Bhutan – Another country using Bitcoin to escape poverty

Having invested in startups for over 20 years, I have deep respect for entrepreneurs looking to build companies. It’s too difficult. And usually it doesn’t work. Of course, developing an entire country is much more difficult. Many leaders in developing countries don’t even try. They use their brief time in power for their own benefit. But some leaders do their best. Nayib Bukele completed a Bitcoin fiat bid in El Salvador in September 2021. Since then, El Salvador has shown remarkable progress on many levels.

Rumors have been circulating for some time about Bitcoin being traded in Bhutan. A few weeks ago we learned that mining operations in Bhutan had created a sizable Bitcoin stack of approximately 13,000 Bitcoins. That’s a lot. Bhutan leads the world with a Bitcoin stack equivalent to approximately 30% of GDP. Per capita, every Bhutanese indirectly holds almost 0.02 Bitcoin, which is equivalent to eight times the average monthly income at current prices. All Bitcoin mining is powered by hydroelectric power, a 100% clean and renewable energy source. Bhutan is the world’s only CO2-negative country and also has the largest Bitcoin stack relative to its size. This puts Bhutan in the global spotlight.

After six days of traveling through this truly beautiful country, I learned a lot by attending the Bhutan Innovation Forum and meeting so many great people, including His Majesty the King. Learn about Bhutan, mindfulness, development strategy and the role of Bitcoin. While traveling, I happened to come across two Bitcoin mining sites, both of which were quite large.

Congratulating Her Majesty Queen Ashi Tshering Yangdon on her Bitcoin strategy, she smiled and offered to introduce Her Majesty Jigme Khesar Namgyel Wangchuck, the 5th King. During my 15-minute conversation with him, he quickly said, “Hodl, hodl, hodl.” He discovered Bitcoin around 2011. Bhutan has been mining Bitcoin since 2019. When he became Bhutan’s leader in 2008 at the age of 28, and on several occasions thereafter, he made his mission clear: “As King, I pledged my life and service to the well-being of my country and people.” Your Majesty has honestly worked hard for 16 years to do just that.

And that’s quite a challenge. The economy is running a deficit, dollars are scarce, and Bhutan is heavily dependent on neighboring India. India made the neighboring kingdom of Sikkim the 16th Indian state in 1975. But India is also helping, building roads, building hydroelectric plants and supplying almost all of Bhutan’s imports. The Indian Rupee and Bhutanese Ngultrum are linked. 70% of Bhutan’s economy is based on agriculture, the cost of living is high relative to average income, and many young people are migrating to Australia or Canada for better income opportunities. We have heard about domestic violence and alcohol problems that contradict the idea that Bhutanese are the happiest people in the world.

Like El Salvador, Bitcoin is not a panacea and is part of a larger plan for innovation and modernization. Her Majesty’s biggest plan is to build a new center for entrepreneurship, technology and mindfulness called “Gelephu Mindfulness City”, a multi-billion dollar project in southern Bhutan. This includes attracting a lot of foreign investment and talent. Another big plan is Bitcoin. Building on Bhutan’s most important strengths – cheap, green hydropower and major exports to India – the kingdom has amassed at least 13,000 bitcoins, perhaps more. They are mostly holding on, hoping for a significant increase in value. Only small quantities are sold. Bitcoin is about wealth creation. With Bitcoin bullish expected to occur soon in this cycle, Bhutan’s Bitcoin stack could exceed its GDP as well as its external debt. Bitcoin’s benefits go beyond pure value creation. They call Bitcoin an energy battery. In winter, when there is much less rain and India uses less energy, Bhutan can use Bitcoin to import some of its electricity from India. Bitcoin gives Bhutan access to hard currencies such as the US dollar or euro. Bhutan, which sells and imports almost everything to and from India, is notoriously short of foreign currency.

Bitcoin mining creates technical capabilities. Bhutanese are able to operate and repair mining equipment themselves. Bhutan could become a global center of competency for clean Bitcoin mining. Newly acquired skills can be extended to other technical fields. For example, Bhutan has implemented a digital national ID card on the Polygon blockchain. Using the wallet, Bhutanese can access many government services. About 20% of Bhutanese have joined it. Know-how about Bitcoin and IT in general can be the basis for attracting foreign technology investors and startups. Strategically, Bitcoin creates a degree of independence from India, a strong and still benevolent neighbor. China is not much of a problem for Bhutan.

His Majesty has built his Bitcoin strategy on Bhutan’s few but distinct assets: cheap energy, exceptionally good English language skills, world-leading images of mindfulness and harmony with nature, and the ability to preserve its rich cultural traditions and history. . He aims to improve the happiness of his people, including their standard of living. Clearly, Bitcoin can be a key element and driver for Bhutan’s future.

While talking about Bitcoin with government officials in Bhutan, we noticed a sense of coyness, which makes a lot of sense. Bitcoiners don’t brag about it. Bhutan still needs a lot of help from developed countries and international organizations. At the meeting, I overheard the following sentence: “I tried to get him to sell, but he refused.” “Hodeul, hodeul, hodeul” is what His Majesty said to me. Clearly, in addition to creating value, Bitcoin is also generating significant benefits for the people of Bhutan.

After 16 years in power, the 44-year-old king appears to have a long-term vision to develop this beautiful country located in the Himalayas and plenty of time to make it happen. As you can see all over the world, it is a really tough job. Clearly, Bitcoin is significantly improving Bhutan’s odds.

This is a guest post by alex v. frankenberg. The opinions expressed are solely personal and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.