GDP’s 9% Spent on Miners: This Country Bets Its National Fortunes on Bitcoin

El Salvador VS Bhutan

Over the past half-year, El Salvador’s Bitcoin holdings have increased from 6,376 to 7,600, while Bhutan’s have decreased from 6,234 to 4,000.

This selling pressure from the Himalayas is not large, but it is mysterious. Bhutan, a relatively closed Buddhist country located between China and India, first opened to foreign tourists in 1974, introduced television and the internet in 1999, transitioned from absolute monarchy to constitutional monarchy in 2008, and still officially bans plastic bags.

It is such a country that, at its peak, held 13,000 Bitcoins; the current 4,000 is the result after significant selling. I imagine you might have many questions, but the first one that needs answering is:

Amitabha, dear Bhutan, where did your Bitcoin come from?

Hydropower, a Gift from Heaven

As a Buddhist country, Bhutan used to be very laid-back.

In 1972, King Jigme Singye Wangchuck of Bhutan proposed “Gross National Happiness.” Yes, this world-famous “Are you happy?” evaluation system was first proposed by Bhutan.

With Buddha in the heart, Amitabha, money and fame are external. In 2006, in the first “World Map of Happiness” released by the University of Leicester, Bhutan ranked 8th.

But with Buddha in the heart, one must still live. Bhutan only graduated from the “Least Developed Countries” list in December 2023. In the UN’s “World Happiness Report,” Bhutan’s highest ranking was 84th in 2014. By 2019, it had further slipped to 95th.

Every country has its advantages; Bhutan’s advantage is hydropower. Located on the southern slopes of the Himalayas, Bhutan has numerous rivers, abundant annual rainfall, and significant elevation drops. Bhutan’s theoretical hydropower potential is estimated at 30,000 – 40,000 MW, while the current developed capacity is only about 2,300 – 4,000 MW, realizing only 5-10% of its potential.

In summer, Bhutan has even more electricity than it can use. In 2025, Bhutan’s summer peak generation was about 3,600 MW, but the corresponding summer peak demand was only about 900 – 1,000 MW.

Naturally, they found a way to monetize the 70%+ surplus electricity: Bhutan sells it to India. Hydropower has thus become Bhutan’s absolute economic pillar, accounting for about 17-20% of GDP, with hydropower exports contributing over 63% of total export revenue.

However, Bhutan is not entirely willing in this trade with India. Since 1961, India has dominated almost all hydropower plant construction in Bhutan, using a “60% grant + 40% loan” funding model. Simply put, India provides the bulk of the capital to build the power plants, but the price is that Bhutan must sell the generated electricity back to India as a priority and at low prices.

This “engineering for resources” model has tightly locked Bhutan’s economic lifeline into the Rupee settlement system. Although Bhutan holds energy resources, what it gets in return is Rupees that circulate mainly in its neighbor, making it difficult to directly exchange for the US dollar foreign exchange needed for modern industry on the international market.

How to break this deadlock?

Turning Hydropower into Bitcoin

The remedy Bhutan found is mining Bitcoin.

Sometime between 2019 and 2020 (when Bitcoin was around $5,000), Bhutan began secretly testing a path called “energy digitization”—using surplus hydropower for Bitcoin mining.

In 2019, King Wangchuck of Bhutan stated: “As a small country, we must become a smart nation—this is not a choice, but a necessity. Technology is an indispensable tool to achieve this vision.”

In 2025, Bhutan’s Prime Minister Tshering Tobgay publicly stated: “When electricity prices are good, we sell to India; when electricity prices are not good, we keep it to mine Bitcoin. This is very strategic.”

Besides abundant hydropower, Bhutan’s unique climate conditions, especially the average annual temperature of just 5.5°C in the central high-altitude regions, provide a natural cooling advantage for mining, significantly reducing energy costs.

Furthermore, the Bitcoin mining industry perfectly aligns with Bhutan’s environmental and religious ethos as a Buddhist nation. Bhutan’s constitution mandates maintaining 60% forest cover, limiting traditional heavy industry development. However, hydropower mining is a “hidden industry” that emits no greenhouse gases and does not damage the ecosystem; using it to mine Bitcoin does not violate Buddhist teachings at all. This contrasts with the challenges 暗号currency development faces in Islamic countries—under Sharia law, financial activities strictly prohibit usury (Riba) and gambling (Gharar). Due to Bitcoin’s high volatility and lack of physical asset backing, some Islamic scholars (e.g., the Syrian Islamic Council) have issued fatwas declaring Bitcoin “Haram” (forbidden).

Dig, dig, dig with abundant hydropower. Through Bitcoin, Bhutan found a path for economic development that breaks the “Rupee blockade.” However, how did a relatively closed Buddhist country find this path in modern finance?

Bhutan’s “Bitcoin Operators”

Bhutan’s Bitcoin mining is not an impulsive move by the King or a zealous politician but a carefully planned “alternative investment” strategy by technical bureaucrats within its sovereign wealth fund, Druk Holding and Investments (DHI).

The current CEO of DHI, Ujjwal Deep Dahal, is the core operator driving Bhutan’s Bitcoin mining. He is an electrical engineer with a deep background in power and water resources. Before leading DHI, he profoundly understood the advantages and limitations of Bhutan’s hydropower resources.

In Dahal’s view, Bhutan faces severe geographical and demographic disadvantages (“Geography is a challenge for us, demography is a challenge for us”). He sees technology as the only path for Bhutan’s leapfrog development. In 2019, Dahal pushed DHI to secretly invest in Bitmain mining rigs. His logic was clear: use Bhutan’s surplus “waste electricity” during the summer monsoon season, which cannot be exported or consumed domestically, to mine “digital gold” as a diversification supplement to national foreign exchange reserves.

In a relatively closed Buddhist country, those who could keenly capture Bitcoin’s historical opportunity were, of course, not ordinary people but technical bureaucrats with top-tier international education. Dahal’s upbringing is naturally not from hardship but a typical epitome of Bhutan’s elite class. As the child of a senior government civil servant, Dahal enjoyed Bhutan’s best educational resources from a young age and received a government “Elite Scholarship” for overseas study. He received his foundational higher education in India before pursuing further studies in Canada and the United States, even serving as a researcher at MIT’s SPURS (Special Program for Urban and Regional Studies) program.

It was the cutting-edge technological concepts he encountered at MIT, combined with Bhutan’s local energy endowment, that prompted him to propose the “electricity price arbitrage” idea of using hydropower for Bitcoin mining to Bhutan’s top leadership in 2019 when Bitcoin prices were low.

All beings are equal, yet all beings are not equal.

A National-Level Gamble

Since the goal is revenue generation, the Bitcoin mined “for free” by Bhutan using surplus hydropower naturally needs to be converted into foreign exchange to contribute to the national reserves. The question “Why is Bhutan selling Bitcoin?” already has an answer, but we can explore deeper.

In June 2023, facing a severe civil servant brain drain crisis, the Bhutanese government used approximately $72 million worth of Bitcoin reserves to raise salaries for all civil servants by 50%.

On December 17, 2025, Bhutan’s National Day. Bhutan made another bold decision: to inject up to 10,000 of its hoarded Bitcoins (worth about $1 billion at the time) as a national seed fund for the future into the still-on-the-drawing-board mega-special zone—the “Gelephu Mindfulness City (GMC).”

GMC’s financial model is “crazy” in macroeconomic terms. According to *Time* and SCMP reports, GMC’s estimated total investment is as high as $100 billion, while Bhutan’s 2025 GDP was only about $3.4 billion. The estimated total investment is about 30 times the country’s 2025 GDP.

Even more exaggerated is that this mega-project, announced with a preliminary vision in December 2023 and officially starting construction in 2025, after over 2 years, can still only be said to be in the “infrastructure construction phase.”

These two actions can be puzzling—with 13,000 Bitcoins at one point, why wasn’t the earned USD used to support other domestic industries, but instead just to pay civil servants, and then spend 10,000 Bitcoins to build a special zone that might yield no returns for 5-10 years?

Bhutan is also helpless.

In Bhutan, the government is the single largest employer. Due to a weak private economy, the operation of the state machinery relies entirely on the civil service system. However, in recent years, Bhutan has faced inflation and brain drain. Raising civil servant salaries is essentially to maintain the operation of the state machinery and prevent government shutdown. Bitcoin mining revenue is seen as “life-saving money” to retain the country’s core talent—first “stop the bleeding,” then talk about “development.”

Furthermore, for Bhutan, supporting domestic industries is quite difficult. Bhutan lacks the industrial soil to absorb capital. Without infrastructure, without logistical advantages, and with an extremely small domestic market (only about 800,000 people), even if the government injected hundreds of millions of dollars into the private sector, it couldn’t magically create a manufacturing or tech industry. The funds would most likely flow into real estate speculation or become imported consumer goods, thereby depleting precious foreign exchange reserves.

Therefore, the commitment of 10,000 Bitcoins for GMC resembles a kind of “desperate gamble.” GMC is not a tourist city but a “special zone” located in the plains of southern Bhutan bordering India, planning to establish an independent legal system (referencing Singapore and Abu Dhabi) to attract global capital.

It is like the “Cayman Islands under the Himalayas.” Through partnerships with institutions like Matrixport, it offers offshore trusts, digital asset legalization, and an independent jurisdiction based on Anglo-American law. The Bhutanese government realizes that under the existing system and geographical constraints, the prospects for incremental reform remain hazy. To attempt to break the singular dependence on India, this might be the best option they can currently conceive.

Although GMC’s estimated total investment scale is as high as $100 billion, it doesn’t mean the Bhutanese government really needs to go all-in with that much money. Their strategy is “building the nest to attract the phoenix”—using Bitcoin revenue and the sovereign wealth fund (DHI) to complete the first phase of infrastructure (like expanding airports, building bridges), then attracting global wealthy individuals and consortia for subsequent investment by granting special zone development rights.

Bhutan is not only “gambling” off-chain; on-chain, their operations are far from simply “mine-hold-sell.” Bhutan does not keep all its assets idle in cold wallets. Instead, it converts a large amount of ETH into liquid staking tokens and deposits them as collateral on the decentralized lending platform Aave to borrow massive amounts of stablecoins.

Earlier this year, Bhutan experienced a perilous “deleveraging” crisis. As the ETH price fell, the value of Bhutan’s collateral on Aave shrank, and its loan health factor once approached the 1.0 liquidation threshold. To save itself, DHI was forced to urgently sell 26,535 ETH (worth about $60 million) in early February 2026 to repay a $137 million USDT loan. This operation pulled its health factor back above the 1.10 safety line, preserving the remaining ~78,245 stETH position.

Actually, we can trace Bhutan’s “gamble” even earlier—because although Bhutan has abundant electricity to mine Bitcoin, they also need mining rigs.

Bhutan primarily purchases equipment from Bitmain. According to customs records and media tracking, the main imports are Bitmain’s Antminer S19 series (including S19 Pro, S19 XP, etc.). After 2023, following a partnership with Bitdeer (founded by former Bitmain co-founder Jihan Wu), Bitdeer also directly shipped tens of thousands of advanced mining rigs to Bhutan.

Forbes and other institutions comprehensively estimate that from 2021 to 2023, Bhutan’s total capital expenditure on crypto mining facilities was about $500 million. This directly caused Bhutan’s foreign exchange reserves to drop from $1.27 billion to a dangerous level of just over $500 million during the same period.

According to the World Bank’s “Bhutan Macroeconomic Outlook” released in April 2024 and the IMF’s 2024 Article IV Consultation report, in the 2022/23 fiscal year, Bhutan’s current account デフィcit (CAD) soared to 34.3% of GDP. The World Bank explicitly stated—

“A major national cryptocurrency mining investment led to a decline in international reserves and widened the CAD to 34.3% of GDP. In 2022 alone, funds equivalent to about 9% of GDP were used to import crypto equipment.”

A country betting 9% of its GDP on Bitcoin might be one of the craziest gambles in human history.

Fortunately, Bhutan’s gamble has passed the painful period. In 2025, as Bitcoin prices reached new all-time highs, Bhutan’s fiscal situation improved significantly. According to the IMF’s latest “2025 Article IV Consultation Report” released in January 2026: “Bhutan’s foreign exchange reserves have strengthened significantly, benefiting from reduced crypto mining-related imports, increased remittances, and growth in tourism and hydropower revenue.” Bhutan’s CAD is projected to narrow sharply from the peak of 34.3% to 8.62% in the 2025/26 fiscal year. This means the “pain period of buying mining rigs” is over, and they have entered the “production and monetization period.”

As a nation, Bhutan’s painful period is over. But as individuals, have Bhutanese lives improved because of Bitcoin?

National Fortune and People’s Fortune

The National Statistics Bureau of Bhutan’s (NSB) “2022 Labour Force Survey Report” clearly shows that Bhutan’s youth unemployment rate in 2022 was indeed 28.6%. In 2025, this figure decreased to 18%.

From the data, the Bitcoin mining industry has indeed improved the lives of Bhutanese people to some extent. But for Bhutanese people, living in Bhutan still offers little hope.

It is estimated that about 66,000 Bhutanese currently live overseas, the vast majority in Australia. For this small country with a population of only about 800,000, this number is equivalent to nearly 8% of the population.

In comparison, globally only about 3.6% of the population lives outside their country of birth. In India, this proportion is 2.5%; in Pakistan, it’s 2.8%.

It’s important to note that in 2025, youth constituted 45.1% of Bhutan’s unemployed population. This means the number of Bhutanese living overseas is almost equal to the number of unemployed youth within Bhutan.

Even living within Bhutan’s cities doesn’t guarantee better job prospects due to greater development. Among unemployed youth, 57.2% live in urban areas.

Every year, the number of Bhutanese students and professionals going to Australia, Canada, and other countries for study and employment grows steadily, a trend that has drawn attention from top government officials. Bhutan’s Prime Minister Tshering Tobgay stated that among the 66,000 Bhutanese diaspora, many are experienced civil servants, teachers, nurses, and other professionals.

“We cannot ask civil servants not to resign, nor can we stop people from leaving the country. I cannot guarantee that professionals will not resign, and when they do, they often cite poor working conditions, which may be true.”

Chimi Dorji, President of the Bhutanese Association of Perth, Australia, said there are now over 20,000 Bhutanese living in Perth alone. He and his wife moved to Australia in 2019; before that, he was a forestry officer in Bhutan.

He said, “Many Bhutanese living in Australia are still seeking permanent residency because they plan to settle down and not return home.”

Tashi Zam left Bhutan for Australia with her boyfriend in 2018. When she and her boyfriend graduated in 2015-2016, they hadn’t even considered traveling abroad:

“Our initial dream was to find a suitable job and settle down in Bhutan.”

For nearly two years, they tried everything to find jobs but got nowhere. Eventually, their families pooled money to encourage them to formally marry so they could apply for jobs together.

“Looking back now, our choice was correct. We have good income now and can also help our family members.”

Mining farms are highly automated, GMC serves foreign elites, Bitcoin is not a panacea, and it cannot solve Bhutan’s severe unemployment crisis. Bhutan jumped directly from an agricultural society to a financial society, missing the manufacturing/service sectors that can absorb large amounts of employment.

This country is soaring in the cryptocurrency field, but its people are still adrift in real life.

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