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Bitcoin Mining Accounts for 5% of Bhutan’s GDP Expenditure

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An attractive country, hidden amidst the majesty of the Himalayas, Bhutan is exploiting its abundant hydroelectric potential, which makes up 30% of its GDP, to electrify the households of almost all of its 800,000 residents. More interestingly, it spent 5% of its GDP buying Bitcoin (BTC) mining equipment.

Over the past few years, the Bhutan administration has surreptitiously tapped into these reserves to fuel a hidden bitcoin mining endeavor.

In a recent report, Forbes revealed that Bhutan has been entertaining the idea of ​​establishing sovereign mining projects since 2020.

Bhutan intends to run massive pools of mining rigs, employ the country’s hydroelectric facilities and perform complex mathematical operations to secure bitcoin rewards. If this is achieved, Bhutan will join El Salvador as one of the rare countries that can boast state-owned bitcoin mines.

Bhutanese mining started years ago when bitcoin was worth around $5,000. Mining profits offset energy and hardware expenses.

The project as a whole, including its whereabouts, its profitability, and the reasons for not being disclosed to the public, remains a mystery.

Parleys with Bitdeer

Bhutan is currently negotiating with Nasdaq-listed mining company Bitdeer, which was founded by former Chinese billionaire Wu Jihan.

In a recent update, Bitdeer revealed its ongoing discussions regarding access to 100 megawatts of power for a bitcoin mining data center in Bhutan, slated for construction this quarter.

Bitdeer, one of the world’s leading bitcoin miners, made its Nasdaq debut earlier this month through a $1.1 billion merger.

The collaboration with Bhutan will increase Bitdeer’s mining capacity by approximately 12%, complementing its data centers in Washington, Texas, and Norway. The announcement declined to identify the ultimate owner of the new data center.

Cryptocurrency cravings on the rise in Bhutan

Druk Holding & Investments, the Bhutan state-owned holding company, has been secretly pumping millions of dollars into crypto assets, as revealed during the bankruptcies of lenders BlockFi and Celsius.

Whispers of government-backed bitcoin farms have been spreading across the country lately. In addition, according to customs data, Bhutan’s import of computer chips has seen a significant increase.

International advocates have expressed concerns about the $193 million spent on computer chips, which could exacerbate a widening trade deficit and a marked decline in the country’s foreign exchange reserves.

The scale and ramifications of mining in Bhutan

Prior to the Bitdeer revelations, Bhutan had allegedly explored a 100-megawatt operation connected to one of its hydroelectric plants.

Although it is smaller than extensive farms such as Riot’s Rockdale facility in Texas, it will rival other important projects such as the Bitriver mine in Russia.

While the exact use of the hardware remains unknown, the nation’s fascination with blockchain technology is evident through its experimentation with Central Bank Digital Currency (CBDC) in collaboration with Ripple (XRP).

way ahead

Bhutan’s hidden involvement in bitcoin mining raises questions about the nation’s openness and the environmental consequences of its investments.

As Bhutan continues to increase its mining operations, and achieve a harmonious balance between economic development, the well-being of its citizens and the global community will be of paramount importance.

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