Having invested in startups for over twenty years, I have a deep respect for entrepreneurs trying to build a company. It’s very difficult. Most of the time, it doesn’t work. Of course, developing an entire country is more difficult. Many leaders in developing countries don’t even try. They are exploiting their short period in power for their own benefit. But some leaders are doing their best. Nayib Bukele introduced legal Bitcoin in El Salvador in September 2021. Since then, the country has shown remarkable development on many levels.
Bitcoin sharing in Bhutan has been rumored for a while. A few weeks ago, we learned about mining operations in Bhutan that led to a large amount of Bitcoin being amassed around 13,000 BTC. That’s a lot. Bhutan leads the world with Bitcoin staking worth around 30% of its GDP. Each person in Bhutan indirectly owns approximately 0.02 Bitcoin, at current prices eight times the average monthly income. All Bitcoin mining is done using 100% clean, renewable energy, hydropower. Bhutan is the only CO2-free country in the world and at the same time has the largest pile of Bitcoin compared to its size. This is of interest to Bhutan all over the world.
After traveling for six days through this truly beautiful country, then attending the Bhutan Innovation Forum and meeting so many great people including His Majesty and Her Majesty the Queen, I learned a lot. About Bhutan, mindfulness, its development strategy and the role Bitcoin plays. While traveling, I happened to see two Bitcoin mining sites, both of which were fairly large.
She smiled to congratulate Her Majesty Queen Ashi Tshering Yangdon on their Bitcoin strategy and offered to introduce me to His Majesty King Jigme Khesar Namgyel Wangchuk, the Fifth King. During a fifteen minute conversation with him he quickly said “Hodl, hodl, hodl”. Bitcoin was discovered around 2011. Since 2019, Bhutan has been mining Bitcoin. In 2008, when His Majesty became leader of Bhutan at the age of 28, and several times after that, he clearly stated his mission: “As King, I pledge my life and service to the well-being of our country and our people.” His Majesty has worked hard for sixteen years to do this faithfully.
This is a big challenge. The economy is in deficit, the dollar is scarce, and Bhutan relies heavily on India, a neighbor that made Sikkim, the neighboring kingdom, India’s 16th state in 1975. But India helps, too: building roads, hydroelectric plants, and delivering almost all of Bhutan’s imports. The Indian Rupee and Bhutanese Ngultrum are linked to each other. 70% of Bhutan’s economy depends on agriculture, the cost of living is high compared to average income, and many young people migrate to Australia or Canada for better income opportunities. We heard about domestic violence and alcohol issues, which contradicts the idea that the people of Bhutan are the happiest people in the world.
As in El Salvador, Bitcoin is not a silver bullet, but rather part of a larger plan for innovation and modernization. His Majesty’s biggest initiative is to build a new hub for entrepreneurs, technology and mindfulness called Gelephu Mindfulness City, a multi-billion dollar project in southern Bhutan. It involves attracting a lot of foreign investment and talent. The other big initiative is Bitcoin. Building on Bhutan’s most important strength, cheap and environmentally friendly hydropower, which is also its main export to India, the kingdom has accumulated at least 13,000 bitcoins, and possibly more. They expect great appreciation in value and they often hold on to it. Only a few are sold. Bitcoin is about creating wealth. As the Bitcoin bull rally approaches, in this cycle, Bhutan’s Bitcoin stock could exceed its GDP and even its external debt. The benefits of Bitcoin go beyond pure value creation: they call Bitcoin a power battery. In winter, when there is much less rain and India uses less energy, Bhutan can use Bitcoin to import some electricity from India. Bitcoin gives Bhutan access to hard currency such as US dollars or euros. Selling and importing almost everything to and from India Bhutan suffers from a shortage of foreign currency.
Bitcoin mining creates technical skills. Bhutanese are able to operate and repair mining rigs themselves. Bhutan can easily become a global center of competence in clean Bitcoin mining. Newly acquired skills can be expanded to other technical areas. For example, Bhutan implemented a digital national ID card on the Polygon blockchain. Using the wallet, Bhutanese can access many government services. About 20% of Bhutanese have subscribed to this service. Knowledge about Bitcoin and general IT can be the basis for attracting foreign investors in technology and startups. Strategically, Bitcoin creates some independence from its powerful and still benevolent neighbour, India. China does not pose a big problem for Bhutan.
His Majesty builds his Bitcoin strategy on Bhutan’s few but distinct assets such as cheap energy, very good English language skills, a world-leading image of awareness and harmony with nature, and the ability to not only preserve its rich cultural traditions and history. It aims to improve the happiness of its people including the standard of living, but not only. It is clear that Bitcoin could be the foundation and driver of Bhutan’s future.
When we talked about Bitcoin with government officials in Bhutan, we felt a little shy, which makes a lot of sense. Bitcoin users don’t brag about it. Bhutan still needs a lot of help from developed countries and international organizations. At the conference I heard the phrase, “I tried to get him to sell, but he refused.” “Hoddle, Hoddle, Hoddle,” His Majesty said to me. Bitcoin certainly creates significant benefits for Bhutanese as well as value creation.
At the age of 44, after 16 years in power, His Majesty seems to have a long-term vision for the development of this beautiful Himalayan country and has plenty of time to implement it. As we see all over the world, it’s a hell of a job. Clearly, Bitcoin improves the odds for Bhutan significantly.
This is a guest post by Alex Vs. Frankenberg. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
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