed projects and bankruptcies in the industry.

The government has an unrealized paper loss on bitcoin of around $60 million. None of these losses are locked in until the country exits its bitcoin position.

In aggregate, the entire experiment and all its associated costs have only set the government back around $375 million, according to estimates. That’s not nothing — especially considering the fact that El Salvador has $7.7 billion of bonds outstanding — but to an economy of $29 billion, it is comparatively small.

El Salvador’s millennial, tech-savvy president — who once touted himself as the “world’s coolest dictator” on his Twitter bio — has tethered his political fate to the country’s crypto gamble, so he has a very big incentive to make it work in the long run and to pay off the country’s debt in the interim. Bukele faces reelection for another five-year presidential term in 2024.

At least El Salvador’s big bitcoin gamble has been a win in terms of attracting bitcoin tourists.

The tourism industry is up 30% since the Bitcoin Law took effect, according to official government estimates. The country’s tourism minister also notes that 60% of tourists now come from the U.S.

The bitcoin experiment hasn’t hurt the president’s popularity either. Bukele’s approval ratings are north of 85% — thanks in large part to his tough-on-crime approach to leading. That’s no small thing to a country that was more dangerous per capita than Afghanistan five years ago.

Suter said the project has also introduced many locals to the concept of savings, noting that before the Bitcoin Law, much of the population didn’t have a way to digitally hold their money and transact among one another.

“It was all cash — and the cash that you earned that week, you typically spent it, because there wasn’t much ability to dream of growing it through investment.”

How bitcoin's mining activity could point to a bottom for the cryptocurrency

The president upped the ante in November when he announced plans to build a “Bitcoin City” next door to the Conchagua volcano in southeastern El Salvador. The bitcoin-funded city would offer significant tax relief, and geothermal energy rolling off the adjacent volcano would power bitcoin miners.

But now, Bitcoin City is on hold, as is the $1 billion bitcoin bond sale, which was initially put on ice in March because of unfavorable market conditions.

“Ultimately, El Salvador’s problems are just tangential to currency,” Muci said.

“The plane is gonna crash eventually, if they don’t change things,” he said — “if they don’t raise taxes, cut spending, start being much more disciplined, convincing markets that they’re sustainable.”

“Bitcoin doesn’t solve any of El Salvador’s important economic problems,” he added.

Bitcoin falls below $19,000 as Ethereum upgrade kicks into full gear

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Forbidden fruit: new Volkswagen Passat eHybrid Match and Black Editions

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Forbidden fruit: new Volkswagen Passat eHybrid Match and Black Editions

Wagons don’t get a lot of love Stateside, with American buyers choosing SUVs over – well, pretty much every other type of vehicle imaginable. That’s our loss, as the latest plug in hybrid versions of the Volkswagen Passat are here to prove.

The latest Passat Variant eHybrid (or, in some markets, Vario, which is what the Europeans like to call wagons) is different from the version we get in the US. Unlike the domestic version which is based on a low-cost platform specific to the US and China, the Euro-market version is built on the MQB platform that underpins VW’s flagship Arteon four-door coupe and both VW‘s and Audi’s entry-luxe SUVs.

That might seem weird, since VW has sold more than 34 million units sold worldwide and the Passat is the second top-selling Volkswagen of all time (behind the Golf and ahead of the Beetle). It’s understandable, then, that the European execs are pretty proud of their Passat.

The latest evolutionary stage of the modular transverse matrix (MQB evo)forms the highly innovative technical basis of the ninth Passat generation. Thanks to the significant economies of scale of the MQB evo, Volkswagen has again democratised numerous high-tech developments and made them available for hundreds of thousands of drivers. The two completely newly developed plug-in hybrid drives (eHybrid) are a perfect example of this. In combination with a new battery, they make all-electric ranges of around 100 km possible. This distance turns the new Passat Variant into an electric vehicle for everyday life – this is additionally ensured by short charging times as the battery can now be charged at AC charge points with 11 kW instead of the previous 3.6 kW. The Passat Variant eHybrid can even be charged with up to 50 kW at DC fast charging stations. In addition, the combination of electric drive motor and new economical turbocharged petrol engine provides overall ranges of around 1,000 km.

KAI GRÜNITZ
Member of the Brand Board of Management, VW

In case the jealous American wago-philes reading this aren’t jealous enough, Volkswagen has announced new Passat eHybrid Match and Black Editions that add nearly £5k of options for the new model year effectively for free.

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“Match is better equipped than the outgoing Life, with additional features including metallic paint, VW’s IQ.Light LED matrix headlights, tinted rear windows and an ‘assistance pack’ which adds area view and emergency assist,” reports Alastair Crooks, from the UK car site AutoExpress. “The new Black Edition comes with metallic paint, 19-inch alloy wheels, a panoramic sunroof, tinted rear windows (darker than the Match’s), heated front and rear seats, a head-up display, a 15-inch central touchscreen and the same assistance pack as the Match.”

The entry-level Match replaces the previous Life trim, but costs the same £45,555 (about $60,500), while the Black Edition costs the same as the outgoing R-Line, from £48,900 (about $64,950). The order books open 14 August.

You can take a look at some of the VW press photos of the European Passat wagon Variant, below, then let us know if you’d rather have this for $60K or the discount American version in the comments.


SOURCE | IMAGES: VW, via AutoExpress.


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E-quipment highlight: Wirtgen Vögele launches new electric MINI pavers

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E-quipment highlight: Wirtgen Vögele launches new electric MINI pavers

Wirtgen Vögele recently revealed the battery-powered MINI 500e and the MINI 502e electric pavers. With an electrically heated screed, a range of paving widths, and zero-emission operations, they’re paving a greener, cleaner path.

Co-developed by Wirtgen Vögele and Italian road equipment manufacturer C. M. S.r.l., the new electric pavers will enable contractors to bid on construction projects that are subject to even the strictest noise and emission limits – but the company is quick to point out that they’re capable enough to serve on conventional job sites.

“These pavers excel on small-scale construction projects and jobs covering a small area – the type of work for which paving crews would not previously have been able to use machines,” reads the official Wirtgen Vögele copy. “Thanks to their elimination of manual labor, among other benefits, the new MINI pavers improve the efficiency and quality of asphalt paving, particularly in the construction of sidewalks and drains, as well as in tight downtown locations.”

The new Wirtgen MINI 502e (the one with wheels) and the MINI 500e (the one with crawler tracks) offer pave widths from 0.25 to 1.8 m, feature a battery-electric drive outputting 22.8 kW (30 hp), and your choice of either a 15 kWh or 22 kWh 48V li-ion battery – good enough battery capacity for up to 16 hours of continuing paving. Both versions can be fully charged on a conventional 110/120 “L1” power socket in about eight hours.

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Electrek’s Take


Wirtgen Vögele MINI 500e; via Wirtgen.

At the end of the day, it doesn’t matter what the federal EV incentives are or even what the guys on your crew want to operate. What matters is that construction noise upsets Mrs. Clancik’s terrier, and she will force the town council to keep the noise down all by herself.

If your construction company wants to bid on any municipal work, that means you’re gonna have to stay quiet. Maybe even keep the smells to a minimum, too. Buying electric equipment means you can do both.

SOURCE | IMAGES: Wirtgen, via Construction Equipment International.


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Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.

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Is this Hyundai IONIQ the safest affordable EV you can buy?

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Is this Hyundai IONIQ the safest affordable EV you can buy?

Car brands like Volvo, Mercedes-Benz, and Tesla have built up solid reputations for safety, but their ultra-safe vehicles often come with a premium price tag. The good news for car buyers looking for a deal, but still prize safety, is that there’s an all-electric Hyundai for under $40K that scores top marks on the IIHS’ toughest new safety tests.

SKIP THE STORY: take me to the deals.

Last Februray, the Insurance Institute for Highway Safety (IIHS) established new benchmark criteria that included stricter side-impact and moderate overlap crash safety standards, improved safety for back seat passengers, and a stronger emphasis on pedestrian detection in low light.

“We followed the tougher requirements we introduced last year with another major update to the award criteria,” explains IIHS President David Harkey. “(The 2024) winners are true standouts, offering the highest level of protection for both vehicle occupants and other vulnerable road users.”

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The Insurance Institute for Highway Safety is making it harder to earn its Top Safety Pick and Top Safety Pick+ awards from 2024, challenging manufacturers to offer better protection for back seat passengers and improve their pedestrian crash avoidance systems.

IIHS

We’ve covered a few of the standout performers already over the past year-plus since the new safety standards were awarded, including the Rivian R1T (the only electric pickup to earn the coveted Top Safety Pick+ award), Audi Q6 e-tron, and the Tesla Model Y … but what we haven’t written about was the fact that the Hyundai IONIQ 6 was the only electric sedan to get a Top Safety Pick+, as well.

Why it matters, now


Hyundai-free-charger-EVs-IONIQ-6
Hyundai IONIQ 6 Limited, via Hyundai.

With the average transaction price of a new car at $48,907 and the looming demise of the $7,500 Federal tax credit accelerating demand for EVs (even for those that may not qualify), new EV buyers looking for a dependable commuter with long-range chops, ultra-fast charging capabilities, and the latest infotainment tech for under $40,000 have precious few options. And, if that Top Safety Pick+ rating is a must have? They only have one.

The good news is that it’s an excellent option. The 2024 version was named Car and Driver‘s 2023 EV of the Year, and led our own Scooter Doll to ask, “is any other automaker delivering more value in high-tech EVs right now?” and Nigel Evans over at CarBuzz to write, “Comparing the Ioniq 6 to its rivals is also an interesting exercise. For example, the Tesla Model 3 RWD now costs more than $40,000, with questionable interior design and layout and no Top Safety Pick+ from the IIHS. You can’t get the Chevrolet Bolt or Bolt EUV anymore in the budget EV sector, but they also lacked fast-charging capability.”

With up to 342 miles of range and a starting MSRP of $37,850 with all trims eligible for $7,500 in Retail Bonus Cash through Labor Day plus dealer discounts (if you can get them) bringing the price down even further, there’s a nonzero chance car buyers will be able to score a 2025 Hyundai IONIQ 6 for a sub-30K transaction price. Other featured deals include 0% interest financing for up to 48 months on any 2025 IONIQ 5 models in dealer inventory for well-qualified buyers, while lease buyers able to get a new SE model for $199/mo. with $3,999 down.

SOURCE | IMAGES: Hyundai, IIHS; via CarBuzz.


If you’re considering going solar, it’s always a good idea to get quotes from a few installers. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. It has hundreds of pre-vetted solar installers competing for your business, ensuring you get high-quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use, and you won’t get sales calls until you select an installer and share your phone number with them. 

Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.

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