Bhutan, the small Himalayan kingdom, has quietly, but decisively, become one of the world’s most important actors in the largely unregulated world of cryptocurrency. The reclusive country has been mining Bitcoin for several years, amassing holdings worth over $600 million as of April 9. Bhutan’s strategic investment in Bitcoin is valued at more than 30 percent of the entire nation’s GDP. It illustrates the nation’s bold approach to fostering economic growth while pushing towards a new technological frontier. With a finite supply of 21 million Bitcoins, Bhutan's early entry into the mining landscape has proven to be a potentially lucrative venture. Utilizing its abundant hydropower resources to power supercomputers, Bhutan is solving complex algorithms to earn Bitcoin, solidifying its position in the digital economy.
Investing in Digital Infrastructure
Bhutan’s adventure with Bitcoin mining is born from a larger idea — of using innovative technology to spur national development. King Jigme Khesar Namgyel Wangchuck has ardently advocated for Bhutan to develop its information and communications technology.
“Being a small nation makes us a smart nation – this is not out of choice but out of necessity,” - Jigme Khesar Namgyel Wangchuck
“Technology is an indispensable tool that will be necessary to realise this aspiration.” - Jigme Khesar Namgyel Wangchuck
This far-reaching vision has energized concrete actions. The federal government is starting to do just that as it seeks to fund and promote industry-digital integration across the economy.
Bitcoin is the first and original decentralized cryptocurrency, invented in 2008. It’s decentralized, meaning that it runs on a global peer-to-peer network and is not controlled by any one government or entity. This feature suits Bhutan’s wish to have more financial independence and diversification of its financial streams.
Bhutan is going all-in on Bitcoin mining. This action largely underscores their approach to exploit every natural resource and use their technological prowess to drive economic growth. The country’s vast, low-cost hydropower resources give it a ready-made sustainable and cost-effective energy source to power the energy-intensive Bitcoin mining operations.
Hydropower and High-Tech Mining
Bhutan’s approach to Bitcoin mining is deeply connected to its long-term vision for sustainability. The country uses its hydropower plants to run the world’s most advanced supercomputers solving today’s toughest challenges. These ventures, in exchange, produce highly coveted Bitcoin incentives.
The process requires powerful computers using advanced techniques to solve complex mathematical equations. We rely on these solutions to settle bitcoin transactions. We then concatenate them into a block and add them to the blockchain, the decentralized public ledger that records every Bitcoin transaction. Miners receive newly mined Bitcoins as an incentive for their computational work. Finally, they can each compete to add those Bitcoins to the blockchain.
“Instead of exporting [hydropower] at a very cheap rate, we are using it to mine Bitcoins in the high mountains of Bhutan,” - Tenzing Lamsang
This creative approach brings in new revenue while building on the value of Bhutan’s cultural and environmental assets.
Bhutan utilizes its abundant hydropower resources to mine Bitcoin. By adopting this strategy, the nation can unlock its abundant natural resources to flow into digital assets that help the nation fund development projects while diversifying the country’s economy beyond fossil fuels.
Balancing Tradition and Modernity
So Bhutan’s adoption of Bitcoin needs to be considered through the lens of its distinctive cultural and environmental values. The small nation has gained international recognition for its commitment to GNH. This new development philosophy prioritizes citizen’s health over economic indicators.
Bhutan does very aggressively done particularly foreign direct investment. To respond, they ensure that new industries match their values before admitting an industry into the country.
“We have been mindful to be very careful about foreign direct investment,” - Tobgay
“We have been careful about allowing industries that would harm the environment, that would pollute our air, that would undermine our culture.” - Tobgay
The southern part of the country is developing a new special administrative region and economic zone, Gelephu Mindfulness City. This ambitious applicability project is focusing on how to better merge sustainability and wellbeing with commercial development. Bhutan restricts the number of tourists by charging a sustainable development fee of $100 daily to foreign tourists.
On the surface, bitcoin mining may seem like an antithesis to these values. For Bhutan, it’s an opportunity to increase economic self-reliance and fund greater efforts towards their sustainable development initiatives. Prime Minister Tshering Tobgay has been keen to stress the strategic rationale for Bhutan’s investments in Bitcoin.
“It’s just a simple strategic choice that many people have made and earned billions of dollars, and I think governments should do it,” - Tshering Tobgay
As of April 9, Bhutan’s Bitcoin holdings are worth more than $600 million. This extraordinary figure represents 30 percent of the country’s total net worth. Given that Bhutan's GDP stood at $3.02 billion in 2022, these holdings constitute approximately 30 percent of the nation's GDP.
Strategic Vision
Bhutan’s strategic vision goes well beyond an interest in Bitcoin mining to include a larger overall adoption of technology and innovation. The nation understands that in a world where everything and everyone is connected, technological expertise is key for economic competitiveness and national progress.
By investing in digital infrastructure and fostering a culture of innovation, Bhutan aims to position itself as a leader in the digital economy. The country’s recently-launched embrace of Bitcoin is perhaps the most notable feature of this larger strategy.
Currently, almost all of Bhutan’s coins have been mined, with just over one million left in circulation. The country stands to reap the rewards of its foresighted investment in cryptocurrency technology.
