Bitcoin king: Why is Bhutan betting on crypto?

Al Jazeera

14-04-2025

For years, Bhutan has measured its economic and social development using uncommon currencies: happiness and sustainability.
But amid growing economic pains and a brain drain, the small, landlocked Himalayan kingdom is adopting a new emblem of progress, which is propelling Bhutan into a leading role, globally, in embracing financial innovation: Bitcoin.
Nestled between India and China, Bhutan – also the first country in the world to become carbon negative– has mined millions of dollars in the world's most popular cryptocurrency in recent years, making an economic bet that almost no other country has, to the same extent.
So, why is Bhutan going big on Bitcoin? How is it mining the energy-intensive cryptocurrency? How much wealth in Bitcoin does the country hold? And is its move risky, given the wild fluctuations in prices that the digital currency has witnessed over the years?
Bitcoin is the first decentralised, peer-to-peer cryptocurrency, created in 2008. It is not controlled by any government.
People can buy and sell cryptocurrencies like Bitcoin, and these transactions are recorded on a shared ledger called a blockchain. Bitcoin has value because there is a finite number of Bitcoins that can exist on the blockchain, about 21 million. Most of these coins have been mined and approximately 1 million remain.
Bitcoin mining is the process through which new Bitcoins are officially added to the blockchain. To mine Bitcoin, an energy-guzzling supercomputer needs to solve a complex puzzle. This adds a new digital coin into circulation.
Bhutan's hydropower plants fuel supercomputers that solve complex problems to be rewarded with Bitcoin, which can be added to the blockchain.
'It's just a simple strategic choice that many people have made and earned billions of dollars, and I think governments should do it,' Bhutanese Prime Minister Tshering Tobgay told Al Jazeera's Bernard Smith in the capital, Thimphu, in March.
Tobgay explained that during the summer months, there is more water flow and the hydropower plants generate more energy than needed.
'That's where Bitcoin mining makes tremendous sense,' said Tobgay.
The country is in the midst of mounting economic challenges, and Bitcoin mining is among a set of steps the nation of 800,000 people is taking to fight its way out of the crisis.
The country has no outlet to the sea, and although – at a little more than 38,000 sq km (14,672 sq miles) – it is almost as big as Switzerland, most of this land is not arable due to its mountainous terrain. Bhutan imports most of its food from India, which Tobgay described as the kingdom's 'closest friend and neighbour'.
The International Monetary Fund (IMF) estimates Bhutan's gross domestic product (GDP) to be $3.52bn in 2025. Based on this, tourism contributes about 3.4 percent to the country's GDP. However, after COVID-19 shook the industry, Bhutan has struggled to draw people back to visit its mountains, forests and Buddhist shrines.
Bhutan has long controlled how many tourists it hosts to ensure that its pristine ecology is not affected by a higher footfall than it can manage. It charges a sustainable development fee of $100 to foreign tourists. The only exception to this rule is tourists from India, who have to pay $15. Tobgay says the vision behind this is to attract 'high-value and low-volume' tourists.
But now, Bhutan is struggling to get even the limited numbers of tourists it wants. According to Tobgay, the country can host approximately 300,000 tourists every year.
'Last year, I think about 150,000 tourists visited,' the prime minister said.
Bhutan's youth unemployment rate was 19 percent in 2024. The global average youth unemployment rate in 2023 was 13.6 percent, according to the World Bank.
One of the most potent symptoms of Bhutan's crisis is the exodus of young, educated people to other countries in recent years – and their departure only compounds the country's economic struggle.
In 2022 alone, more than 10 percent of Bhutan's skilled and educated population left the country. Australia, one of the major destination countries, saw its Bhutanese immigrant population more than double in five years between 2016 and 2021.
'We have jobs in Bhutan but they cannot compete against the wages that they can earn elsewhere in developed countries,' Tobgay said.
This brain drain has also depleted Bhutan's civil services. There was a sharp increase in civil servants quitting the system services since 2019, with the number of civil servants quitting continuing to increase until 2023, the state-funded Bhutan Broadcasting Service (BBS) reported in April 2024.
This is where Bitcoin, as an economic resource, appears to have helped: In 2023, the Bhutanese government sold $100m of the cryptocurrency to double the salaries of civil servants, Al Jazeera's Smith reported from Thimphu.
Since then, the BBS reported a marginal decline in civil servants quitting their jobs. In the first quarter of 2024, 500 civil servants resigned, compared with the nearly 1,900 who resigned in the same period in 2023.
Bhutan has not formally disclosed how much it holds in the cryptocurrency.
However, according to Blockchain intelligence firm Arkham, Bhutan's Bitcoin holdings are worth more than $600m as of April 9, making up about 30 percent of the kingdom's GDP.
Arkham's data suggests that Bhutan also holds other cryptocurrencies, including Ethereum and LinqAI. Albeit the kingdom's holdings of these currencies are much smaller than those of Bitcoin.
Bhutan's king, Jigme Khesar Namgyel Wangchuck, has long advocated for the country to invest in its digital infrastructure.
'Being a small nation makes us a smart nation – this is not out of choice but out of necessity,' the king said in a 2019 address. 'Technology is an indispensable tool that will be necessary to realise this aspiration.'
Bitcoin mining is one of the few ventures that allows Bhutan, a constitutional monarchy, to grow its economy while aligning with its values as a country, analysts say.
'The number of private sector investments that flow into Bhutan are quite limited because of the restrictions that come with Bhutan's mandate to maintain around 60 percent of forest cover and to focus on happiness and conservation of the environment rather than embracing industrialisation rapidly,' Aditya Gowdara Shivamurthy, an associate fellow at the New Delhi-based Observer Research Foundation (ORF), told Al Jazeera.
This limitation is also something Prime Minister Tobgay spoke of.
'We have been mindful to be very careful about foreign direct investment,' Tobgay said. 'We have been careful about allowing industries that would harm the environment, that would pollute our air, that would undermine our culture.'
What Bhutan does have is an environment and natural resources conducive to mining the cryptocurrency, said the ORF's Shivamurthy.
The capital, Thimphu, and other regions have cold temperatures, reducing the need to over-utilise the cooling systems needed to prevent supercomputers from overheating. The average temperatures in the country remain between approximately 15-30 degrees Celsius (59-86 degrees Fahrenheit) throughout the year, according to data from the World Bank.
The country also produces more hydropower than it consumes.
'It is important for Bhutan to capitalise on the green energy we have in terms of mining Bitcoin as a part of our investment portfolio,' Ujwal Deep Dahal, the CEO of Druk Holding and Investments, the commercial and investment arm of the Royal Government of Bhutan, told Al Jazeera.
Bhutan does export hydroelectricity to India. But Bitcoin mining gives Bhutan an alternative to exports. Where tariff rates are good, it sells the power to India. In projects where the rates are not good, Bhutan keeps the power and uses it to mine Bitcoin instead, the ORF's Shivamurthy explained.
'Instead of exporting [hydropower] at a very cheap rate, we are using it to mine Bitcoins in the high mountains of Bhutan,' Tenzing Lamsang, editor-in-chief of The Bhutanese newspaper, a private weekly based in Thimphu, told Al Jazeera.
Besides mining Bitcoin, the country is building a special administrative region and economic hub, the Gelephu Mindfulness City, to combine its ideals of sustainability and wellbeing with commercial growth. The city is an urban development project with low-rise buildings, sustainable businesses, residential zones, a national park and a wildlife sanctuary.
While governments were wary about Bitcoin in its early days, many are now changing their approach.
On March 6, United States President Donald Trump established a strategic Bitcoin reserve. Besides the US, El Salvador holds nearly $550m in Bitcoin, the government announced on March 5.
Other governments, such as the Central African Republic and France, are beginning to recognise Bitcoin as a legal tender.
On April 7, Pakistan appointed Changpeng Zhao, the founder of Binance, which is the largest cryptocurrency exchange globally, as an adviser to the Pakistan Crypto Council (PCC), a regulatory body set up in March, as the country attempts to position itself as a crypto leader in South Asia.