How the Royal Government of Bhutan Became the 4th Largest Nation in BTC Holdings
- The Bhutanese government invested $500 million into crypto mining, equivalent to 21% of its fiscal year 2021–2022 gross domestic product.
- The country started mining Bitcoin at $5,000.
- Electricity tariffs in Bhutan cost $0.015 to $0.032 per kWh.
Arkham recently uncovered that Druk Holding & Investments (DHI), the investment arm of Bhutan’s Royal Government, holds over 13,000 BTC, valued at more than $750 million. Unlike many countries, Bhutan’s Bitcoin holdings aren’t from law enforcement seizures but from its growing mining operations, which have surged significantly since 2023.
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Bhutan is accelerating its Bitcoin mining efforts by building facilities across multiple locations, including its largest at the former Education City project. The country now holds more Bitcoin than El Salvador, which has implemented a daily Bitcoin-buying strategy.
Bhutan’s Investment Into Bitcoin Mining
Local reports reveal that from July 2021 to June 2023, the government invested nearly $500 million in crypto-mining facilities — equivalent to 21% of the country’s gross domestic product (GDP) for the 2021–2022 fiscal year.
In May 2023, Bitdeer partnered with DHI to establish a fully carbon-free Bitcoin mining operation in Bhutan. This collaboration aims to increase the country’s mining capacity sixfold, reaching 600 megawatts by mid-2025 with a projected 500-megawatt expansion.
Bhutan has been mining Bitcoin using hydroelectric power since April 2019, when Bitcoin was valued at $5,000. According to DHI, this renewable energy source provides cheap, abundant electricity, making the country an ideal hub for Bitcoin mining. During winter, operations pause or import power to ensure no disruption to domestic consumption, local industries, or the private sector.
Profitability Strategies for Bitcoin Mining Companies
Bitcoin mining difficulty has hit a record high of 92.67 terawatts, making profitability challenging for smaller miners. In Bhutan, electricity costs range from 1.28 to 2.66 Nu per kWh (roughly $0.015 to $0.032), significantly lower than rates in places like Urban Hawaii, where prices reach up to $5.96 per kWh. This cost advantage makes Bhutan an attractive location for large-scale mining operations.
Two significant trends are reshaping Bitcoin mining: facilities are transitioning into AI and high-performance computing (HPC) centers, while Bitcoin mining companies are increasingly adopting MicroStrategy’s strategy of buying and holding BTC.
Shift to AI/HCP
VanEck projects that Bitcoin miners could generate an estimated $37.6 billion in net present value by 2027 by shifting 20% of their capacity to AI and high-performance computing (HPC). Bitdeer alone gains $6.5 billion by converting its current 895 megawatts to a target of 2.5 gigawatts for AI and HPC operations.
Bitcoin Mining Companies Buying and Holding BTC
Several Bitcoin mining companies have followed MicroStrategy’s lead by adopting a buy-and-hold Bitcoin strategy. The latest is Canadian miner Cathedra Bitcoin, which outlined this approach in its Bitcoin Treasury Strategy Memo. It notes that nine of the ten largest miners by market cap now hold less Bitcoin per share than three years ago.
Year-to-date, MicroStrategy has gained 96.34%, and its stock is up nearly 800% since adopting its Bitcoin buying strategy in 2020.
