In a recent revelation, Bhutan, a South Asian country neighboring China, has been identified as hosting government-owned Bitcoin mining facilities. This discovery sheds light on a strategic move by the Bhutanese government to compensate for the decline in tourism revenue due to the pandemic by venturing into Bitcoin mining. The mining facilities, strategically scattered across various regions, encompass four Bitcoin mining establishments, each strategically situated in Dochula Pass, Trongsa, Dagana, and the region known as the Education City.
The authenticity of these mining facilities has been confirmed by Druk Holdings & Investments (DHI), the kingdom’s investment company. Faced with diminished tourism income, the government turned to Bitcoin mining as a means of offsetting losses. Sources, opting for anonymity, disclosed that government officials initiated discussions with Bitcoin mining companies and device suppliers back in 2020.
Economic Implications: Bitcoin Mining in Bhutan
The government’s investment in Bitcoin mining equipment, amounting to $220 million imported from China between 2021 and 2022, underscores Bhutan’s commitment to this burgeoning industry. Additionally, Energy Ministry data reports a staggering 63% increase in the energy consumption of the mining sector in 2022. Despite historically exporting excess energy to India, Bhutan reversed the trend in 2023, importing $20.7 million worth of energy.
Beyond government-run facilities, Bhutan has other Bitcoin mining operations, including the country’s largest mining facility, owned by a private company. Through a partnership with Singapore-based Bitcoin mining giant Bitdeer, Bhutan has become the central hub for the company’s expansion plans in Asia. Bitdeer, operating 11,000 mining devices with plans to add 15,000 more, is anticipated to surpass the energy consumption of the rest of the country once its 600 MW facility is completed.
Royal Interest: King Jigme Khesar Namgyel’s Crypto Affiliation
King Jigme Khesar Namgyel of Bhutan has long exhibited an interest in cryptocurrencies. Ripple collaborated with Bhutan in 2021 to explore the development of the country’s official digital currency. Furthermore, it has come to light that a government-owned fund in Bhutan discreetly invested in cryptocurrencies, including Bitcoin and Ether.
Global Trends: El Salvador’s Parallel Bitcoin Mining
Bhutan is not the sole government engaging in Bitcoin mining. Following its historic move to recognize Bitcoin as a legal tender in 2021, El Salvador also actively participates in Bitcoin mining. Allocating $500 million for the development of mining facilities and infrastructure expenses, El Salvador mirrors Bhutan’s effort to harness the economic potential of the cryptocurrency sector.
Hash Rate Surge: Government-Driven Trends
As governments increasingly delve into Bitcoin mining, the hash rate continues to set records. The hash rate, representing the total computational power of devices used in Bitcoin mining, has soared to 500 exahashes per second, doubling from last year’s level of 250 exahashes. Simultaneously, mining difficulty, an indicator of the challenge in Bitcoin production, has reached record highs, climbing from 36 trillion last year to a staggering 68 trillion.
Closing Remarks
Bhutan has ventured into government-owned Bitcoin mining facilities, aligning with global trends in cryptocurrency strategies. However, as the kingdom faces economic challenges from the pandemic, diversifying into Bitcoin mining provides promising revenue and technological opportunities. Moreover, this move reflects a strategic position in the rapidly evolving cryptocurrency landscape worldwide. Therefore, Bhutan’s foray into Bitcoin mining serves as a proactive response to the ongoing economic uncertainties. Furthermore, it highlights the country’s commitment to embracing innovative solutions for sustainable development. In addition to this, the active pursuit of technological advancements positions Bhutan at the forefront of the evolving digital economy.
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