Can Bitcoin Rescue Bhutan’s Struggling Economy?
Economic Challenges in the Himalayan Kingdom
Nestled in the Eastern Himalayas, Bhutan has long been known for its unique approach to economic and societal progress, emphasizing happiness and sustainability over conventional growth metrics. However, as the kingdom grapples with economic difficulties and a significant brain drain, the government has turned to an unexpected solution: Bitcoin mining.
For a country of about 800,000 residents, Bhutan faces a slew of economic challenges, including a high youth unemployment rate, which hit 19 percent in 2024. The country’s reliance on tourism, which contributed over 10 percent of its GDP, has suffered severe setbacks following the COVID-19 pandemic. With a vision of attracting “high-value and low-volume” tourists, the country’s strict tourist policy was put into place. Nevertheless, visitor numbers have failed to meet expectations, limiting Bhutan’s economic recovery.
Exploring Bitcoin as a Financial Solution
In a bid to harness emerging technologies for economic growth, Bhutan has ventured into Bitcoin mining, capitalizing on its abundant hydropower resources. Prime Minister Tshering Tobgay has publicly endorsed this innovative strategy, citing it as a means to generate significant revenue for the nation. As he explained in a recent interview, during the summer months, Bhutan’s hydropower plants often produce excess electricity, creating an opportunity for Bitcoin mining that aligns with the country’s renewable energy strategy.
With the assistance of advanced supercomputers, Bhutan has been able to mine millions of dollars’ worth of Bitcoin in recent years. Reports suggest that Bhutan holds more than $600 million in Bitcoin, equating to approximately 30 percent of its GDP. This cryptocurrency investment has helped the government initiate various economic reforms, including significant salary increases for civil servants — a move aimed at curbing the alarming trend of skilled workers leaving the country for better opportunities abroad.
The Impact of Bitcoin on Civil Service and Employment
In an unprecedented step, the Bhutanese government sold $100 million worth of its Bitcoin holdings to double the salaries of its civil servants in 2023. As a result, the rate of resignations within the civil service saw a marked decrease; from nearly 1,900 resignations in the first quarter of 2023 to around 500 in the same period the following year. This move has been lauded as a tactical attempt to retain young professionals who might have otherwise sought employment outside the kingdom.
"We have jobs in Bhutan, but they cannot compete against the wages that they can earn elsewhere in developed countries," said Prime Minister Tobgay, underscoring the challenges facing the local job market.
Sustainable Practices and Environmental Considerations
For Bhutan, the decision to delve deeper into cryptocurrency mining could be seen not only as a financial maneuver but also as an extension of its commitment to sustainability. Bitcoin mining is notoriously energy-intensive, but Bhutan’s extensive hydropower infrastructure allows it to approach this challenge differently. The country produces more hydropower than it consumes, a scenario in which surplus energy can be efficiently allocated toward Bitcoin mining instead of being sold at lower tariff rates to neighboring India.
"The number of private sector investments that flow into Bhutan is quite limited due to the country’s environmental mandates," explained Aditya Gowdara Shivamurthy from the Observer Research Foundation. He noted that the capital city’s cooler temperatures also play a crucial role in maintaining the necessary conditions for mining operations without an extensive cooling infrastructure.
Future Prospects and Developments
As Bhutan continues to navigate its economic challenges, there are broader ambitions on the horizon, including the establishment of a special administrative region known as the Gelephu Mindfulness City. This evolving urban development project aims to harmonize economic growth with the country’s core values of sustainability and well-being.
King Jigme Khesar Namgyel Wangchuck has expressed strong support for integrating technology into Bhutan’s socio-economic framework, emphasizing that "being a small nation makes us a smart nation." Thus, as Bhutan looks toward the future, its bold foray into Bitcoin could serve as both a lifeline and a platform for fostering innovation while adhering to its longstanding principles of happiness and sustainability.
In conclusion, as the kingdom explores the potential of blockchain technology and cryptocurrency, Bhutan’s experience might provide valuable lessons in balancing modern economic strategies with traditional values amid a rapidly changing global landscape.
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