Volcano Energy, a company based in El Salvador, has announced a public-private initiative to invest $1bn in a Bitcoin mining farm.

In a statement on Twitter, Volcano Energy said the proceeds will be used to set up a 241MW renewable energy project.

Located within the municipality of Metapán, Santa Ana, the park will generate 72MW of wind energy and 169MW of photovoltaic solar energy.

With the initial investment of $250m from “key Bitcoin industry leaders”, the project is expected to power the Bitcoin mining farm.

Tether, an entity that operates a cryptocurrency pegged to the US dollar, is participating in the initiative, it said in a separate statement.

Initially, the mining farm is expected to have a computational power of over 1.3 exa hashes per second (EH/s).

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Bitcoin mining farms employ powerful computers that are connected to the internet and consume a significant amount of energy. The energy-intensive process has faced criticism from environmental groups, who fear it will worsen the climate crisis.

Volcano Energy chairman Max Keiser said: “El Salvador has the volcanoes, natural resources, the talent, and now the expertise and support of Tether to be a Bitcoin mining powerhouse. Bitcoin Country will now also be known as Bitcoin mining country.”

According to Volcano Energy, El Salvador’s government will be a key player in the planning and implementation of this project, and has secured a preferred share of up to 23% of the profits.

The investors will hold 27% of the project and the remaining 50% will be reinvested in increasing energy production capacity and enhancing Bitcoin mining.

Tether chief technology officer Paolo Ardoino said: “We are excited to be among the initial pioneers of renewable energy in El Salvador as an equity investor and advisor.

“Volcano Energy represents one of the most ground-breaking and strategic initiatives we are investing in and we look forward to working alongside [Volcano Energy CEO] Josue Lopez and his team to make El Salvador a global force in renewable energy production.”