El Salvador plans to build the world's first Bitcoin City, initially funded with bonds backed by Bitcoin, President Nayib Bukele said, Reuters reports.

According to him, the city, which is planned to be built in the eastern region of La Union, will receive geothermal energy from the volcano and will not collect any taxes other than value added tax (VAT).

"Invest here and make all the money you want," Bukele said in English, dressed all in white and wearing a reversed baseball cap, in the beach resort of Mizata. "This is a fully ecological city that works and is energized by a volcano."

Half of the VAT levied will be used to fund bonds issued to build the city, Bakele said, while the other half will be used to pay for services such as garbage collection, valuing public infrastructure at around 300,000 bitcoins.

El Salvador in September became the first country in the world to accept Bitcoin as legal tender.