About 15 miles outside Bhutan’s capital of Thimphu, Buddhist shrines dot the scenic landscape as prayer flags flutter in the breeze. But tucked away on the mountainside, a Bitcoin mine hums away, drowning out the sounds of the surrounding forest. Its teal roof is barely visible through the pine branches.
In the world of cryptocurrency, major economies like the United States, China and the United Kingdom dominate the landscape. But in recent years, Bhutan has emerged as an unexpected player. Known for its stunning landscapes, commitment to Gross National Happiness and Buddhist ethos, the Himalayan kingdom holds the fourth-largest state-owned stockpile of Bitcoin in the world.
The country’s bold foray into cryptocurrency signals its big ambitions but also represents a lifeline for its struggling economy.
“The grave situation Bhutan is in right now, I don’t think they could have found a better option than Bitcoin mining,” said Aditya Gowdara Shivamurthy, an associate research fellow at the Observer Research Foundation.
Channeling Bhutan’s hydropower might
Bhutan’s investment in cryptocurrency has been led by Druk Holdings and Investments, the investment arm of the Royal Government of Bhutan.
“It’s a very tactical investment for us,” said Ujjwal Deep Dahal, CEO of DHI. “We want to ensure that we diversify our investment portfolio beyond the traditional markets and beyond the traditional industries.”
Bhutan began mining Bitcoin as early as 2018, he said, viewing it as a store of value similar to gold or property. Over the years, Bitcoin has evolved as an asset class, and Bhutan’s leadership has doubled down on its potential. According to cryptocurrency platform Arkham, DHI’s crypto portfolio surged to $1.2 billion in December.
A key driver of Bhutan’s crypto push has been the country’s robust hydropower potential. Rivers fed by Himalayan glaciers thunder down Bhutan’s valleys and power the country’s electric grid. Hydropower is Bhutan’s biggest export and the engine of its economy. But it’s seasonal — there’s a surplus during the summer when snow melts and a deficit in the winter. Dahal said that Bitcoin can act like a battery.
“So theoretically, you could be generating Bitcoin in the summer which can hedge your energy security during winter,” Dahal said. “It is a foreign currency reserve for us.”
Bhutan’s economic woes
Bhutan’s crypto investments come at a critical time for the country’s economy. The COVID-19 pandemic devastated Bhutan’s tourism industry, the second major contributor to its revenue. Meanwhile, youth unemployment has been on the rise, pushing many young Bhutanese to migrate in search of better opportunities abroad.
Dorji Bidha, a Bhutanese woman in her 30s, recalls struggling to find employment after college. “I was unemployed for two straight years. No jobs at all. I applied everywhere,” she said.
She started a yogurt business, then got into tourism, working as a receptionist and housekeeper. She now works as a tour guide taking international visitors on treks. She said many of her peers couldn’t make it work in Bhutan, so they left the country in droves to Australia.
Of Bhutan’s total population of 750,000, roughly 10% have moved abroad. Even those in Bhutan’s civil services, considered to be stable positions, have been resigning in large numbers. The loss of the younger workforce has left villages with only older generations remaining.
A calculated gamble
Despite the risks associated with cryptocurrency’s volatility, Bhutan’s measured approach appears to be yielding positive returns. Last year, Bhutan sold some Bitcoin to support a pay hike for civil servants.
“We want to leverage it in the best way with full risk and opportunity analysis to ensure that this asset class is meaningful for the development of Bhutan and for the next generation of Bhutanese,” Dahal explained.
While Bitcoin’s value can be unpredictable, experts suggest that Bhutan’s investment strategy has been more cautious than that of other nations. For example, El Salvador made Bitcoin legal tender in 2021 but has faced difficulties integrating it into its economy. Bhutan’s crypto bet, on the other hand, seems to be paying off for now, according to Shivamurthy of the Observer Research Foundation.
“With Bitcoin mines being limited, to what extent will Bhutan be able to benefit from it on a longer-term [basis] is a bigger question,” Shivamurthy said. “Obviously there is risk related to it.”
In Bhutan, the crypto initiative is widely seen as part of King Jigme Khesar Namgyel Wangchuck’s larger economic vision for the country. The Bhutanese people love and revere their monarch, and as a result, the Bitcoin investment enjoys broad support.
Bidha says that in addition to telling her guests about Bhutan’s history and culture, she now proudly tells them about Bhutan’s Bitcoin mines. She sees it as a great national asset. Bhutan’s newest and biggest Bitcoin farm, built in partnership with the Singaporean firm Bitdeer, is expected to come online by the end of this year. Cryptocurrency will also be part of the official reserves of the Gelephu Mindfulness City, a futuristic economic hub that Bhutan is building along its southern border with India.