Energy-intensive cryptocurrency "mining" is done by computers, and has come under criticism from environmentalists as a big source of demand for mostly fossil fuel derived electricity.
Last month, El Salvador became the first country to adopt bitcoin as legal tender alongside the U.S. dollar, which for years had served as the country's sole official currency.
Daniel Alvarez, president of the state-run Lempa River Hydroelectric Executive Commission (CEL), said El Salvador has the potential to generate electricity through hydroelectric, solar, wind and tidal power projects.
"The possibilities are endless here, it's just about willpower and that we have the means and the ability to start these projects," Alvarez said.
The Salvadoran government in September began harnessing geothermal energy for bitcoin mining from a plant at the base of the Tecapa volcano, 106 kilometers (66 miles) east of the capital, that is owned by a company which is part of CEL.
The plant generates about 102 megawatts, and the government plans to add another five megawatts next year. At present, 1.5 megawatts are being allocated for bitcoin.
Alongside the plant, officials have set up a room inside a shipping container to house 300 computers that process cryptocurrency transactions.
The Tecapa plant along with another geothermal plant in northwestern El Salvador supply between 23% and 24% of the national power grid, according to authorities.
(Reporting by Nelson Renteria; Editing by Sandra Maler)