Nestled in the majesty of the Himalayas, Bhutan is a charming nation that utilizes its abundant hydroelectric power, accounting for 30% of its GDP, to provide electricity to nearly all of its 800,000 residents. Interestingly, it has also invested 5% of its GDP in purchasing bitcoin (BTC) mining equipment.
In recent years, Bhutan's government has secretly used these reserves to support a clandestine bitcoin mining venture. According to a recent report by Forbes, Bhutan has been considering establishing state-run mining operations since 2020.
Bhutan plans to use its hydroelectric facilities to power large arrays of mining equipment, conducting complex computations to secure bitcoin rewards. If successful, Bhutan will become one of the few countries, along with El Salvador, to operate state-owned bitcoin mines.
The Bhutanese mining project began several years ago when bitcoin was worth around $5,000, and the profits from mining have offset the costs of power and hardware. However, the project's location, profitability, and the reasons for keeping it hidden from the public remain shrouded in mystery.
Negotiations with Bitdeer
Bhutan is currently in talks with Bitdeer, a mining conglomerate listed on Nasdaq and founded by former Chinese billionaire Wu Jihan. According to a recent update, Bitdeer has revealed that it is negotiating for access to 100 megawatts (MW) of power for a bitcoin mining data center in Bhutan, which is expected to be built in the current quarter.
As one of the world's largest bitcoin miners, Bitdeer recently made its debut on Nasdaq through a $1.1 billion merger. Collaborating with Bhutan would raise Bitdeer's mining capability by around 12%, in addition to its present data centers situated in Washington, Texas, and Norway. However, the announcement did not specify who would own the new data center.
Bhutan's Growing Interest in Cryptocurrencies
International advocates have expressed concerns about the $193 million spent on computer chips, which could worsen the country's growing trade deficit and lead to a significant decrease in foreign currency reserves.
The Scale and Implications of Bhutan's Mining Activities
Prior to Bitdeer's announcement, there were reports that Bhutan had been considering a 100 MW bitcoin mining operation linked to one of its hydroelectric plants. While smaller than large-scale facilities like Riot's Rockdale plant in Texas, this operation would still be comparable to other significant ventures such as Russia's Bitriver mine.
Although the specific purpose of the hardware is unknown, Bhutan's interest in blockchain technology is evident from its exploration of a central bank digital currency (CBDC) in partnership with Ripple (XRP).
Bhutan's Secret Bitcoin Mining and Sustainability Concerns
Bhutan's covert involvement in bitcoin mining raises questions about the country's transparency and the environmental impact of its investments. As Bhutan continues to expand its mining activities, it will be crucial to find a balance between economic growth, the well-being of its people, and the interests of the international community.