Bhutan spends 5% of its GDP on mining bitcoin

Concealed amidst the grandeur of the Himalayas, Bhutan, the quaint nation, harnesses its plentiful hydroelectric capabilities, comprising 30% of its GDP, to electrify the households of nearly all its 800,000 inhabitants. More interestingly, it spent 5% of its GDP to buy bitcoin (BTC) mining equipment.

Over the past few years, Bhutan’s administration has furtively leveraged these reserves to fuel a concealed bitcoin mining endeavor.

In a recent report, Forbes revealed that Bhutan had entertained the idea of instituting sovereign mining ventures since 2020. 

Bhutan intends to power enormous arrays of mining apparatuses, employing the nation’s hydroelectric facilities and conducting intricate computations to secure bitcoin rewards. If actualized, Bhutan will join El Salvador as one of the rare countries boasting state-owned bitcoin mines.

The Bhutanese mining commenced years ago when bitcoin was valued at around $5,000. The earnings from mining offset power and hardware expenditures. 

The project as a whole, including its whereabouts, profitability, and the reasoning behind not revealing it to the public, remains mysterious.

Parleys with Bitdeer

Bhutan is presently negotiating with Nasdaq-listed mining conglomerate Bitdeer, established by former Chinese billionaire Wu Jihan. 

In a recent update, Bitdeer disclosed its ongoing discussions regarding access to 100 megawatts (MW) of power for a bitcoin mining data center in Bhutan, slated for construction this quarter. 

Bitdeer, one of the globe’s most prominent bitcoin miners, debuted on Nasdaq earlier this month through a $1.1 billion merger.

A collaboration with Bhutan would augment Bitdeer’s mining capacity by roughly 12%, supplementing its data centers in Washington, Texas, and Norway. The announcement refrained from specifying the eventual proprietor of the new data center.

Bhutan’s escalating crypto cravings

Druk Holding & Investments, Bhutan’s state-owned holding enterprise, has clandestinely poured millions of dollars into cryptocurrency assets, as exposed during the insolvencies of lenders BlockFi and Celsius. 

Whispers of government-endorsed bitcoin farms have proliferated across the country in recent times. Additionally, according to customs data, Bhutan’s importation of computer chips has witnessed a surge. 

International advocates have voiced apprehensions regarding the $193 million spent on computer chips, potentially exacerbating a burgeoning trade deficit and a marked reduction in the nation’s foreign currency reserves.

The magnitude and ramifications of Bhutan’s mining

Before Bitdeer’s disclosure, Bhutan had allegedly explored a 100 MW operation connected to one of its hydroelectric plants. 

Although smaller than extensive farms like Riot’s Rockdale facility in Texas, it would rival other significant ventures such as Russia’s Bitriver mine.

While the precise utilization of the hardware remains undisclosed, the nation’s fascination with blockchain technology is evident through its experimentation with a central bank digital currency (CBDC) in collaboration with Ripple (XRP).

The road ahead

Bhutan’s surreptitious engagement in bitcoin mining raises queries surrounding the nation’s openness and the environmental consequences of its investments. 

As Bhutan persists in augmenting its mining operations, striking a harmonious balance between economic development, the welfare of its citizenry and the global community will be paramount.