Bhutan's mining frenzy? Forbes: Secretly mining for over three years

The Kingdom of Bhutan, located at the foot of the Himalayas and known as the "happiest country in the world," was previously found to have invested over tens of millions of dollars in crypto assets. Recent reports indicate that Bhutan has been using its advantage of renewable energy for Bitcoin mining operations for many years, and discussions have been ongoing regarding using the power generated by its hydroelectric plants for Bitcoin mining. However, these rumors lack transparent information, and there is no public evidence to confirm Bhutan's actual mining capabilities.

Bhutan Entered Bitcoin Mining at $5,000

According to Forbes, a government representative informed local media that the country began mining Bitcoin as an early entrant when the price was around $5,000 several years ago (estimated to be April 2019). The revenue generated from this was used to cover electricity and equipment costs.

However, Forbes also expressed concerns about the secretive nature of their investments. Bhutan's significant increase in chip imports has been linked to the ongoing trade deficit and rapid decline in foreign reserves. The country's undisclosed investment in highly volatile and risky crypto assets raises further concerns about the potential risks involved.

Bhutan Negotiates Partnership with Mining Firm Bitdeer

It is noteworthy that Bhutan is in talks with the publicly listed mining company Bitdeer to provide 100 megawatts of power to Bhutan's Bitcoin mining data center, estimated to increase Bitdeer's mining capacity by approximately 12%.

In an investor report on April 19, Bitdeer indicated that the construction of the mining data center is set to commence, but did not specify the ownership.

(Learn more about Bitdeer: Bitdeer Releases 2022 Financial Report, Stock Price Remains Below IPO Price)

Bhutan Formerly a High-Value Client of BlockFi and Celsius

Managing $2.9 billion in assets, Bhutan's official business entity Druk Holding and Investments DHI was exposed in April to have developed a multi-million-dollar cryptocurrency investment portfolio and was a client of bankrupt crypto lending firms BlockFi and Celsius.

Forbes believes that if DHI is indeed the official business entity of Bhutan, it would be the world's first national-level organization to directly hold cryptocurrency as part of its sovereign fund. DHI had lent $30 million to BlockFi and conducted substantial trades between April and June 2022. In documents provided by Celsius, including user addresses, DHI was estimated to have accessed over $65 million and deposited around $18 million in crypto assets.

Is Bhutan Really Mining Bitcoin?

If Bhutan was an early mining country, why does the Bitcoin mining map from Cambridge University show zero hash rate for Bhutan?

This discrepancy may be related to Cambridge University's statistical methodology, which collects geographical data of mining facilities in a non-intrusive and privacy-protecting manner through collaboration with multiple mining pools. The data is based on IP addresses connected to mining pool servers. There may still be issues such as too few samples from mining pools or the use of VPNs.

Bhutan Mining: A Potential Nomadic Registration for Chinese Miners

As reported by Forbes, Bhutan's mining project may be linked to Chinese miners aiming to utilize Bhutan's inexpensive hydroelectric power.

The "Singapore Bhutan Association," composed of Chinese, Singaporean businessmen, and Bhutanese royalty, proposed importing Bitcoin mining equipment via sea freight. They planned to purchase 700 kilowatts of mining equipment for $800,000, contingent upon the Bhutanese royalty's support for cheap energy.

However, Dasho Ugen Tsechup Dorji, a member of the Bhutanese royalty, stated that the project has been shelved due to the government not approving private companies' involvement in this business, along with the FTX incident and operational costs of transportation, which has reduced investor interest. While Bhutan can export electricity to India during the monsoon season, it must rely on neighboring countries for energy imports during the winter, which may not be conducive to a large-scale mining industry.