Bhutan now boasts a stash of bitcoins worth $1.3 billion, or roughly 40% of the country’s gross domestic product, according to cryptocurrency platform Arkham. It is the third-largest such stockpile held by governments, according to Arkham.
Unlike the U.S. or U.K, which also have vast crypto holdings, Bhutan’s fortune wasn’t seized from criminal activity or purchased in the open market. Instead, the secluded Buddhist nation began quietly setting up bitcoin mines in 2020, harnessing its abundant hydropower to dig for digital gold.
“For Bhutan, it was quite obvious in a lot of ways,” said Ujjwal Deep Dahal, chief executive of Bhutan’s sovereign-wealth fund, Druk Holding and Investments, which implemented the project. “We kind of look at bitcoin as a store of value, similar to gold.”
Many countries are studying ways to inject cryptocurrency into their financial systems. In March, President Trump signed an executive order to create a national stockpile of bitcoin and other digital currencies.
Crypto experts say larger countries want to stake an early claim as a leader in cryptocurrencies, similar to how New York and London dominate traditional finance. Smaller countries also see it as a potential boost. One of the boldest experiments came in 2021, when El Salvador adopted bitcoin as legal tender, although use of the currency didn’t take off.
Bhutan’s bet on bitcoin, however, carries risk. A fall in bitcoin’s price could deal a heavy blow to the government’s coffers.
Sandwiched between China and India, Bhutan, population 780,000, is an unlikely trailblazer in cryptocurrency. Old traditions still dominate: Government officials wear traditional dress, which for men entails a knee-length robe tied at the waist. The capital city of Thimphu has no traffic lights. Archery competitions are a popular weekend pastime. The country’s first credit-card transaction occurred in 2010.
Bhutan has gauged economic progress with a “national happiness index.” But the Land of the Thunder Dragon—named for the dramatic thunderstorms that sweep through its valleys—has struggled to expand its economy beyond hydropower, agriculture and tourism.
Its economy has struggled since the Covid-19 pandemic choked off tourism. Over the past five years, 10% of its population has emigrated in search of better jobs.
“We are poor,” said Dr. Lotay Tshering, a urologist who was prime minister from 2018 to 2023. “Many people refer to Bhutan and Bhutanese as the happiest country in the world. We are not.”
When Jigme Khesar Namgyel Wangchuck, the 45-year-old king who is nicknamed the “Asian Elvis” for his good looks, asked officials for ideas on how to use technology to jump-start the economy, the idea for bitcoin mining emerged.
It is unusual for a sovereign country to run its own crypto-mining operations. But Bhutan already had the key ingredient for profitable mining: cheap electricity.
To unlock new bitcoin, computers must solve mathematical puzzles that become increasingly complex over time. In bitcoin’s early days, enthusiasts often generated new coins using their home computers, but today’s large-scale mining operations require servers guzzling vast amounts of power.
Miners have set up shop in far-flung places like Kazakhstan to take advantage of low electricity prices.
Bitcoin “acts as a battery for us, using up excess summer power,” said Dahal, the CEO of the sovereign-wealth fund, who studied blockchain technology for years as a personal hobby.
The effort got under way in 2019 under the fund’s research and development wing, said Dahal, who started by reading material online and watching YouTube videos on how to mine bitcoin. The team eventually imported two computers to tinker on, which overheated the office one night and led to frantic calls from security at 3 a.m.
However, when the first mine broke ground in late 2020, Bhutan had closed its borders due to the pandemic, preventing anyone from flying in to help set up operations. Dahal and four employees configured the machines themselves, spending months sleeping on-site. The first location, near Dochula Pass, a snowy mountain pass, was chosen for its cool temperatures and proximity to transmission lines, according to officials. Experts in Singapore and Malaysia advised over the phone.
“You don’t want to waste a day of mining, once you have the machines,” Dahal said.
Soon, the effort was successful. By 2022, Bhutan had broken ground on all four of its government-owned mines, officials said. Moreover, it came just ahead of a run-up in the price of bitcoin, which has gone from under $10,000 in 2020 to around $100,000 today.
Prime Minister Tshering Tobgay said the bitcoin haul has more than made up for a drop in hydropower exports, which typically fund about 40% of the government budget. Hydropower exports have fallen as bitcoin mines use up more electricity.
In 2023, the government decided to sell off $100 million of its cache to finance pay rises for civil servants for two years.
“That increase has been financed totally with bitcoins,” Tobgay said. If you just sold electricity, “you wouldn’t get anywhere near the amount that’s required.”
Bhutan is seeking other ways to profit from bitcoin. In 2023, Singapore-based mining company Bitdeer Technologies announced it was joining forces with Bhutan to build mines. The deal gives Bitdeer, which financed the construction of two mines, all the bitcoin. The company in turn pays Bhutan for electricity in U.S. dollars, which has boosted the country’s foreign-currency reserves.
The government has stayed mum about most of the locations and the exact number of its own mines, which are controlled by a company called Green Digital. At least six mines are operational, according to officials and satellite images from Planet Labs.
Dahal said the secrecy is to prevent “misuse or hacking or anything else.” The project, he added, has complied with all Bhutanese regulations.
Behind closed doors, some bureaucrats grumble about the opaque nature of the project and wonder how the money will ultimately be spent. Many Bhutanese people had no inkling about Bhutan’s bitcoin stockpile until local news covered the pay bump for government employees.
Chencho Tshering, a 25-year-old analyst at the national land commission, said he couldn’t believe at first that Bhutan’s struggling economy could generate enough funds to give him a 65% raise.
“I wasn’t aware of bitcoin at all, but it is a diversification of our economy,” he said. “It’s smart.”
Now, the government plans to hold on to the bitcoin reserves for the long haul, officials said, instead of liquidating to fund government spending. While it doesn’t plan to add further mines, it expects to update the existing ones.
Bhutan is experimenting with other ways to weave cryptocurrency into daily life. Last month, the government launched a crypto-payment system that allows tourists to pay with more than 100 cryptocurrencies for flights, hotels and visas.
Dr. Tshering, the former prime minister who now serves as governor of the special administrative region that oversees the bitcoin mines, said cryptocurrency will be integrated into every facet of that region, called Gelephu Mindfulness City, including its strategic reserves. Cryptocurrencies will likely be accepted within the city, which is also developing its own digital currency.
“It’s basically the salt in your curry,” Dr. Tshering said, referring to crypto. “It will touch every element in the curry.”
Write to Shan Li at shan.li@wsj.com
