cryptopolitan.com
The Royal Government of Bhutan has sold $66.5 million worth of Bitcoin as the crypto’s price briefly surged above the $70,000 mark.
Data from Arkham Intelligence shows that Bhutan’s government wallet quietly stacked BTC over the years. The wallet transferred part of the accumulated funds in two separate transactions on October 29.
These transactions moved the Bitcoin stash to a Binance deposit wallet, hinting that the nation plans to liquidate on the world’s largest crypto exchange.
The government wallet still holds approximately $886 million in Bitcoin. Whales, like Bhutan, can influence Bitcoin’s price by unloading massive amounts when it hits certain price levels.
Bhutan’s Bitcoin beginnings and economic strategy
Bhutan entered the Bitcoin game in 2019, driven by a need to diversify revenue. Known more for its hydropower and tourism, the Asian nation took the plunge into crypto when Bitcoin was around $5,000.
That initial investment aimed to counter slumping tourism revenue, which fell hard during the COVID-19 pandemic. The sector, which generates an annual income of $88.6 million, took a heavy hammering.
At the center of Bhutan’s digital push stands Druk Holding & Investments (DHI), the country’s state investment arm, which led the Bitcoin mining efforts.
By capitalizing on its own hydroelectric power, Bhutan launched state-backed mining operations. It is one of the few countries running its own crypto-mining initiative, a model supported by the kingdom’s hydro resources.
The setup offers two things: consistent income without depleting national currency reserves and a future-facing economy model in a nation where tourism and energy production have been dominant.
Mining investments and imports fuelled expansion
Bhutan ramped up its mining operations throughout 2020. High-ranking officials initiated deals with Bitcoin miners and hardware suppliers to beef up capabilities.
By 2021, DHI had broadened its portfolio, partnering with major crypto lenders like BlockFi and Celsius. These investments, though substantial, remained under wraps until the lenders’ financial troubles came to light.
Hardware imports reflect Bhutan’s commitment to crypto. In 2021, it poured $51 million into importing computer chips for mining, an exponential rise from the previous year’s $1.1 million investment.
The trend continued in 2022 when customs reports showed $142 million spent on chips, accounting for about 10% of all imports. Bhutan’s increasing appetite for mining hardware signals how critical these operations have become to its economic strategy.
The South Asian nation’s crypto holdings went public in April 2023 after Forbes published a report uncovering the scope of its investments, which included millions in cryptocurrencies and loans to now-bankrupt crypto firms.
DHI’s holdings have put Bhutan on the map, attracting attention from those tracking government-level crypto ventures.
Shortly after, DHI partnered with Singapore-based mining giant Bitdeer to create a $500 million green mining fund, wanting to leverage Bhutan’s renewable energy for blockchain tech.
Economic pressures and Bitcoin sell-off decisions
Bhutan’s massive Bitcoin holdings, however, are not without controversy. By mid-2023, foreign currency reserves dwindled to $689 million, covering only about 14 months of import needs.
DHI proposed using the Bitcoin holdings to fund government salaries, hinting that crypto sales could fill public finance gaps.
Compared to other crypto-rich nations, Bhutan’s holdings stand out. It has more Bitcoin than El Salvador, which famously embraced Bitcoin as legal tender but holds only around $335 million worth. With a population of just 782,000, the nation’s average Bitcoin holdings exceed $1,000 per citizen.
This impressive per-capita figure underlines the South Asian country’s serious commitment to crypto, making it a leader in sovereign Bitcoin investments. But the country’s stash isn’t limited to Bitcoin.
According to sources, Bhutan holds 656 ETH worth approximately $1.51 million, $3 million in Binance Coin (BNB), and about $20,000 in Polygon’s MATIC.