After investing in startups for over twenty years, I have deep respect for entrepreneurs trying to build a business. It’s so hard. And more often than not, it doesn’t work. Developing an entire country is of course much more difficult. Many leaders in developing countries don’t even try. They use their short time in power for their own benefit. But some leaders are doing their best. Nayib Bukele made Bitcoin legal tender in El Salvador in September 2021. Since then, the country has shown remarkable development on so many levels.
Bitcoin involvement in Bhutan has been rumored for a while now. A few weeks ago we learned about mining operations in Bhutan that led to a sizable Bitcoin pile of around 13,000 Bitcoin. That’s a lot. Bhutan leads the world with a Bitcoin stack worth about 30% of its GDP. Per capita, each Bhutanese indirectly owns almost 0.02 Bitcoin, eight times the average monthly income at current prices. All Bitcoin mining is done with 100% clean and renewable energy, hydropower. Bhutan is the only carbon negative country in the world and at the same time has the largest Bitcoin stack relative to its size. Bhutan is getting worldwide attention for this.
After spending six days traveling around this truly beautiful country, then attending the Bhutan Innovation Forum and meeting so many wonderful people, including His and Her Majesty, I learned a lot. About Bhutan, mindfulness, their development strategy and the role Bitcoin plays. While traveling I happened to see two Bitcoin mining sites, both were quite large.
She congratulated Her Majesty Queen Ashi Tshering Yangdon on their Bitcoin strategy. She smiled and offered to introduce me to His Majesty, Jigme Khesar Namgyel Wangchuck, the Fifth King. During a fifteen minute conversation with him he quickly said, “Hodl, hodl, hodl”. He discovered Bitcoin around 2011. Since 2019, Bhutan has been mining Bitcoin. In 2008, when His Majesty became the leader of Bhutan at the age of 28, and several times since, he clearly stated his mission: “As King, I have pledged my life and service for the good of our country and our people.” Your Majesty has worked hard for sixteen years to do that fairly.
And it is quite a challenge. The economy is in deficit, dollars are scarce, Bhutan is heavily dependent on USA, a neighboring country, which in 1975 made Sikkim, a neighboring kingdom, the 16th Indian state. But USA also helps: building roads, hydroelectric power stations and supplying almost all Bhutanese imports. The Indian Rupee and the Bhutanese Ngultrum are linked. 70% of the Bhutanese economy is based on agriculture, the cost of living is high compared to the average income, many young people emigrate to Australia or Canada for better income opportunities. We have heard about domestic violence and alcohol problems, which contradicts the idea that the Bhutanese are the happiest people in the world.
As in El Salvador, Bitcoin is not the panacea, it is part of a larger plan of innovation and modernization. His Majesty’s biggest initiative is building a new center for entrepreneurs, technology and mindfulness, the “Gelephu Mindfulness City”, a multi-billion dollar project in Southern Bhutan. It is about attracting a lot of foreign investment and talent. The other major initiative is Bitcoin. Building on Bhutan’s main strength, cheap, environmentally friendly hydropower, as well as its main export to USA, the kingdom has amassed at least 13,000 Bitcoin, perhaps more. Because they expect a significant increase in value, they are largely hoddling. Only a small portion is sold. Bitcoin is about wealth creation. With the Bitcoin bull run about to happen, Bhutan’s Bitcoin pile could surpass GDP and even foreign debt in this cycle. The benefits of Bitcoin exceed pure value creation: they call Bitcoin the energy battery. In winter, when there is much less rain and USA uses less energy, Bhutan can use Bitcoin to import some electricity from USA. Bitcoin gives Bhutan access to hard currencies such as the US dollar or the euro. Selling and importing virtually everything to and from USA Bhutan has a notorious shortage of foreign exchange.
Bitcoin mining creates technical skills. The Bhutanese are able to operate and repair the mining platforms themselves. Bhutan can easily become a global center of excellence for clean Bitcoin mining. The newly acquired skills can be extended to other technical areas. For example, Bhutan has deployed a digital national identity card on the Polygon blockchain. With the help of a wallet, the Bhutanese have access to many government services. About 20% of Bhutanese have signed up for this. Know-how around Bitcoin and general IT can form the basis for attracting foreign technology investors and startups. Strategically, Bitcoin creates some independence from its strong and still benevolent neighbor USA. China is not that big of a problem for Bhutan.
His Majesty is building the Bitcoin strategy on Bhutan’s few but distinctive assets, such as cheap energy, very good English skills, a leading view of mindfulness and harmony with nature, and the ability to preserve not only its rich cultural traditions and history . He strives to improve the happiness of his people, including, but not only, the standard of living. It is clear that Bitcoin can be the key element and driver of Bhutan’s future.
When we talked to government officials in Bhutan about Bitcoin, we felt some embarrassment, which makes perfect sense. Bitcoiners 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.” “Hodl, hodl, hodl,” His Majesty said to me. Bitcoin certainly creates significant benefits for the Bhutanese, on top of the value creation.
At the age of 44, after 16 years in power, His Majesty seems to have the long-term vision to develop this beautiful Himalayan country and have enough time to implement it. As we can see around the world, it’s a hell of a job. Bitcoin clearly significantly improves Bhutan’s chances.
This is a guest post by Alex v. Frankenberg. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.