Bhutan is investing in everything from bitcoin mining to drone technology as the Himalayan kingdom turns to new-age businesses looking for rapid growth and returns.
State business holding company Druk Holding & Investments will start pitching investors this month to raise up to $500 million for a cryptocurrency mining operation after it teamed up with Singaporean group Bitdeer, one of the world’s largest bitcoin miners.
Bhutan follows other countries such as El Salvador and the Central African Republic in betting on cryptocurrencies even as sell-offs, contagion and scandals rock the industry. The isolated nation of 800,000 only allowed television and the internet in 1999 and is known for its Gross National Happiness metric, which prioritizes well-being over economic growth.
Ujjwal Deep Dahal, chief executive officer of DHI, said the technology push will help accelerate innovation in key rural economies. DHI is still in the early stages of a project to deploy drones in the power sector and launched a biometric digital identity system in February.
DHI is “focused on new generation industries,” he said. These technologies will “provide the platform to solve problems, but also to create industries and create a diversified portfolio for us”.
DHI’s core portfolio has about US$3 billion in assets in 2021, including Bhutan’s major telecommunications, power and airlines, among others.
Together with Bitdeer it will seek funding from international institutional investors. Bitdeer said it plans to build a 100-megawatt cryptocurrency mining data center in the country.
Mountainous Bhutan is rich in hydropower, an important industry for the country. The companies argue that hydropower provides a simple, renewable source of electricity for bitcoin mining, an energy-intensive process in which computers solve mathematical problems to create new coins.
Bhutan, a long-running absolute monarchy that adopted a democratic constitution in 2008, has grown an average of 7.5 percent a year since the 1980s, according to the World Bank. The country relies on trade with neighboring India and is one of the few countries in the world that is carbon negative, meaning it absorbs more carbon from the atmosphere than it emits. High-end tourism is an important source of income, with tourists paying $200 a day in taxes.
Jaran Mellerud, a Norwegian analyst at bitcoin mining data provider Hashrate Index, said bitcoin mining could help Bhutan diversify its hydropower revenue, much of which is exported to India.
Bhutan could become “the world’s largest bitcoin miner per capita,” he said.
But he expects the country will struggle to raise $500 million given the turmoil in the industry. “In 2021, miners are raising $50 million, $100 million every week,” Mellerud said. “Now, if a miner can raise $50 million, that would be great.” . . So throwing $500 million into a bitcoin mining operation in a bear market? I think it’s a little too much. “
Both companies have been affected by the turmoil in cryptocurrencies. Bitdeer was hit hard last year, with its Nasdaq-listed shares down about a third since going public through a special purpose acquisition vehicle last month. Forbes reported last month that DHI held tens of millions of dollars in cryptocurrencies with bankrupt lenders BlockFi and Celsius, though DHI denied it lost money on the trade.
Dahal believes that mining is the safest part of the industry. “We’re primarily focusing on mining, which appears to be the least risky vertical.”
Despite this, Mellerud warned, miners are still being “dramatically affected” by the cryptocurrency bear market.
DHI is also piloting a project to use drones to inspect and maintain infrastructure in the country’s power sector. DHI said last year that it was in talks with Japanese drone company Sora to develop the technology and even manufacture it in the country. “Because we’re in hilly terrain, it’s very difficult to fly a drone,” Dahal said. “So it’s a very interesting space for drone researchers to test at 4,000 meters.”