Bhutan has emerged as the largest Bitcoin holder in South Asia, surpassing El Salvador in cryptocurrency holdings, according to recent data from Arkham Intelligence. On September 16, the on-chain analytics platform reported that Bhutan holds a remarkable 13,029 Bitcoin, valued at approximately $758 million. In contrast, El Salvador, a country famously known for embracing Bitcoin as legal tender, holds 5,875 Bitcoin, worth around $331 million.
Bhutan’s Strategic Bitcoin Mining with Hydroelectric Power
The Kingdom of Bhutan’s significant Bitcoin holdings are linked to its national investment arm, Druk Holdings and Investments (DHI), which mines Bitcoin using the country’s plentiful hydroelectric power. This sustainable energy source has given Bhutan a competitive edge in the cryptocurrency space, allowing it to amass a substantial amount of Bitcoin since it began mining in April 2019, when Bitcoin was priced at around $5,000.
Arkham Intelligence confirmed these mining activities through a combination of on-chain data and satellite imagery, which identified Bitcoin mining operations at the site of Bhutan’s former Education City project. Besides its impressive Bitcoin holdings, DHI also holds 656 ETH, valued at $1.5 million, and smaller amounts of Binance Coin (BNB) and Polygon, further diversifying its cryptocurrency portfolio.
Bitcoin’s Impact on Bhutan’s Economy
Bhutan’s growing crypto holdings are striking when compared to the country’s overall economy. With Bhutan’s gross domestic product (GDP) projected to reach $3 billion by the end of 2024, the nation’s Bitcoin reserves represent nearly 25% of its GDP, underscoring the substantial role that cryptocurrency plays in its economic strategy.
The Kingdom has recently expanded its efforts in the cryptocurrency sector. In May 2023, DHI partnered with Bitdeer, a Singapore-based Bitcoin mining company, to scale Bhutan’s carbon-neutral mining operations. The plan includes increasing mining capacity to 600 megawatts (MW) by mid-2025.
Comparison to El Salvador’s Bitcoin Strategy
El Salvador, which began purchasing Bitcoin in September 2021 when prices were around $51,700, has also integrated Bitcoin mining into its economic model. However, El Salvador primarily relies on geothermal energy from its volcanoes to power its mining operations. Despite its early adoption of Bitcoin, El Salvador’s total holdings trail behind Bhutan’s, largely due to the lower acquisition cost and earlier entry into the Bitcoin market by Bhutan.
A Failed Government Project Becomes Bhutan’s Largest Mining Site
Bhutan’s largest Bitcoin mining facility is located at the site of the Education City project, a failed $1 billion government initiative that aimed to create an international education hub but was abandoned due to mismanagement and scandal. The Bitcoin mining site is nestled in a mountainous region, with only transformers and power lines revealing its presence. Satellite images show construction at the site began in December 2021.
Despite the scale of the operation, Bhutan’s government, including its Ministry of Finance, has remained tight-lipped about the nation’s cryptocurrency activities. DHI, which oversees a variety of national assets including hydroelectric power plants, Bhutan’s flagship airline, and even a cheese factory, has offered little information on the revenues generated from its Bitcoin mining ventures.
Bitcoin Mining as an Economic Strategy During the Pandemic
Bhutan’s growing interest in Bitcoin mining can be traced back to the economic challenges brought on by the COVID-19 pandemic. In 2020, Bhutanese officials began engaging with Bitcoin miners and suppliers, looking for ways to diversify the economy and leverage the nation’s surplus of renewable energy. The country’s power consumption surged in 2022 due to the growing demands of the mining industry, accompanied by a significant rise in chip imports for Bitcoin mining.
While the mining operations identified at the Education City site are significant, they may not represent the full scale of Bhutan’s Bitcoin mining efforts. Bhutan has also partnered with Bitdeer to build a 600 MW Bitcoin mining facility in the town of Gedu, which is poised to become one of the largest mining operations in the region.
