Can Bitcoin Save Bhutan’s Struggling Economy?
A Fresh Approach to Economic Challenges
For years, Bhutan has embraced an unconventional approach to measuring its development, prioritizing happiness and sustainability over traditional economic indicators. However, the small Himalayan kingdom, nestled between India and China, is now exploring the digital frontier of Bitcoin to address pressing economic challenges. As the nation grapples with a declining tourism sector and a talent exodus, the Bhutanese government has strategically turned to cryptocurrency as a potential avenue for economic recovery.
Embracing Cryptocurrency
Over the past few years, Bhutan has successfully mined millions of dollars worth of Bitcoin, positioning itself as a pioneer in cryptocurrency adoption on the global stage. Prime Minister Tshering Tobgay, in an interview with Al Jazeera, expressed confidence in this innovative approach. He noted that the country’s hydropower resources play a crucial role in Bitcoin mining, explaining, "During the summer months, there is more water flow and the hydropower plants generate more energy than needed. That’s where Bitcoin mining makes tremendous sense."
Economic Hardships and Tourism Declines
Bhutan’s economy is currently facing significant hurdles. The country, with a population of around 800,000, heavily relies on tourism, which contributes more than 10% of its gross domestic product (GDP). The pandemic severely impacted this sector, with a noticeable drop in visitor numbers. In 2023, tourism brought in approximately $334 million, while the country’s GDP was about $3.02 billion. However, the number of tourists fell to around 150,000, far below the potential capacity of 300,000. Additionally, Bhutan has experienced a troubling “brain drain,” with over 10% of its skilled workforce leaving the country in just one year. Australia has been the primary destination for these emigrants, with its Bhutanese population significantly increasing between 2016 and 2021. This loss of talent exacerbates the unemployment crisis, particularly among youth, where the rate stood at 19% in 2024, well above the global average of 13.6%.
Bitcoin as a Solution
In 2023, as part of its broader economic strategy, the Bhutanese government sold $100 million worth of Bitcoin to double the salaries of civil servants in an effort to retain talent. Reports indicate that this decision has led to a slight decrease in resignations from civil service positions, suggesting that Bitcoin may be providing a much-needed cushion against the ongoing economic stress.
The exact amount of Bitcoin held by Bhutan remains undisclosed, but estimates from blockchain intelligence firm Arkham suggest it exceeds $600 million, representing about 30% of the nation’s GDP. This financial resource is instrumental in providing the government with alternatives to bolster its economy amid declining tourism.
Sustainable Mining Practices
One of the significant advantages Bhutan has in Bitcoin mining is its commitment to sustainability. The country, known for its carbon-negative status, leverages its abundant hydropower to fuel the energy-intensive process of mining. Analysts have pointed out that Bitcoin mining aligns with Bhutan’s environmental goals while enabling economic growth—a rare combination for many nations.
"The number of private sector investments that flow into Bhutan are quite limited because of the restrictions tied to maintaining forest cover and a focus on happiness," explained Aditya Gowdara Shivamurthy of the Observer Research Foundation. Bhutan’s cooler temperatures further support Bitcoin mining operations by reducing the energy required for cooling systems.
Future Prospects
Bhutan’s commitment to developing its digital economy does not end with Bitcoin. The government is also exploring the establishment of the Gelephu Mindfulness City, envisioned as an economic hub that combines sustainability with commercial growth strategies.
With its heavy reliance on renewable resources and a proactive stance on technological investments, Bhutan is attempting to redefine its economic landscape. As the kingdom navigates the complexities of Bitcoin and cryptocurrency, all eyes will be on its evolving strategy and whether this bold move can indeed catalyze a revival of its economy.
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