For a long time, the Kingdom of Bhutan gauged its societal and economic progress not with typical financial metrics, but with unique indicators: the happiness of its people and the health of its environment.
However, facing increased economic hardship coupled with a significant outflow of skilled workers, this small, landlocked nation nestled in the Himalayas is embracing a new symbol of advancement: Bitcoin. This bold move positions Bhutan as a global leader in exploring innovative financial solutions.
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Situated between India and China, Bhutan – also renowned as the world’s first carbon-negative country – has been actively involved in mining the world’s leading cryptocurrency, accumulating millions of dollars worth in recent years. This represents a substantial economic gamble, unmatched in scale by almost any other nation.
But why is Bhutan placing such a significant bet on Bitcoin? What is the process behind its energy-intensive cryptocurrency mining operations? What is the scale of the country’s Bitcoin holdings? And does this move expose the nation to considerable risk, considering the notorious price volatility associated with digital currencies?
Understanding Bitcoin and the Mining Process
Bitcoin, launched in 2008, stands as the original decentralized, peer-to-peer cryptocurrency. Its operations are independent of any governmental control.
Individuals can engage in buying and selling cryptocurrencies, like Bitcoin, with these transactions recorded on a public and shared database known as a blockchain. Bitcoin’s value derives from its scarcity; only a limited number of Bitcoins, roughly 21 million, can ever exist. The majority of these have already been “mined,” leaving only about one million remaining to be discovered.
Bitcoin mining is the procedure by which fresh Bitcoins are legitimately introduced into the blockchain network. The extraction process relies on specialized, power-hungry computer systems that tackle complex mathematical puzzles. Successfully solving a puzzle leads to the creation of a new Bitcoin.
Bhutan’s Bitcoin Mining Operations
Bhutan harnesses the power generated by its hydroelectric plants to power supercomputers, which in turn solve the intricate algorithms needed to earn Bitcoin, adding them to the blockchain.
“It’s a straightforward strategic choice that has generated billions of dollars for numerous individuals, and I believe governments should also pursue it,” Bhutanese Prime Minister Tshering Tobgay told Al Jazeera’s Bernard Smith in Thimphu, the capital, in March.
Tobgay elaborated that during the summer season, increased water flow leads to surplus energy production at hydropower facilities, exceeding the country’s immediate needs.
“Bitcoin mining presents a highly logical application for this excess energy,” Tobgay stated.
Bhutan’s Economic Challenges
The nation currently faces significant economic obstacles. Bitcoin mining is one among several strategies the country, with a population of 800,000, is implementing to overcome this difficult period.
Being a landlocked country, Bhutan lacks direct access to the sea. Although its land area, just over 38,000 square kilometers (14,672 square miles), nearly matches that of Switzerland, much of this terrain is unsuitable for agriculture due to its mountainous nature. Consequently, Bhutan relies on importing the majority of its food from India, which Prime Minister Tobgay described as the kingdom’s “closest friend and neighbor.”
Tourism contributes upwards of 10 percent to Bhutan’s Gross Domestic Product (GDP). According to the Royal Monetary Authority, Bhutan’s central bank, tourism generated $334 million in 2023. The country’s total GDP for that year was $3.02 billion.
However, these figures obscure the challenges Bhutan faces in reviving its tourism sector, which experienced a setback during the COVID-19 pandemic.
Bhutan has historically managed the number of tourists it welcomes to safeguard its unspoiled environment from the impact of excessive visitation. Foreign tourists, with the exception of those from India, are charged a sustainable development fee of $100 per day. Indian tourists pay a $15 fee. Tobgay explains that the intent is to cultivate a tourism model based on attracting “high-value, low-volume” travelers.
Currently, Bhutan is struggling to attract even its desired limited number of tourists. According to Tobgay, the nation possesses the capacity to accommodate approximately 300,000 visitors annually.
“Last year, we received approximately 150,000 tourists,” the Prime Minister noted.
Bhutan’s youth unemployment rate stood at 19 percent in 2024. The World Bank reports that the global average youth unemployment rate for 2023 was 13.6 percent.
How Bitcoin Might Aid Bhutan’s Economic Recovery
A prominent symptom of Bhutan’s economic difficulty is the emigration of young, educated citizens to other nations in recent years – a trend that worsens the country’s economic situation.
In 2022 alone, over 10 percent of Bhutan’s skilled workforce left the country. Australia, a common destination for Bhutanese migrants, saw its Bhutanese immigrant population more than double between 2016 and 2021.
“Job opportunities exist within Bhutan, however they can’t compete with the salary potential available in developed countries,” Tobgay said.
This brain drain has also weakened Bhutan’s civil service sector. The state-funded Bhutan Broadcasting Service (BBS) reported in April 2024 that the number of civil servants resigning from their positions has sharply increased since 2019, and continued to climb through 2023.
This is where Bitcoin appears to have become an economic asset. Al Jazeera’s Smith reported from Thimphu that in 2023, the Bhutanese government sold $100 million worth of cryptocurrency to double civil servant salaries.
Since that decision, BBS has reported a slight decrease in the number of civil servants leaving their posts. In the first quarter of 2024, 500 civil servants resigned, compared to almost 1,900 who resigned during the same period in 2023.
Bhutan’s Bitcoin Holdings
Bhutan has not publicly revealed the precise amount of Bitcoin it currently holds.
However, blockchain intelligence firm Arkham estimates that Bhutan’s Bitcoin holdings are valued at over $600 million as of April 9. This represents approximately 30 percent of the kingdom’s GDP.
Arkham’s data also suggests that Bhutan possesses other cryptocurrencies, including Ethereum and LinqAI, although the size of these holdings is significantly smaller than its Bitcoin reserves.
Bhutan’s King, Jigme Khesar Namgyel Wangchuck, has long advocated for investment in the country’s digital infrastructure.
“Being a small nation compels us to be a smart nation – this is not a preference, but a necessity,” the King declared in a 2019 speech. “Technology is an indispensable tool that will be essential to achieve this goal.”
The Sustainability of Bhutan’s Bitcoin Mining
Analysts suggest that Bitcoin mining offers Bhutan, a constitutional monarchy, a unique opportunity to expand its economy while staying true to its national values.
“The influx of private sector investment into Bhutan is limited due to the restrictions associated with Bhutan’s commitment to maintaining approximately 60 percent forest cover and prioritizing happiness and environmental conservation over rapid industrialization,” Aditya Gowdara Shivamurthy, an associate fellow at the New Delhi-based Observer Research Foundation (ORF), told Al Jazeera.
Prime Minister Tobgay echoed this sentiment.
“We have been carefully considering foreign direct investment,” Tobgay said. “We have been cautious about allowing industries that would harm the environment, pollute our air, or undermine our culture.”
Shivamurthy of the ORF noted that Bhutan possesses an environment and natural resources well-suited to cryptocurrency mining.
The capital, Thimphu, and other regions experience cool temperatures, which lessens the demand for extensive cooling systems needed to prevent supercomputers from overheating. World Bank data indicates that average temperatures throughout the country range between 15 to 30 degrees Celsius (59-86 degrees Fahrenheit) year-round.
Furthermore, the country produces more hydropower than it consumes.
“Capitalizing on our green energy resources through Bitcoin mining as part of our investment strategy is crucial for Bhutan,” Ujwal Deep Dahal, CEO of Druk Holding and Investments, the Royal Government of Bhutan’s commercial and investment arm, explained to Al Jazeera.
Bhutan currently exports hydroelectricity to India. Bitcoin mining, however, provides an alternative to exporting this power. Where tariff rates are favorable, the country sells power to India. When rates are less advantageous, Bhutan retains the power and uses it for Bitcoin mining, Shivamurthy of the ORF explained.
“Instead of exporting [hydropower] at very low rates, we are using it to mine Bitcoins in the high mountains of Bhutan,” Tenzing Lamsang, editor-in-chief of The Bhutanese newspaper, a private weekly publication based in Thimphu, told Al Jazeera.
In addition to Bitcoin mining, Bhutan is establishing a special administrative region and economic center, known as the Gelephu Mindfulness City, to combine its dedication to sustainability and well-being with commercial development. This city is an urban development project that will include low-rise buildings, sustainable businesses, residential zones, a national park, and a wildlife sanctuary.
Bitcoin Mining and Other Governments
While governments were initially cautious regarding Bitcoin, many are now adopting different approaches.
On March 6, United States President Donald Trump created a strategic Bitcoin reserve. In addition to the US, El Salvador holds nearly $550 million in Bitcoin, the government announced on March 5.
Other nations, like the Central African Republic and France, are starting to recognize Bitcoin as legal tender.
On April 7, Pakistan appointed Changpeng Zhao, the founder of Binance, the world’s largest cryptocurrency exchange, as an advisor to the Pakistan Crypto Council (PCC), a regulatory body created in March, as the country attempts to establish itself as a leading force in the South Asian crypto market.