Mining digital gold: Bhutan’s hydro-powered crypto venture

Bhutan, a landlocked Himalayan kingdom of just over 800,000 people, is also the world’s first carbon-negative country, with one of the most ambitious crypto-mining extravaganzas ever seen. 

In 2023, Bhutan’s GDP was around 3.01 billion. The country’s lack of access to maritime trade and its non-arable, mountainous terrain has long made Bhutan reliant on India, its southern neighbour. In 2024, Bhutan’s total exports to India were valued at $436 million, followed not-so-closely by South Korea at just $13 million.

India and Bhutan have a longstanding free trade agreement where trade is conducted across their open border, in Indian rupees, to which the Bhutanese ngultrum (BTN) is pegged. 

While Bhutan relies on India primarily for food imports and machinery, India gets much of its renewable energy from Bhutan. With fast-flowing rivers and an installed capacity of around 2,500 megawatts, hydropower accounts for 20% of Bhutan’s GDP. 

The kingdom generates an abundance of electricity from this water-led power – its ‘white gold’ – and 65% of this electricity goes to India. 

Despite the economic and environmental sustainability of hydropower, Bhutan still can’t capture its full potential because pricing and export agreements are heavily tied to India. Its trade deficit with India is also striking, nearly doubling from over 32 billion BTN (around $345 million) in 2021 to over 61 billion BTN (around $658 million) in 2022, but this isn’t because of a worsening, one-sided dependency.  

The trade deficit with India is more a reflection of a surge in imports into Bhutan of specialised equipment, including large-scale computing hardware and infrastructure linked to blockchain operations: in one of the most unusual crypto experiments the world has ever seen. 

Mathletes in mining

Bitcoin, the first and largest decentralised cryptocurrency, is viewed as ‘digital gold’. Bitcoin mining sounds metaphoric, framing the digital asset as a naturally existing commodity like gold or silver, native to the earth’s crust. 

However, not too dissimilarly from those precious metals, mining activity for bitcoin also deeply benefits from the right environment. 

Bitcoin mining is the process of validating transactions on a blockchain network using specialised computers that solve complex cryptographic puzzles, which requires large amounts of electricity. Successful miners are rewarded with newly issued bitcoin, making mining effectively a way of converting electricity directly into a digital asset.

According to the United Nations, from 2020 to 2021, the global bitcoin mining network resulted in a carbon footprint equivalent to that of burning 84 billion pounds of coal.

Bhutan, on the other hand, entered this sector by leveraging its cheap, renewable hydropower, which allowed it to mine bitcoin with a significantly lower carbon footprint than most global competitors. The country’s tall mountains and high-altitude geography also provided the ideal environment to keep overheated computers cool amid busy mining times. 

The Bhutanese government’s sovereign wealth fund Druk Holding and Investments (DHI) began mining operations around 2019, when bitcoin prices sat timidly between $3,800 and $7,200 – nowhere near the rollercoaster-esque leaps it made in the following years. It was viewed as a hedge against external economic dependence.

“Being a small nation makes us a smart nation – this is not out of choice but out of necessity,” said Jigme Khesar Namgyel Wangchuck, the King of Bhutan, in a 2019 address. “Technology is an indispensable tool that will be necessary to realise this aspiration.”

This sparked Bhutan’s mass imports of Bitcoin mining technology, triggering a widened trade deficit driven by energy-intensive machinery. The DHI, alongside mining company Bitdeer, sought for $500 million to be invested in the country’s crypto venture.

The scale of investment indicates that Bhutan’s mining strategy was far beyond experimental: it was a state-linked industrial policy. However, because much of this activity was routed through sovereign investment channels, the full scale of the project was not initially transparent to external observers.

A short-lived crypto-mining empire

At its peak in late 2024, Bhutan held around 13,000 bitcoin, now worth around $931 million. This not only accounts for a substantial share of Bhutanese GDP but also positions Bhutan as one of the few countries to actively accumulate bitcoin through state-led mining.

Bhutan was essentially seen as building a ‘sovereign crypto reserve’ strategy, driven by the monetisation of renewable energy. 

However, since late 2024, Bhutan has reduced its bitcoin holdings by approximately 70%, bringing its reserves down to under 4,000 bitcoin (around $270 million). Blockchain intelligence data suggests that inflows from mining have largely stopped, with no significant new bitcoin generation recorded for over a year.

Instead of accumulating new coins, Bhutan has been actively transferring bitcoin to external wallets and selling through over-the-counter trading desks.

While the Bhutanese government has been largely taciturn about its striking crypto moves, one major driver of this shift may be the funding pressure for Bhutan’s new large-scale infrastructure projects, such as the Gelephu Mindfulness City. 

The urban development project is designed to become the nation’s new economic hub, combining Bhutanese ideals of sustainability and wellbeing with commercial advancement. 

In December 2025, Bhutan revealed that roughly $1 billion worth of bitcoin would be dedicated to supporting the long-term development of this initiative. 

The profitability of bitcoin mining has also declined significantly following the 2024 bitcoin halving. Bitcoin halving is an automatic event that occurs every four years, in which the reward given to miners for validating transactions and adding new blocks to the blockchain is reduced by 50%. These rewards are the primary incentive for miners, and halving them slows the rate at which new bitcoin enters circulation, reinforcing its scarcity.

Hence, despite their likeness in rarity, this is a crucial manner by which bitcoin differs from gold and silver. In many cultures, particularly across South Asia and the Middle East, a gold bracelet is traditionally seen as a symbol of wealth and stability, of family lineage, continuity, and even safety and security. The ‘digital gold’, by design, doesn’t carry that longevity. Unlike gold, whose value is embedded not only in markets but in cultural traditions, bitcoin’s legitimacy depends on technological systems.

For the DHI, halving meant that the rewards for mining declined, while network difficulty rose. This meant that there was more to gain from selling existing stock at high prices, rather than deploying electricity for mining lower and lower amounts of new bitcoin. 

Additionally, selling hydropower to India provides more stable and predictable revenue than mining bitcoin, and Bhutan’s hydropower expansion, including projects like Punatsangchhu-II, increases the value of exporting electricity. 

Bhutan’s decision to move away from bitcoin was as strategic as its choice to start mining it,  and it points to how sensitive bitcoin mining is to global price cycles, even for sovereign actors.

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Bhutan’s story is one of how a country can harness its natural resources and use them strategically to its advantage. 

Bitcoin mining offered Bhutan an alternative path to monetising energy, outside of traditional trade channels. Its volatility and declining margins made it less attractive over time, but this didn’t cripple Bhutan. 

Instead, the money generated by the crypto-craze is now being dedicated to infrastructure-led economic development, laying the foundations for long-term economic stability and unprecedented sustainability.