Author: Cookie

It’s been almost half a year since Bitcoin set its all-time high. During this half year of declines, nearly all of the known government-backed holding entities have shown little to no selling activity; however, we’ve discovered a pair of very interesting counter-parties:

El Salvador vs. Bhutan

Over nearly half a year, El Salvador’s Bitcoin holdings increased from 6,376 BTC to 7,600 BTC, while Bhutan reduced its holdings from 6,234 BTC down to 4,000 BTC.

This wave of selling pressure coming from the Himalayas isn’t huge, but it’s very mysterious. Bhutan, a relatively closed Buddhist country located between China and India, first opened to foreign tourists in 1974, introduced television and the internet only in 1999, shifted from absolute monarchy to constitutional monarchy in 2008, and even now the government still bans the use of plastic bags.

It’s in this kind of country that Bitcoin holdings reached 13,000 BTC at their peak, and today the 4,000 BTC you see is the result of all the selling—selling—selling. You might have many questions, but the first one that needs answering is:

Amitābha, Bhutanese sir—where did your Bitcoin come from?

Hydropower, a gift from the heavens

As a Buddhist country, Bhutan used to be very “laid-back” about everything.

In 1972, Bhutan’s king Jigme Singye Wangchuck proposed Gross National Happiness (GNH). Yes—this world-famous “Are you happy?” rating system was originally put forward by Bhutan.

With Buddha in your heart, Amitābha—money and status are things outside the body. In 2006, in the first “World Happiness Map” released by the University of Leicester in the UK, Bhutan ranked as high as 8th.

But even with Buddha in your heart, you still have to live. Bhutan only graduated from the “Least Developed Countries” category in December 2023. In the “World Happiness Report” published by the United Nations, Bhutan’s highest ranking was 84th in 2014. By 2019, it had fallen further to 95th.

Every country has its own advantages; Bhutan’s advantage is hydropower. Located on the southern foothills of the Himalayas, Bhutan has many rivers, rich annual precipitation, and an extremely large elevation difference. Bhutan’s theoretical hydropower potential is estimated at 30,000–40,000 MW, while the currently developed installed capacity is only about 2,300–4,000 MW—meaning it has realized just 5–10% of its potential.

In summer, Bhutan even has electricity it can’t get rid of. In 2025, Bhutan’s summer peak generation is about 3,600 MW, while the corresponding peak of daily demand in summer is only about 900–1,000 MW.

With more than 70% of its electricity going unused, naturally it needs to find a buyer to generate revenue—Bhutan sells that power to India. And hydropower, unsurprisingly, has become Bhutan’s absolute economic pillar, accounting for about 17–20% of GDP. Hydropower exports contribute more than 63% of the total export value.

But Bhutan is less than fully willing about this buy-sell relationship with India. Since 1961, India has dominated the construction of nearly all of Bhutan’s hydropower stations and adopted a funding model of “60% grant + 40% loan.” In simple terms, India covers the lion’s share to help you build the power plant, but the price is that you must prioritize and return the generated electricity to India at a low price.

This model—trading engineering for resources—has effectively locked Bhutan’s economic lifeline into a rupee settlement system. Even though Bhutan holds energy, what it receives back is rupees that can only circulate in neighboring countries, making it difficult to directly obtain the US dollars in foreign exchange needed by modern industry on the international market.

How do you break the deadlock?

Turn hydropower into Bitcoin

The cure Bhutan found was mining Bitcoin.

Sometime between 2019 and 2020 (when Bitcoin’s price was around $5,000), Bhutan began secretly testing a path called “energy digitalization”—using surplus hydropower to mine Bitcoin.

In 2019, King Wangchuck of Bhutan had stated: “As a small country, we want to become a smart nation—that’s not a choice; it’s a necessity. Technology is an indispensable tool to achieve this vision.”

In 2025, Bhutan’s Prime Minister Tshering Tobgay publicly said: “When the electricity price is good, we sell it to India; when the electricity price is bad, we stay and mine Bitcoin. This is of very strategic significance.”

Besides hydropower it can’t use up, Bhutan’s unique climate—especially the mid-elevation high-altitude region where the average annual temperature is only 5.5°C—also provides a natural cooling advantage for mining, significantly reducing the energy cost of mining.

In addition, the Bitcoin mining industry fits perfectly with Bhutan as a Buddhist country in terms of environmental protection and religious beliefs. Bhutan’s constitution requires maintaining 60% forest cover, which limits the development of traditional heavy industry. But hydropower mining is an “invisible industry” that doesn’t emit greenhouse gases and doesn’t damage the ecosystem. Using it to mine Bitcoin doesn’t go against the Buddha’s teachings at all. By contrast, cryptocurrencies have run into trouble in Islamic countries—under Islamic law, financial activities are strictly forbidden from involving usury (Riba) and gambling (Gharar). Because Bitcoin’s price is highly volatile and lacks backing from tangible assets, some Islamic scholars (such as the Islamic Council of Syria) have issued a fatwa declaring Bitcoin to be “haram” (forbidden).

Mine with abundant hydropower—dig and dig and dig. Through Bitcoin, Bhutan has found a path for economic development that breaks out of the “rupee blockade.” But how did a relatively closed Buddhist country find a breakthrough route in this modern financial field of cryptocurrencies?

Bhutan’s “Bitcoin operators”

Bhutan’s Bitcoin mining was not a spur-of-the-moment act by the king or some fanatical politician; it was an “alternative investment” strategy carefully planned by the professional technical bureaucrats at its sovereign wealth fund, Druk Holding and Investments (DHI).

DHI’s current CEO, Ujjwal Deep Dahal, is the key operator driving Bhutan’s Bitcoin mining. He is an electrical engineer with deep expertise in the power and water conservancy sectors. Before taking charge of DHI, he understood the advantages and limitations of Bhutan’s hydropower resources.

In Dahal’s view, Bhutan faces serious geographic and demographic disadvantages (“Geography is a challenge for us, demography is a challenge for us”). He sees technology as the only way for Bhutan to achieve leapfrog development. In 2019, Dahal pushed DHI to begin secretly investing in Bitmain mining machines. His logic was very clear: use Bhutan’s “wasted electricity” during the summer wet season—electricity that cannot be exported and cannot be absorbed—to mine “digital gold” as a diversified补充 to the country’s foreign exchange reserves.

In a relatively closed Buddhist country, it’s not just anyone who can spot Bitcoin’s historical window of opportunity; it has to be technical bureaucrats with international top-tier educational backgrounds. Dahal’s career trajectory also could not possibly be the kind that comes from hardship; it’s the typical snapshot of Bhutan’s elite class. As the child of a senior government civil servant, Dahal enjoyed the best education resources Bhutan has access to from a young age and received the government’s “Elite Scholarship” to study abroad. Early in his career, he received basic higher education in India, then went to Canada and the United States for further studies. He also worked as a researcher at MIT’s SPURS (Special Program for Urban and Regional Studies).

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

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

A country-level gamble

Since it’s for revenue generation, the Bitcoin mined “for free” from surplus hydropower naturally needed to be monetized to contribute to the country’s foreign exchange reserves. “Why does Bhutan sell Bitcoin?” We already have an answer to that question, but we can dig deeper.

In June 2023, facing a severe civil servant retention crisis, the Bhutanese government used about $72 million worth of its Bitcoin reserves to give all civil servants a 50% raise.

On December 17, 2025, Bhutan’s national day, Bhutan made another bold decision: to take its largest hoard of up to 10,000 Bitcoin (based on the market value at the time, this asset was worth about $1 billion), use it as the country’s future seed fund, and inject all of it into the massive special administrative zone—“Galeph Mindfulness City (GMC)”—which was still on the drawing board.

GMC’s financial model is downright “crazy” from the standpoint of macroeconomics. According to reporting by Time Magazine and SCMP, GMC’s estimated total investment could reach $100 billion, while Bhutan’s GDP in 2025 is only about $3.4 billion—making the projected total investment about 30 times that country’s 2025 GDP.

What’s even more astonishing is that after the project’s initial vision was announced in December 2023 and it began formal construction in 2025, with more than two years passing, you can still only describe it as being in the “infrastructure development phase.”

These two moves are easy to leave people confused—especially since Bhutan previously had 13,000 Bitcoin, so why not use the earned dollars to support other domestic industries, rather than just paying civil servants, and then using 10,000 Bitcoin to build a special zone that might produce no returns for 5 to 10 years?

Bhutan is also pretty helpless.

In Bhutan, the government is the single largest employer. Because the private economy is weak, the operation of the state machine depends entirely on the civil servant system. However, in recent years, Bhutan has faced inflation and talent flight. Raising salaries for civil servants is, at its core, to maintain the operation of the state machine and prevent the government from shutting down. Bitcoin mining profits are seen as “life-support money” to retain key national talent—talk first about “stopping the bleeding,” then about “development.”

Moreover, for Bhutan, supporting domestic industries is extremely difficult. Bhutan lacks the industrial soil to absorb capital. With no infrastructure, no logistics advantages, and a very small domestic market (only about 800k people), even if the government were to scatter several hundred million dollars into the private sector, it still couldn’t conjure a manufacturing industry or a technology industry out of thin air. The money would most likely flow into real estate speculation or become imported consumer goods, thereby consuming scarce foreign exchange reserves.

So the promise of 10,000 Bitcoin for GMC looks very much like a “helpless gamble.” GMC is not a tourist city; it’s a “special zone” located in the plains in the southern part of Bhutan near India’s border. The plan is to establish an independent legal system (reference Singapore and Abu Dhabi) to attract global capital.

It’s like “the Cayman Islands under the Himalayas.” By working with institutions such as Matrixport, it offers offshore trusts, legal recognition of digital assets, and an independent judicial jurisdiction based on common law in the US and UK. The Bhutanese government realizes that, given the existing institutional and geographic constraints, the prospects for incremental reform are still shrouded in heavy fog. If they want to try to break away from reliance on a single partner—India—this may be the best option they can come up with right now.

Although the estimated total investment scale of GMC is as high as $800k, that doesn’t mean the Bhutanese government truly intends to go all-in with that much money. Their strategy is “build the nest and attract the birds”—using Bitcoin earnings and the sovereign wealth fund (DHI) to complete the first phase of infrastructure construction (such as expanding airports and building bridges), and then, by transferring development rights of the special zone, attract global wealthy individuals and conglomerates for the subsequent investment.

Bhutan is not only “gambling in the real world” off-chain; on-chain, its operations are far from merely “mine—hold—sell.” Bhutan has not put all its assets into cold wallets to sit there; instead it has converted a large amount of ETH into liquid staking tokens and deposited them into the decentralized lending platform Aave as collateral to borrow large amounts of stablecoins.

Earlier this year, Bhutan also experienced a risky “deleveraging” crisis. As the ETH price fell, the value of Bhutan’s collateral on Aave dropped, and the health factor of its borrowing once approached the liquidation threshold of around 1.0. To save itself, in early February 2026, DHI was forced into an emergency sale of 26,535 ETH (about $60 million) to repay USDT loans totaling up to $137 million. This operation pulled its health factor back above the safe line of 1.10, preserving the remaining position of about 78,245 stETH.

In fact, regarding Bhutan’s “gamble,” we can trace it even further back—because although Bhutan has all that electricity and mines Bitcoin, they also need mining rigs.

Bhutan mainly purchases equipment from Bitmain. According to customs records and media tracking, the imported equipment is mainly Bitmain’s Antminer S19 series (including S19 Pro, S19 XP, etc.). And after 2023, as cooperation was reached with Bitdeer (a crypto company founded by Wu Jihan, Bitmain’s former co-founder), Bitdeer directly shipped tens of thousands of advanced mining machines to Bhutan.

Based on comprehensive assessments by organizations such as Forbes, from 2021 to 2023, Bhutan’s total capital expenditure on cryptocurrency mining facilities was about $500 million. This directly caused Bhutan’s foreign exchange reserves to fall from $1.27 billion to more than $500 million over the same period—into a dangerous level.

According to Bhutan’s “Macroeconomic Outlook of Bhutan” released by the World Bank in April 2024 and the IMF’s 2024 Article IV consultation report, in fiscal year 2022/23, Bhutan’s current account deficit (CAD) surged to 34.3% of GDP. The World Bank also clearly pointed out that—

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

For a country to bet 9% of GDP on Bitcoin, this could very well be one of the craziest gambles in human history.

Luckily, Bhutan’s gamble has already passed the pain. In 2025, as Bitcoin hit a new all-time high, Bhutan’s fiscal situation improved significantly. According to the IMF’s latest “2025 Article IV consultation report” published in January 2026: “Bhutan’s foreign exchange reserves have been significantly strengthened, helped by reduced imports related to crypto mining, increased remittances, and higher revenue from tourism and hydropower.” Bhutan’s CAD is expected to shrink dramatically from the peak of 34.3% down to 8.62% of GDP in fiscal year 2025/26. That means the pain period of “buying mining rigs” is over, and it has entered the “production and monetization phase.”

As a nation, Bhutan’s pain period can be considered over. But as individuals, have Bhutanese people’s lives gotten better because of Bitcoin?

National fortunes and people’s fortunes

A labor force survey report from Bhutan’s National Statistics Bureau (NSB) on 2022 shows that in 2022, Bhutanese youth unemployment was indeed 28.6%. In 2025, that figure fell to 18%.

From the data, it does appear that the Bitcoin mining industry has improved life for Bhutanese people. But for Bhutanese people, living in Bhutan, there still isn’t much to see that looks like hope.

It’s estimated that about 66k Bhutanese people currently live overseas, with the vast majority in Australia. For a country with only about 800k people, that number is close to 8% of the population.

Correspondingly, globally only about 3.6% of the population lives outside their country of birth. In India, the figure is 2.5%, and in Pakistan it is 2.8%.

Bear in mind that in 2025, among Bhutan’s unemployed population, the youth share reaches 45.1%. That means the number of Bhutanese living abroad is almost equal to the number of unemployed youth within Bhutan.

Even living inside Bhutan’s cities doesn’t mean there’s a better employment outlook just because the cities are more developed. Among unemployed youth, 57.2% live in cities.

Each year, the number of Bhutanese students and professionals going to Australia, Canada, and other countries to study and work steadily increases, and this trend has attracted attention from the top levels of the government. Bhutan’s Prime Minister Tshering Tobgay said that among the 66k Bhutanese expatriates overseas, many are experienced civil servants, teachers, nurses, and other professionals.

“We can’t require civil servants not to resign, and we can’t stop people from leaving this country. I can’t guarantee that professionals won’t resign, and when they resign they often mention that the working environment is poor—perhaps that’s true.”

Chimi Dorji, chairman of the Bhutanese Association in Perth, Australia, said that currently there are already more than 20,000 Bhutanese people living in Perth alone. He and his wife moved to Australia in 2019, and before that he had been a forestry officer in Bhutan.

He said, “Many Bhutanese living in Australia are still looking for 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 had not even considered traveling abroad:

“Our original dream was to find a suitable job, and then settle in Bhutan.”

Over the past two years, they used every possible effort to apply for jobs, but got nothing. In the end, their families pooled money to encourage them to formally get married so they could apply for jobs together.

“Looking back now, our choice back then was correct. We now have decent income, and we can help our relatives back home.”

The mines are highly automated. GMC is a service platform for foreign elites. Bitcoin is not a cure-all medicine that can rescue Bhutan’s severe unemployment crisis. Bhutan jumped directly from an agricultural society to a financial society, leaving a gap in manufacturing/services that could absorb large numbers of jobs.

This country has skyrocketed in the cryptocurrency field, but its people are still struggling and drifting in real life.