Bhutan has emerged as the fourth-largest government holder of Bitcoin globally, owning over 13,011 BTC worth USD 780.49 million, highlighting Bhutan’s notable position in the global cryptocurrency landscape.
This information comes from a report by Arkham Intelligence, a public data application that allows users to analyse blockchain and cryptocurrency activities.
The value of Bitcoin held by Bhutan represents about 25 percent of the country’s gross domestic product (GDP) for 2023, which is estimated at Nu 249.39 billion or USD 3.02 billion.
Globally, the United States holds the largest amount of Bitcoin, with 213,246 BTC, followed by China with 190,000 BTC, and the United Kingdom with 61,000 BTC.
According to Arkham Intelligence, Bhutan’s Bitcoin holdings differ from those of most governments, as they do not result from law enforcement asset seizures but from Bitcoin mining operations that have significantly increased since early 2023.
The country began its mining operations in 2019-2020, when Bitcoin was valued between USD 5,000 and USD 8,000. As of yesterday, the current value of one Bitcoin is USD 63,528, and Bhutan’s digital asset portfolio remains net positive.
Bhutan has established mining facilities at multiple locations, with the largest facility situated at the defunct Education City project.
Bhutan has acquired Bitcoin through extensive mining operations powered by renewable hydropower resources, led by Druk Holding and Investments. The production cost of Bitcoin is influenced by several factors, including electricity prices, project capital costs, and the difficulty rate of mining.
In partnership with Bitdeer, Bhutan aims to expand its mining capacity to 600 megawatts by 2025. On May 3 last year, Bitdeer, a leading Nasdaq-listed technology company, and DHI announced a partnership for a USD 500 million project to develop environmentally sustainable, carbon-free digital asset mining operations.
According to a World Bank report, Bhutan has invested USD 539 million in cryptocurrency mining operations over the last two fiscal years, from July 2021 to June 2023. This substantial investment has contributed to a significant decline in the country’s reserves.
During the period from July 2021 to June 2022, reserves dropped by 34.7 percent, falling from USD 1.27 billion to USD 832.9 million. By June 2023, reserves further decreased to USD 573 million, less than half of what they were in June 2021.
In terms of trade, Bhutan imported IT equipment valued at Nu 4 billion in 2023 and Nu 11.91 billion in 2022. In 2021, the country imported IT equipment worth Nu 4.33 billion.
The Bank reported that Druk Holding and Investments (DHI) financed its cryptocurrency mining investments through loans from the Royal Monetary Authority (RMA) to accelerate the country’s digital transformation and diversify its economy.
The RMA and the finance ministry have announced eleven bond issuances to date, with the government’s domestic debt from these issuances reported at Nu 28.1 billion as of December 2023. According to the loan repayment schedule, DHI is required to repay USD 224 million in fiscal year 2023-24 and USD 315 million in fiscal year 2024-25 to the RMA.
The proceeds from these bonds were used to import IT equipment for cryptocurrency mining operations and related goods, as well as to expand the electricity network.
The Bank noted that the recent increase in cryptocurrency values has aided DHI in making timely repayments. However, the government stated that all proceeds from the RMA loans have been utilised, and there will be no further imports of IT equipment in fiscal year 2023-24.
