An Overview of Bhutan Economy
Bhutan's economy relies on agriculture and forestry to provide livelihoods for about 60% of its population. Agriculture consists mainly of animal husbandry and subsistence farming. Its forests also provide tons of raw materials it trades to grow its Gross Domestic Product.
Bhutan has rugged terrain, which limits its ability to build roads and infrastructure. Regardless, the nation is one of the richest in South Asia in gross domestic product (nominal) per caption. Nonetheless, it is considered one of the poorest countries in the world, ranking 178th by the IMF in GDP.
Current State of Crypto Adoption in Bhutan
Source: Skyfi lab
Bhutan is tucked between two behemoths, China and India. The country has a population of under a million, with only about 4-5% actively engaging in crypto-related activities.
According to Statista, “the cryptocurrencies market is projected to achieve a revenue of US$53,800 in 2024”. However, the growth is projected to drop in the coming years. In 2025, the crypto market's value would drop to $51,200.
The user penetration is also not incredible, at about 4.88% in 2024. The low penetration of cryptocurrency in Bhutan might be cultural. The nation has strong ties with religion and hardly prioritizes amassing wealth.
In the 1970s, Jigme Singye Wangchuck, Bhutan’s fourth monarch, wanted to nip the bud of the kingdom's obsession with economic growth. He formed the mantra “Gross national happiness is more important than gross domestic product.”
Yet Bhutan has participated in one of the biggest state-operated mining activities. Let's examine Bhutan's Bitcoin mining and how it affects the country.
Crypto Law in Bhutan
Source: Flickr
As of 2024, cryptocurrency is a gray area in Bhutan. The legislative landscape of cryptocurrency is unregulated. The only information by the country regarding cryptocurrency comes from the country's central bank, the Royal Monetary Authority. The bank released a warning in 2020 regarding Pi and other cryptocurrencies.
The RMA would like to remind the public to exercise due caution in making investment in Pi or any other cryptocurrency as the risks, implications, and use cases on the economy and financial system is still being ascertained.
Cryptocurrency is not legal tender or backed by the Central Bank in Bhutan. Hence, all crypto transactions are carried out at the risk of the parties involved. The government advises against cryptocurrency due to its potential dangers.
While the country advises against cryptocurrency, there are no laws banning it, no penalties for participants, and no regulatory framework for trading, using, or mining cryptocurrency. The legal status is currently unclear.
Potential Perks of Crypto Adoption
Source: Space Coast Daily
Crypto adoption comes with several amazing benefits; here are a few of them:
Economic Growth
Cryptocurrency is known to spur economic growth in countries that adopt it. Once Bhutan adopts crypto, it will offer a fertile ground for crypto-related and blockchain startups. This would attract investors and also create jobs. More jobs and startups provide revenue for the country through taxes.
Transparency and Traceability
Blockchain technology features all transactions on a public ledger. Hence, opting for cryptocurrency promotes transparency, which reduces the chances of fraud and corruption. All the transactions are traced, and users can't alter them once they are recorded.
Lower Transaction Fees
Crypto transactions have less fees and shorter processing times. You can process transactions much faster and cheaper than traditional financial transactions. Hence, embracing crypto transactions is better for international and peer-to-peer transactions.
Challenges of Crypto Adoption
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Several challenges exist that stifle Bhutan's potential rapid and widespread crypto adoption. Here are some notable mentions:
Environmental Impact
Participating in crypto mining has serious environmental implications. The current energy consumption for cryptocurrency mining activities is massive, adversely affecting the environment. As a result, this has dissuaded many countries from participating in crypto-related activities.
Lack of User Protection
Unlike traditional finance, cryptocurrency doesn't have user protection. There is no central authority, so consumers are responsible for all that happens. If a user loses their crypto assets as a result of a hack, there is almost always recourse. The lack of protection often deters people from adopting cryptocurrency.
Integration with Current Traditional Financial Systems
Integrating cryptocurrencies into the current financial system can be a hassle. Hence, countries like Bhutan wouldn't want to disrupt their flow by including cryptocurrencies. They have stated many times that cryptocurrency is still a foreign concept.
Bhutan Bitcoin Mining Operations
Source: ccnull.de
Although Bhutan's stance on crypto remains unclear, the country participates in crypto mining. Bhutan is now a major state holder of Bitcoin, trailing behind China, the UK, and the US alone. This development comes as a great surprise as Bhutan is viewed as a nation. Nonetheless, it has been toiling endlessly to raise its Bitcoin reserves, gaining attention from the cryptosphere.
Arkham Intelligence revealed that Bhutan’s Druk Holdings has 13,011 Bitcoins as of this writing. This amounts to about $780 million and a third of the country's GDP. Plus, a population of roughly 780,000 equates to $1,000 in Bitcoin per head.
Arkham explains that the country can accumulate a lot of Bitcoin thanks to its mining operations. Much of Bhutan's infrastructure is dedicated to mining. And while mining is power-intensive, Bhutan leverages hydropower to provide the necessary power supply.
The exciting twist is Bhutan doesn't limit its holdings to Bitcoin alone. Here are some of the other cryptos Bhutan has:
- Ethereum
- BNB
- Matic
- Tether
Finally, the country wants to invest $500 million in developing greener mining operations. A portion of the cost will go to chips, hardware, and bolstering hydroelectricity.
Is Cryptocurrencies Legal in Bhutan?
Unlike its neighboring countries, Bhutan has no clear say on its legality. The discussion is still a gray area, and so far, no regulations have banned the activity in the region.
Final Thoughts
Bhutan is more than a happy country; it is also a mining behemoth. While the nation has active mines, Bhutan has not declared its stand on cryptocurrency. At best, the activity is still a gray area. Of course, we will update occasionally, but we are not promising.
Disclaimer: The views expressed in this article are not intended as financial advice and should not be taken as one. We accept no liability for any financial decisions made based on the information presented in this article.
Frequently Asked Questions About Crypto Adoption in Bhutan
How Many Mining Farms Does Bhutan Have?
According to a Forbes report, Bhutan has four active Bitcoin mines responsible for the country's growing fortune.
Can you use Crypto Exchanges in Bhutan?
Yes. There are no restrictions, so citizens can use crypto exchanges like Binance, Kraken, and other well-known options.
How Much Bitcoin Does Bhutan Retain?
Currently, Bhutan has about 13,011 Bitcoins. However), the value is not static. It is subject to change as mining operations continue.
When will Cryptocurrency be Legal in Bhutan?
It is still unclear. As of 2024, Bhutan's financial infrastructure is wary of cryptocurrency. However, given Bitcoin mining and the benefits it has offered the country, the country may adopt cryptocurrency sooner rather than later.
