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It’s time to start learning Dzongkha. That’s the language of Bhutan, a South Asian country on the Himalayas’ eastern edge that is one of two confirmed nation-states mining Bitcoin (BTC) today (the other being El Salvador).
Bhutan made the fateful decision to build out a world-class hydroelectric power production infrastructure in order to leverage one of the largest water reserves in the world, as well as the country’s dramatic attitudinal change, which creates swift-flowing rivers and makes Bhutan a natural haven for hydroelectric.
With so much abundant electricity, much of which is sent to neighboring and energy-deficient India, the nation decided to begin building bitcoin mines with the official goal of ensuring the nation’s economic self-reliance and socio-economic development.
Indeed, by leveraging its hydropower infrastructure to mine Bitcoin, Bhutan ensures its own self-reliance and socio-economic development. It can ensure these even further by being the first nation on planet Earth to adopt a Bitcoin standard.
Mining Bitcoin now creates new currency possibilities
Bhutan today holds over 13,000 BTC, according to Arkham Intelligence, which first identified Bhutan’s Bitcoin addresses.
The holdings make Bhutan the fourth-largest government holder of Bitcoin in the world behind nations which confiscated their BTC during law enforcement busts: US, China, and UK. Bhutan is, in fact, ahead of El Salvador’s holdings. And since 2023, Bhutan has only increased its Bitcoin mining capabilities.
One million people make up the population of Bhutan, from the tropical southern plains to the brutal winters and cool summers of the northern Himalayas. And so, at the time of writing, the nation’s holdings from Bitcoin equals approximately 0.122 BTC per person or nearly $8,000.
As Bhutan’s Bitcoin holdings and mining infrastructure gain more domestic and geopolitical relevance with the devaluation of fiat currencies worldwide, Bhutan will find itself in a prime position to innovate in the realm of monetary policy and Bitcoin.
On a Bitcoin standard, Bhutan could keep its monetary unit, Ngultrum. That would be in keeping with countries pegging their own individual national currencies to gold under the gold standard of the nineteenth and early twentieth century, while keeping their own currencies.
Thus, Bhutan’s currency would circulate alongside Bitcoin, whilst simultaneously pegged to Bitcoin. In other words, the notes would be redeemable for BTC. The currency would remain fiduciary, since it is not fully backed by bitcoin.
Under the gold standard, central banks partially backed the issued notes with gold. Bhutan’s monetary authority would presumably define the amount of bitcoin to peg to the monetary unit.
However, there would be sacrifice on the side of the state under a Bitcoin standard. If it were to adopt a Bitcoin standard, Bhutan would not be able to conduct an interest rate policy to change domestic economic conditions without depegging from Bitcoin—something any nation-state might eventually be tempted to do.
The times are changing in Bhutan
Bhutan didn’t have electricity until 1966. For comparison, England opened its first hydroelectric plant in 1878, and the US opened its first power plant in 1882. Despite being ranked 133rd in terms of land area and 160th in population today, Bhutan is proving itself a 21st-century leader.
The nation’s investment in hydropower has fueled economic growth already. Bhutan’s decision to exploit its water resources for the production of electric, and the decision to use some of this electricity to mine Bitcoin, could drastically change the economic outlook of the landlocked country based on its Bitcoin accumulation alone.
By backing the Ngultrum with Bitcoin, Bhutan would shock the known universe by going on a bitcoin standard just like the world used to be on the Classical Gold Standard. Bhutan could draw up the Bitcoin standard “rules of the game” that countries will follow as they too adopt a better way of life than central bank fiat currencies.
If Bhutan adopts a Bitcoin standard, it might one day act as a lender of last resort for countries and institutions facing acute crises. Under a Bitcoin standard, as argued by Warren E. Weber for the Bank of Canada in his 2015 thought experiment, Bhutan might expect “mild deflation, low nominal interest rates, and good output growth under the Bitcoin standard.”
