Bitcoin in Bhutan: Charting Its Own Course of Economic Development

Bhutan is one of the largest sovereign holders of bitcoin. Hyla Fund’s Paola Origel visits and finds a small landlocked country punching above its weight. Updated Dec 19, 2024, 5:10 p.m. UTCPublished Dec 19, 2024, 4:49 p.m. UTC

As nations explore the implications of digital currencies, Bitcoin is becoming part of national strategies. El Salvador made headlines as the first country to adopt Bitcoin as legal tender, while the United States is considering a national Bitcoin reserve. Even China, despite its cautious stance on cryptocurrency, has embraced blockchain technology to support its digital yuan. Amid these changes, Bhutan stands out — not by following global trends, but by charting its own path.

Nestled in the Himalayas between China and India, Bhutan has long defied conventional economic models. Instead of prioritizing Gross Domestic Product (GDP), the country measures success using Gross National Happiness (GNH), focusing on the well-being of its citizens. Under the leadership of King Jigme Khesar Namgyel Wangchuck, Bhutan is now integrating blockchain and Bitcoin into its vision for sustainable development. Projects like the creation of a “Mindfulness City” in Gelephu highlight Bhutan’s approach to merging technology, culture, and sustainability.

I have been fortunate to visit Bhutan twice in recent years, and from the moment I first arrived, I felt an unshakable connection to the country. During my visit to Bhutan’s tech park in Thimphu, I engaged in several conversations about the “Mindfulness City” initiative and learned about bitcoin mining in Bhutan. While the country has been discreet about its Bitcoin mining operations, its growing interest in the field is undeniable. Bhutan is not only preserving its rich traditions but also boldly embracing emerging technologies as tools to advance its unique development philosophy.

Bitcoin Mining: A Quiet Revolution in the HimalayasDruk Holding and Investments (DHI), Bhutan’s investment arm, and Green Digital Limited (GDL) began Bitcoin mining when prices were around $5,000. Today, Bhutan’s Bitcoin reserves exceed $1 billion, making it one of the largest sovereign holders of digital assets, according to Bitwise Europe. As of 2023, these holdings represent approximately 34.48% of the country’s $2.9 billion GDP, according to World Bank data. This reflects Bhutan’s strategic use of cryptocurrency as an economic asset.

Bhutan is expanding its mining infrastructure through a phased development pipeline with Bitdeer Technologies Group. The first phase, with a capacity of 100 megawatts, is already operational. A second phase aims to add 500 megawatts by mid-2025. The project is powered by Bhutan’s abundant hydropower resources, ensuring mining is both sustainable and efficient. The $500 million fund established in May 2023 with Bitdeer underscores Bhutan’s focus on attracting foreign direct investment (FDI) and strengthening its position in the global Bitcoin mining landscape.

The construction of a 100-megawatt crypto-mining data center in Gedu was Bhutan’s first large-scale Bitcoin mining venture. It uses the country’s hydroelectric power to mine bitcoin in an environmentally responsible way. The facility currently houses 30,000 mining machines, which likely produce three to five bitcoins daily, generating daily revenue of $317,400 to $529,000 at today’s prices. This strategic approach allows Bhutan to generate steady income from bitcoin mining while mitigating market volatility. The project also creates local jobs, contributing to the country’s broader economic transformation.

Mindfulness City: A Blueprint for the FutureThe “Mindfulness City” in Gelephu is less a traditional city and more a transformative development project aimed at fulfilling Bhutan’s long-term vision. In his National Day speech on December 17, King Jigme Khesar Namgyel Wangchuck, highlighted the project’s goal to create opportunities for Bhutanese youth, encouraging them to remain in the country rather than seek opportunities abroad. “Balancing economic growth with the preservation of Bhutan’s natural beauty, culture, and values is crucial,” the King stated.

Covering over 2,500 km², Mindfulness City is designed to integrate sustainable development with modern technologies, including blockchain and artificial intelligence. Gelephu’s location, at the crossroads of South Asia and Southeast Asia, makes it a strategic hub for economic activity. As a Special Administrative Region (SAR), the city aims to attract both domestic and international investment with a business-friendly environment.

The project will focus on seven key sectors: agritech, finance, education, green energy, health, high-tech, and spirituality. By diversifying its economy, Bhutan seeks to combine technological progress with its cultural values. A recent development within this framework is the application by Matrixport, a global crypto financial services company, for a Financial Services Permission License to operate in Mindfulness City. Matrixport is the first company to apply under the city’s new regulatory framework for financial services and virtual assets. This move highlights Bhutan’s interest in building a regulated environment for digital assets and blockchain, reinforcing its strategy to attract global players while maintaining its commitment to sustainable and culturally mindful development.

Happiness as an Economic ParadigmBhutan’s focus on happiness challenges traditional economic models. The GNH framework, introduced in the 1970s, measures national success through health, education, community vitality, and environmental stewardship. This holistic approach complements blockchain’s potential to create fairer, more transparent systems.

Blockchain technology can support Bhutan’s GNH goals by enhancing accountability in public projects and ensuring the fair distribution of resources. For example, Bhutan repurposed its “Education City” into a Bitcoin mining hub, illustrating how technology can meet local needs while contributing to global innovation.

Bhutan’s experience demonstrates how small nations can leverage their strengths to lead in emerging technologies. With a population of just 700,000, Bhutan can quickly implement policies and adapt to changes. The country’s use of hydropower for Bitcoin mining sets a global example of environmentally responsible practices in the cryptocurrency industry. This approach reduces mining’s carbon footprint while aligning with Bhutan’s commitment to environmental preservation.

As Bhutan advances its development strategy, the King’s vision offers a clear path forward, blending tradition with modernity. The “Mindfulness City” represents Bhutan’s goal to create a thriving society where technology serves the nation’s people and its unique cultural values.

For the global community, Bhutan’s adoption of blockchain and Bitcoin presents an alternative view of success — one that prioritizes well-being over profit. In a world of rapid technological change, Bhutan shows how technology can promote sustainable growth while preserving cultural identity. This innovative approach proves that even small nations can lead by example, demonstrating how technology can benefit humanity rather than divide it.