Bitcoin Now Accounts for 40% of Bhutan’s GDP: WSJ

Nestled in the Himalayas, Bhutan, a nation celebrated for its “gross national happiness” philosophy, has gradually emerged as a cryptocurrency leader. A Wall Street Journal report on Thursday highlighted that Bhutan now holds an eye-catching Bitcoin reserve valued at approximately $1.3 billion.

The report cited data from Arkham Intelligence showing that Bhutan’s impressive Bitcoin stash accounts for nearly 40% of its gross domestic product (GDP). Furthermore, its 12,062 BTC holding positions Bhutan as the fourth-ranking nation among governments with crypto holdings worldwide. Those ahead of Bhutan are the United States, China, and the United Kingdom.

Tapping Hydropower to Mine Digital Wealth

Bhutan’s crypto venture emerged as a creative solution to economic woes intensified by the Covid-19 pandemic, which slashed tourism revenue and spurred emigration among 10% of its population.

Led by Ujjwal Deep Dahal, CEO of Druk Holding and Investments, the project started small with experimental computers that once overheated an office. Meanwhile, Bhutan has forged a distinctive path by mining Bitcoin since 2020. 

By 2022, four state-run mining facilities were operational, with at least six now active. Unlike the United States, which accumulated its crypto reserves through seizures, Bhutan leveraged its abundant hydropower resources to mint new bitcoins. 

For perspective, the nation’s abundant, low-cost hydropower has become the cornerstone of its Bitcoin mining initiative, positioning it among the elite in the digital space. This innovative strategy has transformed the country’s economic outlook. Previously, the government relied on tourism, agriculture, and hydropower as its primary sources of revenue.

Bitcoin Surge Fuels Bhutan’s Economic Growth

Notably, as Bitcoin’s price climbed from under $10,000 in 2020 to over $100,000 today, Bhutan’s reserves grew substantially, providing a critical financial buffer. The Bitcoin haul has delivered significant gains, funding a 65% salary increase for civil servants in 2023.

The landlocked country, situated between China and India, achieved this milestone by liquidating $100 million of its stockpile. This compensated for reduced hydropower export revenues, which typically account for 40% of the national budget. This economic move came as a surprise to many citizens who were unaware of Bhutan’s crypto endeavors.

Meanwhile, the volatility of Bitcoin poses risks, as a price crash could strain public finances. To diversify, Bhutan partnered with Singapore’s Bitdeer Technologies in 2023 to construct additional mines.

Bitdeer would honor the dues of their partnership in U.S. dollars, strengthening Bhutan’s foreign reserves. The government also introduced a payment system allowing tourists to use over 100 cryptocurrencies for travel-related expenses.

Bhutan’s bold crypto experiment positions it as a forward-thinking player in the global digital economy. At the same time, it encourages the uninitiated to explore exposure to Bitcoin, the largest cryptocurrency by market capitalization.

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