Robert Steinadler, a month ago

How the Kingdom of Bhutan is secretly accumulating Bitcoin

Some well-known state actors own Bitcoin or other cryptocurrencies. Most of them got BTC in possession because they confiscated them during criminal investigations. However, a few exceptions exist, such as El Salvador, which adopted the Bitcoin standard under President Nayib Bukele. His country became a shining beacon of hope for all Bitcoiners who genuinely believe that Bitcoin can improve the world.

It looks like Bhutan is secretly following the example of El Salvador. How does the country accumulate Bitcoin?

Bhutans mining operation

According to Forbes, the Kingdom of Bhutan has been secretly running its mining operation for quite some time. The small country is situated between China and India. The reason why its operations came to attention is the bankruptcy case of Celsius and BlockFi. Druk Holdings and Investments (DHI) was an institutional customer of both companies.

Documents prove that state-owned DHI actively invested with both companies by depositing cryptos and borrowing money against them. Neither DHI nor BlockFi or Celsius have commented on these business relationships. What is known is that DHI took out a collateralized loan with BlockFi that was backed with Bitcoin, and those coins were liquidated in the process.

This raises the question of why Bhutan raised capital through these lenders and for what purpose. The answer came just a few days ago.

Bhutan has been mining Bitcoin for a few years

According to a local newspaper, DHI runs mining facilities within the country. Most of the hash power was committed to the Bitcoin network and only a tiny portion to Ethereum. Now that Ethereum has switched to proof of stake, Bhutan has become a Bitcoin-only country regarding mining. Even though it might be possible that DHI became an active staker after the Merge commenced in September 2022.

The country entered the market when Bitcoin was worth $5,000, which means that it has been actively engaging since March 2020 or earlier. Bhutan produced excessive hydro-based energy, and the country put this abundance to work. If calculations are correct, Bhutan is responsible for about 1% of Bitcoin's global hash rate.

This is indeed breaking news since it proves a crucial point made by Bitcoiners in the past. Green Bitcoin mining is possible and sustainable. It remains to be seen if more countries will follow the example. Using natural energy resources for Bitcoin mining is a highly lucrative opportunity for other countries that rely on wind-, geothermal- or hydro-based energy.

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