Beneath the Himalayas: Bhutan's Secret Bitcoin Mining Operation

Bhutan, the Himalayan kingdom, has quietly been mining Bitcoin for years using its immense stores of hydroelectricity.

Bhutan, the Himalayan kingdom, has been secretly operating its bitcoin mining facility for a few years, as per a recent disclosure by a government representative to a local newspaper, The Bhutanese. The country has been using its abundant hydroelectricity resources to power its bitcoin mine. The mining project is state-owned, making Bhutan one of the only countries besides El Salvador to have its own bitcoin mining facility. The profits earned from mining are being used to subsidize power and hardware costs, according to the representative. It remains unclear when the mining began, its location, and whether it has been profitable. Bhutan's Ministry of Finance did not respond to questions about the scope of the enterprise.

The government is currently in talks with Nasdaq-listed mining firm Bitdeer to build a 100 MW hydro-powered mining data center in Bhutan. Bitdeer disclosed the talks in a stock market update earlier this month. Bhutan's partnership with Bitdeer would add 12% to Bitdeer's mining capacity, which is currently second only to bankrupt Texas-based Core Scientific in scale. Bitdeer's announcement did not specify who would ultimately own the data center. The construction is expected to begin in the second quarter of 2023 and complete in the third quarter of 2024.

Bhutan's interest in cryptocurrencies has been growing over the years, as evident from its significant crypto portfolio. Bhutan's state-owned holding company, Druk Holding & Investments, has invested millions of dollars in cryptocurrency holdings, which were inadvertently exposed by the bankruptcies of lenders BlockFi and Celsius. While these investments were made through a sovereign entity created to manage the country's wealth on behalf of its people, its citizens were never informed.

The rumors of government-backed bitcoin farms have been spreading across the country in recent years, and some citizens claim to have seen experimental projects underway. Druk staff have listed their responsibilities on LinkedIn as operating and managing "crypto mining farmhouse" and Bitmain-made mining rigs. The amount of chips imported by Bhutan has also skyrocketed in recent years, according to customs data. However, Bhutan's growing crypto appetite has concerned its international supporters, who have voiced their concerns about the secrecy and risks involved in a highly volatile investment with a big environmental burden.

Bhutan's government seems to have been considering working with other miners beyond Bitdeer. Insiders at rival services and pools have held advanced talks with senior government officials, including Druk, about the kingdom building and operating a hydro-powered operation. Consultants who advised the government on its mining strategy prior to Bitdeer's announcement told Forbes that Bhutan had previously inquired about a 100 MW operation hooked into one of its hydroelectric plants. This level of spending would equate to a data center the size of several football fields.

Bhutan is known for its commitment to "gross national happiness" over domestic product, its emblematic "thunder dragon," and Buddhist monasteries. However, the isolated nation's growing interest in cryptocurrencies has surprised many. Some international advisers have raised concerns about the secretive nature of Bhutan's crypto investments and their impact on the country's foreign currency reserves. Nevertheless, Bhutan's abundant renewable resources make it an ideal location for bitcoin mining, and the country's efforts to develop sovereign mining operations are expected to continue in the future.

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