Bhutan Bets Big on Bitcoin Mining

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Nestled in the eastern Himalayas, Bhutan has long been celebrated for its breathtaking landscapes, deeply rooted Buddhist traditions, and unique emphasis on Gross National Happiness over GDP. Yet, in recent years, this remote kingdom has quietly emerged as an unexpected leader in the global cryptocurrency movement—by becoming one of the world’s most significant government holders of Bitcoin.

According to data from blockchain intelligence platform Arkham, Bhutan currently holds approximately $1.3 billion worth of Bitcoin, equivalent to nearly 40% of its GDP. This positions the country as the third-largest national holder of Bitcoin, trailing only the United States and Germany—not through market purchases or seized assets, but through state-backed Bitcoin mining operations powered by its abundant hydropower resources.

A Himalayan Nation’s Digital Gold Rush

Unlike larger economies exploring crypto policy or digital asset reserves, Bhutan took a bold operational step: launching government-run Bitcoin mining facilities starting in 2020. The initiative was spearheaded by Druk Holding and Investments (DHI), the nation’s sovereign wealth fund, under the leadership of CEO Ujjwal Deep Dahal.

“Bhutan’s choice makes sense in many ways,” Dahal said. “We see Bitcoin as a store of value—much like gold.”

The country’s geography provides a natural advantage. With over 30 major rivers flowing down from snow-capped peaks, Bhutan generates massive amounts of clean, low-cost hydropower—especially during monsoon season when production exceeds domestic demand. Instead of letting surplus electricity go to waste, the government now channels it into energy-intensive Bitcoin mining rigs.

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This strategy transforms excess power into a high-value digital export. As Dahal puts it: “Bitcoin acts like a battery for our unused summer electricity.”

From Experimental Servers to National Infrastructure

The journey began in 2019 when DHI’s R&D team started researching blockchain technology. With no prior experience, Dahal taught himself through online tutorials and YouTube videos. Initial experiments involved just two imported mining machines—so new to the team that one overheated overnight, triggering a security alarm at 3 a.m.

Despite early hiccups, progress accelerated. When the first official mining site broke ground in late 2020, pandemic border closures prevented foreign technicians from entering. Undeterred, Dahal and four colleagues manually assembled and configured the hardware on-site near Dochula Pass—a cool, high-altitude location close to transmission lines.

Technical guidance came remotely from experts in Singapore and Malaysia. Within months, the facility was operational.

By 2022, Bhutan had completed four government-owned mining centers. Satellite imagery from Planet Labs confirms at least six active sites today, managed by a state-affiliated entity called Green Digital. Exact locations remain classified for security reasons.

Powering Public Services with Digital Assets

The economic impact has been tangible. At a time when tourism—a key revenue source—collapsed during the pandemic, Bitcoin mining helped fill the gap.

Prime Minister Tshering Tobgay revealed that Bitcoin profits fully funded a two-year public sector salary increase in 2023—an unprecedented move globally. The government sold $100 million worth of its Bitcoin reserves to finance the raises.

“You couldn’t achieve this kind of fiscal boost just by selling electricity,” Tobgay said.

Bitcoin’s rise—from under $10,000 in 2020 to around $100,000 today—amplified returns. But even beyond price appreciation, officials emphasize strategic diversification.

“Bitcoin is not just about quick gains,” Dahal explained. “It’s about building long-term financial resilience.”

Strategic Partnerships and Foreign Investment

Bhutan isn’t going it alone. In 2023, Singapore-based Bitdeer Technologies partnered with the government to co-develop mining infrastructure. Under the agreement, Bitdeer financed two new facilities and retains all mined Bitcoin—while paying Bhutan in U.S. dollars for electricity used.

This model boosts foreign exchange reserves without depleting the nation’s own digital asset holdings.

“We’re monetizing energy in a smarter way,” said a senior energy official involved in the negotiations.

Integrating Crypto Into Daily Life

Beyond mining, Bhutan is pioneering real-world crypto adoption. Last month, the government launched a crypto payment gateway allowing tourists to pay for flights, hotels, and visas using more than 100 different cryptocurrencies.

Even more ambitious is the Gelephu Mindfulness City, a special administrative zone led by former Prime Minister Dr. Lotay Tshering. Designed as a hub for sustainable development and spiritual well-being, the city plans to integrate cryptocurrency into every level of its economy—including issuing its own digital currency.

“Cryptocurrency is like salt in curry,” Dr. Tshering said. “It touches every element.”

Risks and Criticisms

Despite successes, challenges remain. Critics question transparency, especially given limited public disclosure about mining revenues and fund allocation. Some officials have privately expressed concerns about accountability.

There are also macroeconomic risks. A sharp drop in Bitcoin’s price could significantly affect state finances, particularly since reserves represent such a large share of GDP.

Additionally, environmentalists warn that while hydropower is clean, concentrating energy use for mining may limit future industrial or residential expansion.

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Looking Ahead: A Model for Small Economies?

For a nation of just 780,000 people caught between geopolitical giants China and India, Bitcoin offers a rare opportunity: economic leverage without military or diplomatic clout.

While countries like El Salvador made headlines by adopting Bitcoin as legal tender, Bhutan’s approach—state-led mining using renewable energy—may offer a more scalable and financially sound blueprint for small nations.

Officials say no new mining sites are planned, but existing ones will be upgraded for efficiency. The long-term strategy? Hold Bitcoin as a strategic reserve, not spend it recklessly.

Frequently Asked Questions (FAQ)

Q: How much Bitcoin does Bhutan own?
A: Bhutan holds approximately $1.3 billion worth of Bitcoin—about 40% of its GDP—making it one of the largest national holders in the world.

Q: Where does Bhutan get the energy to mine Bitcoin?
A: The country uses surplus hydropower generated during monsoon seasons, which would otherwise go unused due to low domestic demand.

Q: Has Bhutan sold any of its Bitcoin?
A: Yes. In 2023, the government sold $100 million worth of Bitcoin to fund public sector salary increases.

Q: Is Bitcoin legal tender in Bhutan?
A: No. While not legal tender, the government accepts over 100 cryptocurrencies for tourism-related payments and is developing local crypto integration through projects like Gelephu Mindfulness City.

Q: Are there private Bitcoin miners in Bhutan?
A: Currently, all major mining operations are government-affiliated or involve foreign partnerships like Bitdeer Technologies. There is no known large-scale private mining sector.

Q: Could other countries replicate Bhutan’s model?
A: Yes—especially small nations with excess renewable energy. Bhutan’s blend of sustainability, state oversight, and strategic asset accumulation offers a compelling case study.

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