Bhutan, a country that bets 9% of its GDP on Bitcoin.

It’s been nearly half a year since Bitcoin reached an all-time high. During this half-year downturn, it’s known that nearly all government-held coin entities have shown little to no selling activity—yet we’ve found a pair of very interesting counterparty trades:

El Salvador vs. Bhutan

Over nearly six months, El Salvador’s Bitcoin holdings increased from 6,376 coins to 7,600 coins, while Bhutan trimmed its holdings from 6,234 coins down to 4,000 coins.

This wave of selling pressure coming out of the Himalayas isn’t large, but it’s quite 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, shifted from an absolute monarchy to a constitutional monarchy in 2008, and to this day the government still bans the use of plastic bags.

And that’s the kind of country where Bitcoin holdings at their peak reached 13,000 coins—while today’s 4,000 coins are already the result after “selling, selling, selling.” I bet you might have many questions, but the first question that needs to be answered is:

Oh Amitabha, Bhutanese benefactor—where did your Bitcoin come from?

Hydropower—God’s gift

As a Buddhist country, Bhutan used to be very “laid-back” (detached).

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

With Buddha in your heart, Amitabha—money and status are things beyond 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 having Buddha in your heart doesn’t mean you don’t have to live. Bhutan only came out of the “Least Developed Country” category in December 2023. In the UN-published “World Happiness Report,” Bhutan’s highest ranking was 84th in 2014. By 2019, it had further fallen to 95th.

Every country has its own advantages; Bhutan’s advantage is hydropower. Bhutan is located in the southern foothills of the Himalayas, with many rivers and abundant annual rainfall, plus a huge elevation drop. Bhutan’s theoretical hydropower potential is estimated at 30,000–40,000 MW, but its currently developed installed capacity is only about 2,300–4,000 MW—realizing just 5–10% of that potential.

In summer, Bhutan even has electricity they can’t possibly use up. In 2025, Bhutan’s summer peak power generation is about 3,600 MW, while the corresponding summer daily demand peak is only about 900–1,000 MW.

With more than 70% of the electricity going unused, it makes sense to find a buyer to generate revenue. Bhutan sells this electricity to India. And hydropower, naturally, becomes Bhutan’s absolute economic pillar—about 17–20% of GDP. Hydropower exports contribute more than 63% of total exports.

But for this deal with India, Bhutan is far from being entirely willing. Since 1961, India has dominated the construction of nearly all Bhutan’s hydropower plants, using a funding model of “60% grants + 40% loans.” Put simply: India covers the bulk of the cost to build the power plant, but the price is that Bhutan must prioritize and repurchase the generated electricity back to India at low prices.

This model—trading engineering for resources—locks Bhutan’s economic lifeline tightly into the rupee settlement system. Bhutan may hold energy, but what it gets back is rupees that can only circulate in neighboring countries, making it difficult to directly exchange for the US dollars needed for modern industry on international markets.

How do you break the deadlock?

Turn hydropower into Bitcoin

The cure Bhutan found is mining Bitcoin.

Sometime around 2019 to 2020 (when the Bitcoin price was roughly around $5,000), Bhutan began secretly testing a path called “energy digitization”—using surplus hydropower to mine Bitcoin.

In 2019, Bhutan’s king Wangchuck stated: “As a small country, we need to become a wise nation—this is not a choice, but a necessity. Technology is an essential tool to realize this vision.”

In 2025, Bhutan’s prime minister, Tshering Tobgay, publicly said: “When electricity prices are good, we sell to India; when electricity prices are not good, we keep it to mine Bitcoin. It has very strategic significance.”

In addition to surplus hydropower, Bhutan’s unique climate—especially the central high-altitude areas with an average annual temperature of just 5.5°C—also provides a natural cooling advantage for mining, significantly lowering the energy consumption cost of mining.

Also, Bitcoin mining perfectly aligns with Bhutan as a Buddhist country’s environmental and religious principles. Bhutan’s constitution requires maintaining 60% forest coverage, which limits the development of traditional heavy industry. But hydropower mining is an “invisible industry” that doesn’t emit greenhouse gases or damage the ecosystem. Using it to mine Bitcoin doesn’t violate the Buddha’s teachings at all. By contrast, the problems that crypto has encountered in Islamic countries are the opposite—under Islamic law, finance activities are strictly prohibited from involving usury (Riba) and gambling (Gharar). Because Bitcoin’s price is highly volatile and lacks tangible asset backing, some Islamic scholars (such as the Syrian Islamic Council) issued a fatwa declaring Bitcoin “haram” (Haram, meaning forbidden).

Keep mining with all that hydropower. Through Bitcoin, Bhutan found an economic development path to break through the “rupee blockade.” But how did a relatively closed Buddhist country find its breakthrough into this modern financial sector?

Bhutan’s “Bitcoin trader”

Bhutan’s Bitcoin mining isn’t an impulsive move by the king or some enthusiastic politician. It’s a carefully planned “alternative investment” strategy engineered by its sovereign wealth fund, Druk Holding and Investments (DHI).

DHI’s current CEO, Ujjwal Deep Dahal, is the core operator driving Bhutan’s Bitcoin mining. He’s an electrical engineer with deep experience in the power and water resources sector. Before taking charge of DHI, he deeply understood both the strengths and limitations of Bhutan’s hydropower resources.

In Dahal’s view, Bhutan faces severe geographic and demographic disadvantages (“Geography is a challenge for us, demography is a challenge for us”). He sees technology as the only path for Bhutan to leap forward. In 2019, Dahal pushed DHI to begin secretly investing in Bitmain mining machines. His logic was very straightforward: use Bhutan’s “waste power” during the summer wet season that can’t be exported and can’t be absorbed, to mine “digital gold,” serving as a diversification of the country’s foreign exchange reserves.

In a relatively closed Buddhist country, the ones able to sensitively seize Bitcoin’s historical opportunity clearly aren’t ordinary people, but rather technical bureaucrats with an international top-tier educational background. Dahal’s growth trajectory also couldn’t possibly be a story of rising from hardship—it’s a typical snapshot 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 the government’s “Elite Scholarship” to study abroad. Earlier in his career he received basic higher education in India, then went all the way to Canada and the United States for further studies, and even served as a researcher at MIT’s SPURS (Special Program for Urban and Regional Studies).

It was the cutting-edge technology concepts he encountered at MIT, combined with Bhutan’s local energy endowments, that led him—when Bitcoin prices were low in 2019—to propose to Bhutan’s leadership the “electricity price arbitrage” plan to use hydropower for Bitcoin mining.

All beings are equal—and yet all beings are not equally so.

A national-level gamble

Since it’s meant to generate revenue, the Bitcoin mined “for free” using surplus hydropower would naturally need to be realized into cash to contribute to the country’s foreign exchange reserves. The question “Why does Bhutan sell Bitcoin?” has an answer already, but we can explore it more deeply.

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

On December 17, 2025—Bhutan’s National Day—Bhutan made another bold decision: it would take its stored holdings of up to 10,000 Bitcoin (based on the market value at the time, worth about $1 billion), and inject them all as a seed fund for the country’s future into that massive special administrative region still on the drawing board—“Gyaleyphu Mindfulness City (GMC).”

GMC’s financial model is, in macroeconomics terms, practically “crazy.” According to reports by Time and SCMP, GMC’s projected total investment could be as high as $100 billion, while Bhutan’s GDP in 2025 is only about $3.4 billion—meaning the projected total investment is roughly 30 times Bhutan’s 2025 GDP.

Even more astonishing: from the initial vision announced in December 2023 to the start of official construction in 2025, more than two years have passed, yet at most it can still only be described as being in the “infrastructure construction phase.”

These two moves are likely to leave people confused. Bhutan previously had 13,000 Bitcoin—so why not use the dollars it earned to support other domestic industries? Instead, it pays civil servants, and then spends 10,000 Bitcoin to build a special administrative region that may produce no returns for 5 to 10 years?

Bhutan is also helpless.

In Bhutan, the government is the largest single employer. Because the private sector is weak, the machinery of the state runs entirely on the civil servant system. However, in recent years, Bhutan has faced inflation and talent drain. Raising civil servant salaries is fundamentally aimed at keeping the state machinery running and preventing the government from stalling. Bitcoin mining profits are viewed as “life-support money” to retain the country’s core talent—first “stop the bleeding,” then talk about “development.”

Also, for Bhutan, supporting domestic industries is extremely difficult. Bhutan lacks the industrial soil that can absorb capital. Without infrastructure, without logistics advantages, and with a very small domestic market (only about 800,000 people), even if the government handed out hundreds of millions of dollars to the private sector, it couldn’t conjure a manufacturing or technology industry out of thin air. The money would most likely flow into real estate speculation or become imported consumer goods, consuming precious foreign exchange reserves in the process.

Therefore, the promise of 10,000 Bitcoin to GMC feels like a “forced gamble.” GMC isn’t a tourism city—it’s a “special region,” located in a plain area in southern Bhutan near the Indian border, planned to establish an independent legal system (referencing Singapore and Abu Dhabi) and attract global capital.

It’s like “the Cayman Islands under the Himalayas.” By partnering with institutions such as Matrixport, it offers offshore trusts, legal recognition for digital assets, and an independent judicial jurisdiction based on English and U.S. law. Bhutan’s government realizes that under existing institutional and geographic constraints, the outlook for incremental reforms is still shrouded in fog. Trying to break the single dependence on India may be the best option they can think of for now.

Although GMC’s projected total investment can reach as high as $100 billion, that doesn’t mean Bhutan’s government really plans to go all-in with all that money at once. Their strategy is “build the nest to attract the phoenix”—use Bitcoin returns and the national sovereign wealth fund (DHI) to complete the first phase of infrastructure construction (such as expanding the airport and building bridges), and then, through selling development rights for the special region, attract wealthy individuals and corporations for subsequent investment.

Bhutan isn’t only “gambling” off-chain; on-chain, its actions are also far from being merely a simple “mine-collect-sell” loop. Bhutan hasn’t put all its assets into cold wallets to gather dust. 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 even ran into a risky “deleveraging” crisis. As the price of ETH fell, the value of Bhutan’s collateral on Aave declined. The health factor of its loans once edged close to the 1.0 liquidation threshold. To rescue itself, in early February 2026, DHI was forced to urgently liquidate 26,535 ETH (about $60 million) to repay USDT loans as high as $137 million. This move pulled its health factor back to above the safe line of 1.10, protecting the remaining position of about 78,245 stETH.

In fact, we can trace Bhutan’s “gamble” even further back—because although Bhutan has plenty of electricity to mine with, they also need mining machines.

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

Based on combined assessments by organizations such as Forbes, 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 in the same period to fall from $1.27 billion to dangerously low levels of more than $500 million.

According to the “Bhutan Macroeconomic Outlook” published by the World Bank in April 2024 and the IMF 2024 Article IV consultation report, in the fiscal year 2022/23, Bhutan’s current account deficit (CAD) surged to 34.3% of GDP. The World Bank was even explicit about—

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

A country placing a bet of 9% of GDP on Bitcoin may be one of the craziest gambles in human history.

Fortunately, Bhutan’s gamble has already passed the pain phase. In 2025, as the Bitcoin price hit an all-time high, 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 been significantly strengthened, thanks to reduced crypto-mining-related imports, increased remittances, and higher tourism and hydropower revenues.” Bhutan’s CAD is expected to narrow sharply from the peak of 34.3% to 8.62% in the 2025/26 fiscal year. This means the pain of “buying mining machines” is over, entering the phase of “production and realization.”

As a country, Bhutan’s pain period seems to be over. But as individuals, has life for Bhutanese people gotten better because of Bitcoin?

A matter of national fortune and people’s fortune

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

Data-wise, the Bitcoin mining industry has indeed improved life for Bhutanese people to some extent. But for Bhutanese people, living in Bhutan still doesn’t really offer much hope.

Estimates suggest that currently about 66,000 Bhutanese people live overseas, the vast majority in Australia. For this small country of only about 800,000 people, that number is close to 8% of the population.

Correspondingly, globally only about 3.6% of people live outside their birth country. In India, that proportion is 2.5%, while in Pakistan it’s 2.8%.

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

Even if they live in Bhutan’s cities, jobs prospects won’t necessarily be better just because the cities are more developed. Among unemployed youth, 57.2% live in urban areas.

Each year, the number of Bhutanese students and professionals going abroad to study and work—such as in Australia and Canada—has been steadily increasing. This trend has drawn the attention of the country’s top leadership. Bhutan’s prime minister, Tshering Tobgay, said that among the 66,000 Bhutanese diaspora overseas, many are experienced civil servants, teachers, nurses, and other professionals.

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

Chimi Dorji, president of the Bhutanese Association in Perth, Australia, said that currently there are more than 20,000 Bhutanese people 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 imagined traveling abroad yet:

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

Over the past two years, they tried everything to find jobs, but nothing worked out. In the end, their families pooled money to encourage them to get married formally, so they could apply for jobs together.

“Looking back now, our choice back then was right. Our income is good now, and we can help our relatives at home.”

The mines are highly automated; GMC is a service platform for foreign elites. Bitcoin is not a universal cure-all medicine. It can’t rescue Bhutan from its severe unemployment crisis. Bhutan jumped directly from an agricultural society to a financial one—leaving out the manufacturing/services sector that could absorb large amounts of employment.

This country has soared in the field of crypto, yet its people are still being uprooted and scattered in real life.

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