Bhutan, the secluded Himalayan kingdom famed for measuring progress by Gross National Happiness instead of traditional economic metrics, finds itself turning to an unexpected economic savior — Bitcoin.
Historically isolated between economic giants China and India, Bhutan faces persistent economic pressures such as high youth unemployment, limited agricultural land, and a tourism industry still recovering from the pandemic.
With Bhutan's GDP hovering around $3.02 billion in 2023, tourism previously accounted for more than 10%, bringing in around $334 million. However, tourism plummeted during COVID-19, and numbers have yet to fully rebound.
Prime Minister Tshering Tobgay acknowledged that while Bhutan can accommodate about 300,000 visitors annually, only 150,000 arrived last year.
To offset these economic troubles, Bhutan is getting into Bitcoin mining – a decision brought about by its surplus hydropower. Bhutan's abundant rivers, fed by melting Himalayan glaciers, generate ample hydropower.
During peak summer months, excess electricity production surpasses domestic demand, creating an ideal scenario for Bitcoin mining. The country's hydropower plants thus power supercomputers solving complex mathematical puzzles, rewarding Bhutan with newly minted Bitcoins.
Currently, Bhutan's Bitcoin holdings are valued at over $600 million, accounting for about 30% of its GDP, according to blockchain analytics firm Arkham. Beyond Bitcoin, Bhutan has smaller holdings in Ethereum and LinqAI.
The strategic move to crypto isn't without precedent. Countries worldwide are quickly warming to these currencies, with global crypto adoption surpassing records.
For instance, El Salvador holds around $550 million in Bitcoin, and the United States recently established a strategic Bitcoin reserve under President Donald Trump.
This global crypto momentum isn't limited to Bitcoin alone – interest in alternative assets, particularly meme coins, has exploded recently, proving to us the growing mainstream enthusiasm for crypto's potential.
Bhutan's economic struggles are compounded by its geographic constraints. Nestled among mountainous terrain, the kingdom has limited arable land, forcing dependence on imports, particularly food, mainly from neighboring India.
Also, Bhutan's policy of environmental conservation, which maintains at least 60% forest coverage, restricts industrial expansion and foreign direct investment.
These economic restrictions directly contribute to a brain drain crisis. With youth unemployment reaching 19% in 2024, which is significantly above the global average of 13.6% reported by the World Bank, Bhutanese youth are increasingly emigrating for better employment prospects.
In 2022 alone, over 10% of Bhutan's educated populace moved abroad, particularly to countries such as Australia, seeking higher wages.
Interestingly, Bitcoin mining revenues are providing a direct economic stimulus, recently allowing Bhutan to sell $100 million worth of crypto. This sale directly funded a huge increase in civil servant salaries, effectively doubling wages and mitigating the civil service exodus.
Early 2024 saw civil servant resignations decrease to 500 from nearly 1,900 during the same period in 2023, showing Bitcoin's immediate benefit.
Sustainability is central to Bhutan's Bitcoin initiative, aligning smoothly with the kingdom's stringent environmental ethics. Given the naturally cooler climate, with temperatures that usually range between 15 to 30 degrees Celsius, there is reduced need for costly cooling systems, mostly required by mining operations elsewhere.
Moreover, the choice to mine Bitcoin rather than export hydroelectricity at lower tariff rates optimizes revenue, positioning Bitcoin mining as economically pragmatic and environmentally compatible.
Also, Bhutan is diversifying economically through innovative projects such as the Gelephu Mindfulness City, a special administrative region designed to support all this sustainability and economic activity.
This urban development project has its own sustainable businesses, residential zones, and protected natural areas, supporting Bhutan's environmental and happiness-centric philosophies.
Overall, Bhutan's strategic use of Bitcoin is not really an economic gamble but more a calculated move set for economic self-reliance, sustainability, and halting the exodus of its young talent.
Article edited by Sherri Wang
