- Bhutan has been running a bitcoin mining operation for a few years now, using its immense hydroelectricity stores to power the mine.
- The country has been secretive about its earlier cryptocurrency investments, which were made through a sovereign entity created to manage the country’s wealth on behalf of its people.
Bhutan’s Secret Bitcoin Mining Operation
Bhutan, a Himalayan kingdom tucked between China, India, and Nepal, has been running a bitcoin mining operation for a few years now. It has been using its immense stores of hydroelectricity, which accounts for 30% of the country’s gross domestic product, to power the mine. The country has been secretive about its earlier cryptocurrency investments, which were made through a sovereign entity created to manage the country’s wealth on behalf of its people.
This has raised concerns among its international supporters.
Bhutan’s Efforts to Develop Sovereign Mining Operations
Sources familiar with Bhutan’s efforts to develop sovereign mining operations told Forbes that discussions have been occurring since 2020, and Bhutan sought to harness the country’s hydroelectric plants to power racks of mining machines that solve complex mathematical problems to earn bitcoin rewards. Once completed, this would make Bhutan one of the only countries to run a state-owned mine, alongside El Salvador.
Bhutan’s Negotiations with Nasdaq-Listed Mining Company Bitdeer
Bhutan is also in negotiations with Nasdaq-listed mining company Bitdeer, which was founded by former Chinese billionaire Wu Jihan. Bitdeer is one of the world’s largest bitcoin miners and recently listed on the Nasdaq through a $1.1 billion merger with a blank check company. Bitdeer revealed to investors in a stock market update that it was in talks to secure access to 100 megawatts (MW) of power for a bitcoin mining datacenter in Bhutan, slated to break ground this quarter.
This partnership would increase Bitdeer’s mining capacity by about 12%, adding to its data centers in Washington, Texas, and Norway.
Scale of Bhutan’s Mining
Bhutan customs data hints at the scale of its mining operation. Last year, around $142 million worth of computer chips were imported into Bhutan, accounting for around a tenth of the kingdom’s total $1.4 billion of inbound trade, or around 15% of the government’s $930 million annual budget. The cost of bitcoin mining rigs tracks the cryptocurrency’s value as it swings, but industry insiders say even at 2021’s sky-high prices, this level of spending would equate to a data center the size of several football fields.
Concerns About Bhutan’s Mining Operations
Analysts have also voiced concerns about Bhutan’s suitability for large-scale mining operations. While Bhutan exports roughly 75% of the electricity generated in its country to India annually, its rivers dwindle in the winter dry season, and it actually imports energy back from its giant neighbor. During those periods, miners stand to lose substantial amounts, according to Alex de Vries, an economics researcher at Vrije Universiteit Amsterdam and the author of Digiconomist.
“If you shut down for extended periods of time, you risk not even being able to recoup your investment. Not running means no income.”
Bhutan’s Negotiations with Other Miners
Bhutan’s government appears to have considered working with other miners beyond Bitdeer. Insiders at rival services and pools said they have held advanced talks with senior government officials, including Druk, about the kingdom building and operating a hydro-powered operation.
Bhutan’s Efforts to Develop Crypto Portfolio
Forbes previously reported that Bhutan’s state-owned holding company, Druk Holding & Investments, covertly poured millions of dollars.