Bhutan is investing in everything from bitcoin mining to drone technology as the Himalayan kingdom looks to new-age businesses for rapid growth and profits.
State-owned commercial holding company Druk Holding & Investments announced this month to raise up to $500 million for its crypto mining business after partnering with Singaporean group Bitdeer, one of the world’s largest bitcoin mining companies. We plan to start pitching to investors.
Following other countries such as El Salvador and the Central African Republic, Bhutan’s crypto bets are taking place despite the declines, epidemics and scandals that have rocked the sector. This isolated country of 800,000 people was allowed only television and internet in 1999 and is known for its Gross National Happiness index, which prioritizes happiness over economic growth.
Ujwal Deep Dahal, CEO of DHI, said the promotion of technology will help accelerate innovation, mainly in rural economies. DHI is also in the early stages of a project to bring drones into the power sector, launching a biometric digital ID system in February.
DHI is “focused on a new generation of industries,” he said. These technologies will “not only provide a platform for solving problems, but also for creating industries and creating diversified investment portfolios.”
With approximately $3 billion in assets as of 2021, DHI’s core portfolio consists of Bhutan’s major telecommunications, power and airline companies.
In collaboration with Bitdeer, we will approach the fund to international institutional investors. Bitdeer said it plans to build a 100-megawatt cryptocurrency mining data center in the country.
Mountainous Bhutan is rich in hydroelectric power, an important industry for the country. The companies claim that hydropower provides an easy, renewable source of power for bitcoin mining, an energy-intensive process in which computers solve mathematical problems to create new coins.
Long an absolute monarchy, Bhutan adopted a democratic constitution in 2008 and has averaged 7.5% annual growth since the 1980s, according to the World Bank. The country relies on trade with neighboring India, but is also one of the few carbon negative countries in the world. That means it absorbs more carbon than it releases from the atmosphere. High-end tourism is an important source of income, and visitors are charged a levy of $200 per day.
Bitcoin mining could help diversify income from hydropower in Bhutan, most of which is exported to India, said Jalan Mereld, a Norway-based analyst at Hashrate Index, which provides bitcoin mining data. said that
He said Bhutan could become “the world’s largest bitcoin miner per capita.”
But he expected the country to struggle to raise $500 million given the turmoil in the industry. “In 2021, miners were raising $50 million, $100 million every week,” Mereld said. “If a miner can raise $50 million, that’s a big deal… So in a bear market, $500 million for a bitcoin mining business? A bit too much, I think.”
Both companies are exposed to turmoil in the cryptocurrency industry. Bitdia suffered heavy losses last year, and its Nasdaq-listed shares have fallen by about a third since listing through a special-purpose acquisition vehicle last month. Forbes reported last month that DHI held tens of millions of dollars in cryptocurrency between bankrupt financiers BlockFi and Celsius, but DHI denied losing money on the deal.
Dahl argued that mining is the safest part of the industry. “We are primarily sticking to the mining sector, which we believe is the least risky.”
Nevertheless, Mereld warned that miners have been “extremely affected” by the crypto bear market.
DHI is also piloting a project using drones to inspect and maintain infrastructure in the country’s power sector. DHI announced last year that it was in talks with Japanese drone company Sora about technology development and domestic manufacturing. “We are in a very hilly area, which makes it difficult for drones to fly,” Dahal said. “So for drone researchers, it is a very interesting space to test at an altitude of 4,000 meters.”