These are also known as Volcano Bonds.
On January 11, 2023, El Salvador passed the Digital Asset Issuance legislation which paved the way for the country to create Bitcoin backed bond. These are also being called "Volcano Bonds" due to the location where a renewable cryptocurrency mining hub powered by hydrothermal energy from the Conchagua volcano.
Bitcoin Bonds will be used to pay down sovereign debt, fund the construction of the Bitcoin City, and create Bitcoin mining infrastructure.
Under the government’s proposal, the bonds would be denominated in U.S. dollars and pay 6.5% annually for ten years with a five-year lock-up period, with fast-track access for citizenship in the country.
The target is to raise $1 billion with half of the amount going to a special empowerment zone. This area would offer tax advantages, crypto-friendly regulations and otherwise incentivize Bitcoin businesses for its population.
In October 2021, El Salvador became the first country in the world to make Bitcoin legal tender. President Nayib Bukele is pushing the nation in the direction of embracing digital assets in spite of mounting debt and risk of default.