Bhutan, a small Himalayan kingdom wedged between India and China, with a population of around 800,000, has revealed that it has been quietly mining Bitcoin using its vast hydroelectric plants to power racks of mining machines since 2020.
This move comes at a time when there are growing concerns over the environmental impact of cryptocurrency mining, as Bitcoin and other cryptocurrencies require vast amounts of energy to operate. However, Bhutan’s commitment to renewable and sustainable development could provide an opportunity for the country to pursue cryptocurrency mining in a more environmentally friendly manner.
Bhutan is not the first country to use Bitcoin mining to generate revenue. El Salvador made Bitcoin a legal tender in 2021. However, Bhutan is the first country to use Bitcoin mining to generate revenue for its government. The Bhutanese government is reportedly in talks with several Bitcoin mining companies such as Bitdeer, about settings up operations in the country.
Sources familiar with Bhutan’s efforts have said that the earnings from Bitcoin mining are being used to subsidise power and hardware costs. Bhutan is also known for its significant crypto portfolio, with its state-owned holding company, Druk Holding and Investments, having previously poured millions of dollars into cryptocurrency holdings. While these investments were made through a sovereign entity created to manage the country’s wealth on behalf of its people, its citizens were never told.
The kingdom also saw an increase in chip imports in recent years. The Bhutanese government has spent $193 million on computer chips fuelling a widening trade deficit along with a sharp drop in the country’s foreign currency reserves.
Bhutan’s immense hydropower potential makes it an attractive destination for crypto-mining companies following China’s ban on crypto-mining in 2021 and Kazakhstan and Sweden’s tax imposition on miners. “It’s no surprise that entities are mining Bitcoin in Bhutan. The mountainous country has a massive hydropower capacity compared to its small population and produces a similar amount of electricity per capita as the United States — a much wealthier country,” Jaran Mellerud, bitcoin mining analyst told Forbes.
Although the mining companies are eyeing the kingdom, analysts have voiced concerns about Bhutan’s sustainability for large-scale mining operations as the rivers dwindle in the winter season causing Bhutan to import electricity from India. During this time, the miners stand to lose substantial amounts.
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