Bhutan is investing in everything from bitcoin mining to drone technology as the tiny Himalayan kingdom turns to fledgling companies in search of rapid growth and revenue.
Druk Holding & Investments, the state-owned trading holding company, will this month start promoting investors to raise up to $500 million for its cryptocurrency mining business after partnering with Singapore’s Bitdeer Group, one of the world’s largest bitcoin miners.
Bhutan’s bet on cryptocurrencies follows those of other countries such as El Salvador and the Central African Republic, despite the sell-off, contagion, and scandals that have rocked the sector. The isolated country of 800,000 people only allowed television and the Internet in 1999 and is known for its Gross National Happiness measure, which seeks to prioritize well-being over economic growth.
Ujwal Deep Dahal, CEO of DHI, said that the technological push will help accelerate innovation in the rural economy to a great extent. DHI is also in the early stages of a project to deploy drones in the energy sector, and in February launched a biometric digital identity system.
He said DHI is “focusing on the new generation of industries”. These technologies will provide “platforms to solve problems and also provide platforms to create the industry and create a diversified portfolio of investments for us.”
DHI’s core portfolio, which will have approximately $3 billion in assets in 2021, consists of Bhutan’s major telecom, energy and aviation companies, among others.
In collaboration with Bitdeer, you will reach out to international institutional investors for funds. Bitdeer said it plans to build a 100 megawatt crypto mining data center in the country.
Mountainous Bhutan has abundant sources of hydroelectric power, which is a vital industry in the country. The companies argue that hydropower provides an easy, renewable source of electricity for bitcoin mining, an energy-intensive process where computers solve mathematical problems to create new coins.
A longtime absolute monarchy, Bhutan adopted a democratic constitution in 2008 and has averaged annual growth of 7.5 percent since the 1980s, according to the World Bank. The country, which relies on trade with neighboring India, is also one of the few in the world carbon-negative, meaning it absorbs more carbon from the atmosphere than it releases. High-end tourism is a significant source of income, with visitors charged a $200 per day tax.
Bitcoin mining could help Bhutan diversify revenues from hydropower, much of which is exported to India, said Jaran Millrod, a Norway-based analyst at bitcoin mining data provider Hashrate Index.
He said Bhutan could become “the world’s largest per capita bitcoin miner”.
But he predicted the country would struggle to raise $500 million in light of the turmoil in the industry. “In 2021, a miner was making $50 million, $100 million every week,” Melero said. “Now it’s huge for a miner to be able to raise $50 million… So, $500 million in a bear market for a bitcoin mining operation? I think it’s too much.”
Both companies have been hit by cryptocurrency turmoil. Bitder posted huge losses last year and its Nasdaq-listed shares have fallen by about a third since it listed through a special purpose acquisition vehicle last month. Forbes reported last month that DHI held tens of millions of cryptocurrencies with bankrupt lenders BlockFi and Celsius, though DHI denied losing money in the deals.
Dahal argued that mining represents the safest part of the industry. “We are very much sticking to the mining sector, which seems to be the least risky sector.”
Mellerud warned that miners have been “extremely affected” by the cryptocurrency bear market, though.
DHI is also piloting a project to use drones for infrastructure inspection and maintenance in the country’s energy sector. DHI said last year it was in talks with Japanese drone company Sora to develop the technology and even manufacture in the country. “Because we are in a very hilly area, the drones have a hard time flying,” Dahl said. “So it’s a very interesting space for drone researchers to test at 4,000 meters.”