Bhutan, at the foot of the Himalayas, was once known as "the happiest country in the world", but under the ever-expanding trade deficit and rising import costs, this mysterious Shambhala is sounding the economic "alarm" . The 2022 "World Happiness Report" shows that Bhutan, which has always been known for its "happiness", does not appear on the list.
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Launched a US$500 million encryption mining fund, Bhutan secretly laid out for three years
Rivers fed by ancient glaciers give Bhutan one of the largest reserves of hydropower and water resources in the world. An economic engine, renewable resources account for 30% of Bhutan's gross domestic product and fuel the country's nearly 800,000 residents. Such abundant natural resources have also created unique and significant advantages for Bhutan to participate in Bitcoin mining.
According to Bloomberg News, Druk Holding & Investments (DHI), the commercial institution of the Royal Government of Bhutan, and Bitdeer Technologies Group, a listed mining company owned by Jihan Wu, plan to seek investors for their upcoming $500 million fund, of which Bitdeer will serve as the chairman. general partner, while DHI will act as strategic limited partner. A fundraising campaign for institutional investors will begin at the end of May, with the goal of building a carbon-free crypto mining base by deploying “100% carbon-free” hydropower at a new mining center using Bhutan’s abundant hydropower.
Bitdeer expects to build a 100-megawatt power plant in Bhutan, with construction scheduled to begin in the second quarter of this year and complete between July and September, according to a regulatory filing. This means that the Kingdom of Bhutan will become one of the few countries after El Salvador to have a state-owned mining operation.
At the same time, DHI revealed that Bhutan entered the encryption industry when the price of Bitcoin was below $5,000, and the current digital asset portfolio has a positive net present value. According to a government representative to local media The Bhutanese, Bhutan uses its mining revenue to subsidize electricity and hardware costs. For years, Bhutan has used its renewable energy to run bitcoin mining operations. The Kingdom of Bhutan has been in talks since 2020 about a hydroelectric project as it seeks to use the country's hydropower plants to power miners for bitcoin rewards, as the country began 2020.
In fact, Bhutan’s encryption operations have already been traced. The number of chips imported by Bhutan has also increased significantly in recent years, underscoring the country's growing interest in cryptocurrencies. Bhutanese customs data show that inbound trade to the landlocked country is usually dominated by gasoline, steel and rice. But in 2021 and 2022, the country's computer chips will soar to the top of its imports, according to data released by Bhutan's finance ministry. Among them, in 2021, Bhutan imported chips worth US$51 million, far exceeding the US$1.1 million in the previous year; in 2022, Bhutan imported computer chips worth about US$142 million, accounting for about US$1.4 billion in the country. One-tenth of all inbound trade in US dollars and about 15% of the government's $930 million annual budget. The chips are the same export labels used by manufacturers of bitcoin mining machines, mainly from mainland China and Hong Kong.
It is well known that the cost of Bitcoin mining equipment varies with the fluctuations in the price of the cryptocurrency. Even at the sky-high price of bitcoin in 2021, Bhutan will buy enough chips to build a data center the size of several football fields.
Prior to this, some organizations actually proposed mining plans to Bhutan. For example, the Singapore Bhutan Association, which is composed of Chinese, Singaporean businessmen, and members of the Bhutanese royal family, once proposed a proposal to introduce bitcoin mining equipment by sea, proposing to purchase 700 kilowatts of mining equipment for US$800,000, but only if Bhutan needs support cheap energy. However, the plan was put on hold due to the FTX incident and shipping operating costs.
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Former BlockFi and Celsius million-dollar customer
Facing multiple crises, the Kingdom of Bhutan has already used DHI to include encrypted assets in its investment portfolio to improve its own predicament.
DHI is a sovereign wealth fund established by the King of Bhutan Jigme Khesar Namgyel Wangchuck in 2007 with a royal charter. It is also the largest and only state-owned holding company in Bhutan. In order to realize the long-term interests of the Bhutanese people", and the Ministry of Finance is the sole shareholder, and the mode of operation is biased towards state-owned enterprises. DHI manages approximately US$2.9 billion in assets and owns shares in 21 different companies involved in manufacturing, energy, natural resources, finance, communications, aviation, trading and real estate. In 2021, DHI's full-year performance will contribute as much as 39% (approximately $12.69 billion) to state revenue.
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Screenshot of Celsius’s user deposit and withdrawal
However, DHI's recent annual report and balance sheet did not disclose its digital asset portfolio, but the institution manages the country's wealth on behalf of the people, and investments in highly volatile assets such as cryptocurrencies have also raised concerns about the lack of transparency in the country's sovereign wealth management. doubts. “Investing in digital assets presents opportunities for Bhutan, and our inclusion of digital assets in our portfolio is a deliberate, conscious and bold step,” DHI said.
In addition to this, DHI is also building its Autonomous State Digital Identity (SSI) platform. "We will be the first sovereign government in the world to launch an SSI-based digital identity. This provides us with an opportunity to demonstrate and build credibility globally, and brings us to the forefront of global innovation." In the future, DHI will also Consider investing in emerging technologies such as blockchain, artificial intelligence, metaverse, etc.
"For Bhutan, the layout of encryption projects will create more local employment opportunities, bring economic activities and foreign currency-denominated income to local communities and the country, and generate stable and sustainable returns in the long run will create more opportunities for the Bhutanese people. A better tomorrow and a safer future for future generations," said DHI.
