Bhutan’s path to economic self-reliance is Bitcoin mining

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It’s time to start learning Dzongkha. It is the language of Bhutan, a South Asian country located at the eastern edge of the Himalayas and one of only two nation states confirmed to mine Bitcoin (BTC) today (the other being El Salvador).

Bhutan took the important decision to build a world-class hydroelectric power generation infrastructure to tap into one of the largest water reserves in the world, and also experienced the country’s dramatic change in attitude, which created fast-flowing rivers and turned Bhutan into a natural city. hydroelectric paradise.

With such an abundance of electricity being sent to India, many of its neighbors and energy-starved countries, the country decided to build bitcoin mines with the official goal of ensuring economic self-reliance and socio-economic development of the country.

In fact, Bhutan is achieving self-sufficiency and socio-economic development by using its hydroelectric infrastructure to mine Bitcoin. By being the first country on planet Earth to adopt the Bitcoin standard, it can achieve this even further.

Bitcoin mining now creates new currency possibilities

According to Arkham Intelligence, which was the first to identify Bhutan’s Bitcoin addresses, there are more than 13,000 BTC in Bhutan today.

These holdings make Bhutan the fourth-largest government holder of Bitcoin in the world, behind the US, China and the UK, which have seized their BTC during law enforcement raids. Bhutan is actually ahead of what El Salvador has. And since 2023, Bhutan has only increased its Bitcoin mining capabilities.

From the tropical southern plains to the harsh winters and cool summers of the northern Himalayas, Bhutan’s population numbers one million. And so, at the time of this writing, the country’s holdings from Bitcoin were equal to about 0.122 BTC per capita, or about $8,000.

As Bhutan’s Bitcoin holdings and mining infrastructure become more important domestically and geopolitically with the devaluation of fiat currencies around the world, Bhutan will find itself in a prime position to innovate in the monetary policy and Bitcoin space.

According to the Bitcoin standard, Bhutan can maintain its currency, Ngultrum. This would be consistent with countries pegging their national currencies to gold under the gold standard of the nineteenth and early twentieth centuries, while maintaining their own currency.

Thus, Bhutan’s currency will be pegged to Bitcoin while circulating alongside it. In other words, banknotes will be redeemable for BTC. The currency will remain trust-based as it is not fully backed by Bitcoin.

Under the gold standard, central banks partially backed the bonds issued with gold. Bhutan’s monetary authority will likely define the amount of bitcoin to be pegged to the currency.

However, within the scope of the Bitcoin standard, the state will also have to make sacrifices. If it were to adopt a Bitcoin standard, Bhutan would not be able to pursue an interest rate policy that would change local economic conditions without moving away from Bitcoin; This is something that any nation-state may eventually tend to do.

Times are changing in Bhutan

There was no electricity in Bhutan until 1966. By comparison, Britain opened its first hydroelectric power plant in 1878, and the United States opened its first power plant in 1882. Today, Bhutan proves this, although it ranks 133rd in terms of surface area and 160th in terms of population. He is a 21st century leader.

The country’s investment in hydropower has already fueled economic growth. Bhutan’s decision to use its water resources for electricity generation and use some of that electricity for Bitcoin mining could drastically change the economic outlook of the landlocked country based solely on Bitcoin accumulation.

By backing Ngultrum with Bitcoin, Bhutan would shock the known universe by switching to a bitcoin standard, just like the world’s Classical Gold Standard. Bhutan could draft Bitcoin standard “rules of the game” for countries to follow as their central bank embraces a better way of life away from fiat currencies.

If Bhutan adopts a Bitcoin standard, it could one day act as a lender of last resort for countries and institutions facing acute crises. As Warren E. Weber on behalf of the Bank of Canada argued in a 2015 thought experiment, under the Bitcoin standard Bhutan could expect “mild deflation, low nominal interest rates, and good output growth under the Bitcoin standard.”

Kadan Stadelmann

Kadan Stadelmann is a blockchain developer, operations security expert, and chief technology officer of the Komodo Platform. His experience ranges from working in operational security in the government sector, launching technology startups, to application development and cryptography. Kadan started his journey into blockchain technology in 2011 and joined the Komodo team in 2016.