Bhutan Turns to Bitcoin Mining in Hope of Economic Miracle

Though this appears reputable, it's less well-known that the authorities of this South Asian kingdom have long hidden mining farms deep in the jungles, away from external scrutiny. Bhutan provided its miners with initial capital, land, and access to energy sources.

The revelation that state-owned Bhutanese companies own a substantial crypto investment portfolio first surfaced in the media in spring 2023, especially following the bankruptcy of cryptocurrency lenders BlockFi and Celsius.

By late 2023, Forbes journalists conducted an in-depth analysis of Bhutan's territory using satellite imagery services like Google Earth, Satellite Vu, and Planet Labs. Identifying features of mining farms, such as cooling systems for computing equipment, transformer stations, and power lines from local hydroelectric plants, revealed four potential crypto mining locations serving the royal subjects. 

Mining Farm in Dochula Source: Forbes

Interestingly, one of the mining farms is located at the site of what was once touted as the Education City – an ambitious government project aimed at becoming an international knowledge hub. Initially hyped in the early 2010s, it was proposed as a solution to curb the rising unemployment among Bhutan's youth. Presently, one of Bhutan's most pressing economic issues is the persistent brain drain, with citizens emigrating in search of better job opportunities and higher wages. In 2022, for instance, 1.5% of Bhutan's population moved to Australia. More than 10% of Bhutanese live below the poverty line, with the minimum monthly wage being $45. The Education City was supposed to rectify this and envisioned hosting branches of top global universities, scientific laboratories, exhibition centers, hotels, etc. Sadly, the project was never fully completed, although its infrastructure, including roads and power lines, was established. This infrastructure now supports the state's Bitcoin mining operations, seemingly becoming Bhutan's alternative plan for economic recovery. 

For a long time, tourism was a significant income source for Bhutan, but the COVID-19 pandemic drastically reduced tourist numbers, creating a substantial deficit in Bhutan's budget. However, Bhutan doesn't lack the electricity needed for extensive Bitcoin mining, as it typically exports excess hydroelectric power to neighboring countries. In 2020, recognizing this potential, the government began negotiations with firms specializing in cryptocurrency mining. 

At least one company, Singapore-based Bitdeer, launched the first phase of an enormous 100 MW mining complex in Bhutan's Ghidu in August 2023. When finished, the 600 MW facility is expected to become the kingdom's largest power consumer. 

Despite the crypto winter, Bhutan's state-run miners have reported minimal impact. The government is considering selling some of its Bitcoin holdings to increase public servants' salaries.