Bhutan Has Been Secretly Mining Crypto For Years

Bhutan, a small kingdom located between China, India, and Nepal, has been quietly developing a sovereign bitcoin mining operation that uses its massive hydroelectric resources to power it, according to a new report from Forbes.

The project had been kept under wraps until this week, days after Forbes reached out to Bhutanese officials with questions about the mining scheme. A government representative confirmed to the local newspaper The Bhutanese that it began mining “a few years ago.” 

The report said that earnings from the mining operations go towards subsidizing power and hardware costs. The location, starting date, and profits of the scheme remain unclear, but the local paper quoted a government representative saying that mining began “a few years ago as one of the early entrants when the price of Bitcoin was around USD 5,000.” This would put the time at around 2019.

Bhutan has been rumored to have been cultivating a significant crypto portfolio for several years, and Forbes previously reported that the government’s state-owned holding company covertly poured millions of dollars into cryptocurrency holdings, which were inadvertently exposed by bankruptcies of lenders BlockFi and Celsius. 

In addition to mining bitcoin, Bhutan is also in negotiations with mining company Bitdeer to build a 100MW data center in the country. Bitdeer is one of the world’s largest bitcoin miners and was listed on the Nasdaq last month through a $1.1 billion merger with a special purpose acquisition company or SPAC. The announcement of the partnership has not yet specified who will ultimately own the data center. 

Forbes notes that while the project is significantly smaller than other massive farms like Riot’s Rockdale facility in Texas, which has a 450MW capacity, it would be in the same tier as other large projects, such as Russia’s Bitriver mine and an operation negotiated by in Itaipu, Paraguay. 

“It’s no surprise that entities are mining bitcoin in Bhutan. The mountainous country has a massive hydropower capacity compared to its small population and produces a similar amount of electricity per capita as the United States — a much wealthier country,” says Luxor bitcoin mining analyst Jaran Mellerud. 

“This cheap, stranded hydropower is undoubtedly alluring for miners whose sole job is turning undervalued electricity into bitcoin.”

It is concerning however to some of Bhutan’s international supporters that the country’s resources have been invested in a secretive manner in a highly volatile and risky investment with a big environmental burden.

Information for this story was found via Forbes, The Bhutanese, Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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