Bhutan, a country near the Eastern Himalayas, has successfully mined Bitcoins worth 1.3 Billion US dollars using its excess hydro power. It is yet another success story of innovative policy making and quick planning amidst economic crisis.
Based on an Arkham Intelligence report, the Royal Government of Bhutan had accumulated bitcoins worth over $764M last year. Recent reports reveal that Bhutan has stocked a whopping 1.3 Billion US dollars worth of Bitcoins. It is roughly 40% of their GDP.
The most unique part about this mining is that Bhutan has used its surplus hydro-electricity generated through rotating turbines for computing.
CEO of the fund Druk Holding and Investments (DHI) Ltd., Ujjwal Deep Dahal, said, “We are a nation that runs 100% on hydropower, and every digital coin we mine in Bhutan using hydropower offsets that coin which gets mined using fossil fuels,”. He further added, “So a coin mined in Bhutan will contribute to the green economy.”
DHI is the investment arm of the Royal government of Bhutan that invested heavily on procuring digital mining machines and starting the mining operations in Bhutan. Bhutan betted big. When crypto-currency leaders around the world were failing, Bhutan chose the path of crypto mining to revive its struggling economy.
Spearheaded by the “Dragon King” himself, Jigme Khesar Namgyel Wangchuck’s Bhutan silently became the Crypto heaven. The Royal government gave land, funding and energy required for running the heavy computing machines. Plan for mining Bitcoins in Bhutan was conceived sometime between 2017 and 2019. However, reports indicate that actual mining operations in Bhutan began in 2021. It was kept a secret until the data analytics firm Arkham Intelligence traced a digital wallet back to the Bhutan Government. Later, satellite imaginary revealed world’s largest state owned Bitcoin mines located in the country.
The Himalayan Kingdom’s largest Bitcoin mining factory is located near Phuentsholing-Thimphu Highway, neatly hidden from the public view. This was constructed upon the failed “Education City” project meant to be a global education centre.
Concealment of these mines was well crafted to avoid early detection. However, satellite images from Planet Labs, Satellite Vu and Google Earth now confirm the locations of mining units in Bhutan. Data center cooling systems including high capacity power lines and transformers were also spotted through satellite imaging.
At least 6 Bitcoin mining facilities are now operating in Bhutan. Out of these, four are state-owned while two are functioning as partnership projects.
How does Crypto Mining work?
Crypto mining work by using heavy computing machines to solve complex network problems while earning a crypto currency in the process. So these computing machines need huge amount of electricity to operate. In the case of Bitcoin mining, miners solve complex mathematical puzzles to earn reward, for example Bitcoins. But these miners are not actual human miners. These are fast computing machines like the ASICs (Application-Specific Integrated Circuits). The mining farms buy and deploy these machines which solve puzzles and earn Bitcoins.
Where did Bhutan get Scientists and Engineers for the mining ?
Bhutan’s own Engineers and Technicians carried out the initial installation process. As per reports, Bhutan imported its first mining machines from China. But it was Bhutan’s own people who got the whole system rolling. Bhutan also borrowed digital assets from failed companies like BlockFi and Celcius during the early phase of the program. But it was later clarified through official statement that all dues were paid back.
In 2023, the Royal Government of Bhutan’s commercial arm Druk Holding & Investments (DHI) entered into a partnership with Singapore cryptocurrency mining Company Bitdeer Technologies Group. Bitdeer will not only assist with the technology but also provide technical aid to people of Bhutan working on mining operations.
Chairman of Bitdeer Technologies Group, Jihan Wu, said, “We are excited to be working alongside DHI in accessing Bhutan’s zero-emissions power to sustainably enable the blockchain technologies that will eventually form an immutable bedrock for a global store of value. The new Fund will also represent a pathway to foster global stakeholder networks that are driving growth and innovation in the technology sector in Bhutan.”
How is Bhutan using Bitcoin mining to solve local problems ?
Bitcoin mining became a masterstroke for Bhutan’s economic plan. Tourism and Surplus Hydroelectricity was the main source of revenue for the Bhutanese. Tourism was deeply affected during COVID which caused a loss of 88.6 million dollars in annual revenue. This led to immediate discussion about the future course of action and soon the Bhutanese leadership initiated talks with the Bitcoin community and its leaders. This led to the DHI investing in Bitcoins and using Bhutan’s surplus hydro power for Bitcoin mining.
But DHI did not explicitly reveal how Bhutan is using its stockpile for the development of the country. Some projects in the country are believed to be funded by Bitcoins, though not confirmed. A 2023 report said Bitcoin will power 50% hike of salary for the Civil servants in Bhutan.
Though USA is dominating Crypto mining space with 40% of the global crypto mining power, Bhutan’s real success is its utilization of green energy in the mining. It has a unique geography which makes the use of natural flow of water to generate surplus electricity. The bold move by Bhutanese leaders during economic adversity to invest in Bitcoin mining has contributed to its success.
