Bhutan Showcases How Developing Nations Could Leverage Bitcoin Mining to Improve Their Economies

The East Himalayan Kingdom of Bhutan is showcasing a powerful example of how developing nations could leverage Bitcoin mining to improve their economies

Bhutan, a small East Himalayan kingdom, is quietly making a powerful statement about how developing nations can use Bitcoin mining to bolster their economies and propel themselves toward greater economic prosperity.

On Sept. 16, onchain analytics platform Arkham Intelligence claimed to have detected and identified the first Bitcoin BTC $62,925 address belonging to Bhutan’s investment arm, Druk Holding and Investments. According to Arkham, DHI holds 13,029 BTC, 656 Ether ETH $2,557 , some BNB BNB $568 and Polygon MATIC $0.3739 , which together total roughly $780 million in various crypto holdings.

BTC

$62,925

ETH

$2,557

BNB

$568

MATIC

$0.3739

This means that Bhutan’s crypto reserves account for over 26.9% of its $2.9 billion 2023 national gross domestic product (GDP), according to data from the World Bank.

As nations around the world grapple with staggering debt levels, they face increasing economic strain as borrowing costs rise and fiscal challenges multiply. The mounting debt crisis is sparking debates about the long-term sustainability of current economic models, especially in poorer countries that rely heavily on external loans.

Total debt liabilities issued by central governments as a share of GDP. Source: International Monetary Fund

During the Bitcoin 2024 conference in Nashville, Tennessee, Michael Saylor, founder and chairman of software and Bitcoin-proxy company MicroStrategy, explained how nations — particularly those burdened with substantial debt — could use Bitcoin to solve their economic woes.

He proposed a strategy where indebted countries could reallocate their treasury reserves from assets like gold and bonds to Bitcoin, a long-term digital asset. By doing so, these countries could leverage Bitcoin’s growth potential to pay off debt and possibly achieve economic prosperity.

The World Bank classifies Bhutan, a small Asian nation with limited economic capacity, as a developing country. Countries in this category typically have a gross national income (GNI) per capita below $14,005. Most countries worldwide fall into this category, and many could follow Bhutan’s example to address their national debt. Some potential candidates include Paraguay, Venezuela, El Salvador, Argentina and Kenya.

Paraguay: A renewable energy giant limited by politicians

Paraguay made moves toward regulating Bitcoin mining in 2024, largely due to its abundant hydroelectric energy resources. The country’s low electricity costs and favorable climate have made it an attractive destination for cryptocurrency miners.

Joaquin Morinigo, also known as Criptoboi, co-founder of Bitcoin Paraguay, told Cointelegraph, “Paraguay has a unique position in the world because 99% of its energy is hydroelectric.”

Morinigo explained that Paraguay’s low energy demand cannot absorb all the energy produced by the hydroelectric dams, so the surplus energy eventually ends up being exported to Argentina and Brazil at “rock-bottom prices.”

Even though Paraguay is the largest power exporter in South America and among the 10 largest worldwide, politics and regulation have prevented the country from using its surplus energy for cryptocurrency mining.

Morinigo pointed out that the same political party has ruled Paraguay for over 70 years. He believes the ruling bureaucrats fail to fully understand Paraguay’s vast energy potential to build a profitable Bitcoin mining infrastructure.

Related: Venezuela opposition’s Bitcoin reserve plan must overcome political turmoil first

In 2022, Paraguay’s legislature approved a bill to regulate cryptocurrency mining to establish a clear legal framework for the industry in the country. The bill required miners to register with government authorities and adhere to specific energy consumption standards, ensuring compliance while fostering the growth of crypto-related activities.

However, former President Mario Abdo Benítez vetoed the bill, citing concerns over energy consumption and minimal economic benefits. Some lawmakers urged the government to consider the benefits of selling the surplus energy to local crypto miners instead of exporting it to Argentina and Brazil. Despite friction from lawmakers, mining operations have continued to grow, albeit in a regulatory gray zone.

Venezuela: Energy giant with stunted crypto adoption

Venezuela has faced severe economic crises, including hyperinflation and shortages of essential goods, and many citizens have turned to cryptocurrencies to protect their earnings from inflation.

Rate of inflation from August 2023 – August 2024. Source: Trading Economics

The country is rich in oil and natural gas, providing a cheap and abundant energy source for electricity generation, an important factor in Bitcoin mining’s proliferation.

Anibal Garrido, CEO of crypto assets self-custody firm BTC Techno, told Cointelegraph that if Venezuela used its natural wealth correctly, it could bring “our nation into a cycle of financial profitability and operational sustainability” in the Bitcoin mining sector.

However