For many years, Bhutan has gauged its economic and social progress using unique measures: happiness and sustainability.
However, as the nation grapples with economic hardships and a brain drain, this small, landlocked Himalayan kingdom is embracing a new symbol of advancement that is positioning Bhutan as a global leader in financial innovation: Bitcoin.
Tucked between India and China, Bhutan – famously the first nation to achieve carbon negativity – has mined millions in Bitcoin over recent years, taking an economic gamble that few other countries have matched.
So, what has led Bhutan to invest heavily in Bitcoin? How does it carry out the energy-demanding process of mining? What wealth in Bitcoin does the nation possess? And is this move risky, considering the volatile price swings the digital currency has experienced?
What is Bitcoin and how do you mine it?
Bitcoin is the original decentralized cryptocurrency, established in 2008, and operates independently of any government.
Individuals can trade cryptocurrencies like Bitcoin, with these transactions recorded on a communal ledger known as a blockchain. Bitcoin derives its value from its limited supply, with only about 21 million Bitcoins available, of which most have been mined, leaving roughly 1 million still to be mined.
The process of Bitcoin mining involves using energy-intensive supercomputers to solve intricate puzzles, a method through which new Bitcoins are officially integrated into the blockchain.
How is Bhutan mining Bitcoin?
Bhutan’s hydropower facilities power supercomputers that tackle complex challenges, earning Bitcoin that can then be added to the blockchain.
“It’s a straightforward strategic decision that many have made profitably, and I believe governments should follow suit,” Bhutanese Prime Minister Tshering Tobgay remarked to Al Jazeera’s Bernard Smith in March while in Thimphu.
Tobgay noted that during the summer months, increased water flow enables hydropower plants to generate surplus energy.
“That’s where Bitcoin mining makes tremendous sense,” Tobgay expressed.
Why is Bhutan facing an economic crisis?
The nation is confronting escalating economic difficulties, and Bitcoin mining is one of several strategies being employed by the kingdom of 800,000 to navigate out of this crisis.
With no access to the sea and a land area of just over 38,000 sq km (14,672 sq miles)—similar to Switzerland—it faces challenges due to its mountainous landscape, rendering most land unsuitable for agriculture. Bhutan relies on India for the majority of its food supply, which Tobgay refers to as the kingdom’s “closest friend and neighbour.”
The International Monetary Fund (IMF) projects Bhutan’s gross domestic product (GDP) at $3.52bn by 2025, with tourism contributing around 3.4 percent to GDP. However, following the impact of COVID-19, Bhutan has struggled to attract visitors back to its beautiful mountains, forests, and Buddhist temples.
Historically, Bhutan has regulated the number of tourists it receives to safeguard its delicate ecology from excessive foot traffic. It imposes a sustainable development fee of $100 on foreign tourists, with a reduced fee of $15 for visitors from India. Tobgay states that this strategy aims to attract “high-value and low-volume” tourists.
Yet now, Bhutan finds it challenging to accommodate even the limited tourist numbers it desires. As per Tobgay, the country can manage about 300,000 tourists annually.
“Last year, approximately 150,000 tourists visited,” the prime minister noted.
In 2024, Bhutan’s youth unemployment rate stood at 19 percent, in contrast to the global average of 13.6 percent reported by the World Bank for 2023.
How might Bitcoin help Bhutan fight its economic challenges?
A significant consequence of Bhutan’s economic issues is the outflux of young, educated individuals in recent years, further exacerbating the country’s economic challenges.
In 2022 alone, over 10 percent of Bhutan’s skilled populace emigrated. Australia, a key destination, witnessed the Bhutanese immigrant population more than double from 2016 to 2021.
“We have job opportunities in Bhutan, but they can’t compete with the wages available in developed countries,” Tobgay disclosed.
This brain drain has severely impacted Bhutan’s civil service. A noticeable rise in civil servant resignations began in 2019, with the trend continuing to grow as reported by the state-funded Bhutan Broadcasting Service (BBS) in April 2024.
Bitcoin has emerged as a potential economic remedy: In 2023, the Bhutanese government sold $100m worth of cryptocurrency to increase civil servant salaries, according to Al Jazeera’s Smith in Thimphu.
Since this initiative, BBS reported a slight decrease in civil service resignations. In the first quarter of 2024, 500 civil servants left their roles compared to nearly 1,900 in the same period in 2023.
How much Bitcoin does Bhutan hold?
Bhutan has not officially released information regarding its Bitcoin holdings.
Nevertheless, blockchain intelligence firm Arkham estimates that Bhutan’s Bitcoin assets are worth over $600m as of April 9, constituting roughly 30 percent of the kingdom’s GDP.
Arkham’s analysis indicates that Bhutan also holds smaller amounts of other cryptocurrencies, including Ethereum and LinqAI, though these holdings are significantly less than Bitcoin.
Bhutan’s king, Jigme Khesar Namgyel Wangchuck, has long promoted investments in digital infrastructure.
“Being a small nation makes us a smart nation – this is not by choice but necessity,” remarked the king in a 2019 address. “Technology is an essential tool that will be pivotal to achieving our aspirations.”
Is Bhutan’s Bitcoin mining sustainable?
According to analysts, Bitcoin mining represents one of the few ventures enabling Bhutan, a constitutional monarchy, to advance its economy while staying true to its foundational values.
“The flow of private sector investments in Bhutan is quite limited due to the regulations tied to maintaining approximately 60 percent forest cover and prioritizing happiness and environmental conservation over rapid industrial development,” stated Aditya Gowdara Shivamurthy, an associate fellow at the New Delhi-based Observer Research Foundation (ORF), in comments to Al Jazeera.
This limitation aligns with Prime Minister Tobgay’s caution regarding foreign direct investment.
“We have been deliberate in our approach to foreign direct investment,” Tobgay emphasized. “We’ve been cautious about industries that could harm our environment, pollute our air, or undermine our culture.”
However, Bhutan has a conducive environment and natural resources ideal for cryptocurrency mining, noted ORF’s Shivamurthy.
The capital, Thimphu, along with other areas, experiences relatively cool temperatures, thereby lessening the demand for excessive cooling systems necessary to prevent supercomputers from overheating. Average temperatures in Bhutan range from about 15-30 degrees Celsius (59-86 degrees Fahrenheit) year-round, according to World Bank data.
Moreover, Bhutan generates more hydropower than it consumes.
“It’s vital for Bhutan to leverage our abundant green energy for Bitcoin mining as part of our investment strategy,” stated Ujwal Deep Dahal, CEO of Druk Holding and Investments, which serves as the commercial and investment branch of the Royal Government of Bhutan, to Al Jazeera.
While Bhutan exports hydroelectricity to India, Bitcoin mining offers an alternative to traditional exports. When tariff rates are favorable, it sells power to India, and where rates are less advantageous, Bhutan retains the energy for Bitcoin mining activities, explained ORF’s Shivamurthy.
“Instead of selling our hydropower at a low price, we are utilizing it for Bitcoin mining in Bhutan’s high mountains,” remarked Tenzing Lamsang, editor-in-chief of The Bhutanese newspaper, a weekly publication based in Thimphu, to Al Jazeera.
In addition to Bitcoin mining, the nation is developing a special administrative region and economic center named Gelephu Mindfulness City, which aims to merge sustainability and well-being with commercial progress. This urban project envisions low-rise buildings, sustainable enterprises, residential areas, a national park, and a wildlife sanctuary.
Are other governments mining Bitcoin?
Initially cautious about Bitcoin, many governments are now reconsidering their stances.
On March 6, former U.S. President Donald Trump announced the establishment of a strategic Bitcoin reserve. Beyond the United States, El Salvador has disclosed holdings of nearly $550m in Bitcoin, as stated by its government on March 5.
Other nations, including the Central African Republic and France, are moving towards recognizing Bitcoin as legal tender.
On April 7, Pakistan appointed Changpeng Zhao, founder of Binance (the world’s largest cryptocurrency exchange), as an adviser to the newly formed Pakistan Crypto Council (PCC), established in March in a bid to position the country as a leader in cryptocurrency within South Asia.
