A country that bets 9% of its GDP on Bitcoin.

Original Title: A Country Betting Big on Bitcoin with 9% of GDP

Original Author: Cookie

Original Source:

Reprinted: Mars Finance

It’s been almost half a year since Bitcoin hit a new all-time high. During this half-year pullback, nearly all known entities—government-backed holders of Bitcoin—have shown little to no selling. Yet we’ve found 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 coins to 7,600 coins, while Bhutan reduced its holdings from 6,234 coins to 4,000 coins.

This wave of sell pressure from the Himalayas is not large, but it’s very mysterious. Bhutan, a relatively closed Buddhist country located between China and India, only opened to foreign tourists for the first time in 1974, introduced television and the internet in 1999, transitioned from an absolute monarchy to a constitutional monarchy in 2008, and to this day the government still bans the use of plastic bags.

That’s right—at its peak, this country held as many as 13,000 Bitcoins. Now, the current 4,000 is the result after all the selling. You might have a lot of questions, but the first one that needs answering is:

Amitābha, Bhutanese benefactor, where did your Bitcoins come from?

Hydropower, a gift from heaven

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

In 1972, Bhutan’s king Jigme Singye Wangchuck proposed “Gross National Happiness.” Yes, this globally famous “Are you happy?” evaluation system was originally put forward by Bhutan.

With Buddha in your heart, Amitābha—money and status are just 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 can live without reality. Only in December 2023 did Bhutan move out of the category of “Least Developed Countries.” In the “World Happiness Report” published by the United Nations, Bhutan’s highest ranking was 84th in 2014. By 2019, it had slipped further to 95th.

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

In summer, Bhutan even has “too much” electricity. In 2025, Bhutan’s summer peak power generation was about 3,600 MW, but the corresponding summer peak for everyday demand was only about 900–1,000 MW.

With more than 70% of the power going unused, naturally they looked for an object to generate revenue. Bhutan sells this electricity to India. And hydropower, as a matter of course, became Bhutan’s absolute economic pillar—accounting for about 17–20% of GDP. Hydropower exports contribute more than 63% of total exports.

But this trade with India is not exactly something Bhutan is very eager to do. Since 1961, India has dominated the construction of almost all of Bhutan’s hydropower plants, adopting a funding model of “60% grant + 40% loan.” In simple terms: India covers the bulk of the cost to help you build power plants, but in return you must prioritize and return-sell the generated electricity to India at a low price.

This resource-acquisition-through-engineering model tightly locks Bhutan’s economic lifeline into a rupee settlement system. Bhutan may hold the energy, but what it gets back is rupees that can only circulate in neighboring countries—making it difficult to directly exchange for the U.S. dollars of foreign exchange needed for modern industry in international markets.

How to break the deadlock?

Turn hydropower into Bitcoin

The cure Bhutan found was to mine Bitcoin.

Around 2019 to 2020 (when Bitcoin’s price was roughly around $5,000), Bhutan began secretly testing a path called “energy digitization”—using surplus hydropower for Bitcoin mining.

In 2019, Bhutan’s king Wangchuck said: “As a small country, we need to become a smart nation—that’s not a choice, it’s a necessity. Technology is an indispensable 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 stay and mine Bitcoin. This is of very strategic significance.”

Beyond its abundant hydropower, Bhutan’s unique climatic conditions—especially the central high-altitude region with an average annual temperature of just 5.5°C—also provide a natural cooling advantage for mining, substantially reducing energy-consumption costs.

In addition, Bitcoin mining as an industry perfectly aligns with Bhutan’s Buddhist-country environmental and religious philosophy. Bhutan’s constitution requires maintaining 60% forest cover, which limits the development of traditional heavy industry. But hydropower mining is a kind of “invisible industry” that emits no greenhouse gases and doesn’t damage the ecosystem. Using it to mine Bitcoin doesn’t go against the Buddha’s teachings at all. The opposite is what crypto has encountered in Islamic countries: under Islamic law, financial activities are strictly forbidden from charging interest (Riba) and from gambling (Gharar). Because Bitcoin’s price fluctuates wildly and lacks backing from tangible assets, some Islamic scholars (such as the Islamic Council of Syria) issued a fatwa declaring Bitcoin “haram” (forbidden).

Mine with plenty of hydropower—dig, dig, dig. Through Bitcoin, Bhutan found an economic development route to break through the “rupee blockade.” But as a relatively closed Buddhist country, how did it find a way to crack the problem in this modern financial space of crypto?

Bhutan’s “Bitcoin operators”

Bhutan’s Bitcoin mining is not an impulsive move by the king or some rabid politician. It’s an “alternative investment” strategy carefully designed by the professional technical bureaucrats of 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 is an electrical engineer with deep expertise in the fields of power and water conservancy. Before taking charge of DHI, he had a deep understanding of the advantages and limitations of Bhutan’s hydropower resources.

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

In a relatively closed Buddhist country, of course it isn’t just anyone who can keenly seize Bitcoin’s historical opportunity—it’s the technical bureaucrats with an international top-tier education background. Dahal’s growth trajectory also could not 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 the best educational resources from an early age and received the government’s “Elite Scholarship” to study abroad. Early in life, he received foundational and higher education in India, then went far away to further study in Canada and the United States. He 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 endowment, that led him—in 2019, when Bitcoin prices were sluggish—to propose the “electricity price arbitrage” idea of using hydropower for Bitcoin mining to Bhutan’s leadership.

All beings are equal—yet not all beings are equal.

A nationwide-level gamble

Since it’s for generating revenue, the Bitcoins mined “for free” from excess hydropower naturally need to be liquidated so that the resulting foreign-exchange reserves can contribute to the country. “Why does Bhutan sell Bitcoin?” has already been answered, but we can explore it a bit deeper.

In June 2023, facing a severe civil-servant retention crisis, the Bhutanese government used about $72 million from 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 up to 10,000 of the Bitcoins it had accumulated (based on the market value at the time, this asset was worth about $1 billion) and inject them all into a massive special economic zone that was still on the drawing board—the “Geleph Mindfulness City (GMC).”

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

Even more outrageous: after the project’s initial vision was announced in December 2023, and official construction began in 2025, more than two years have passed, and we can still only say the project is in the “infrastructure construction stage.”

These two moves are likely to leave people confused. Bhutan previously had 13,000 Bitcoins—why didn’t it use the dollars earned to support other industries at home? Instead, it paid civil servants, and then spent 10,000 Bitcoins to build a special zone that might generate no returns for 5 to 10 years?

Bhutan also has no choice.

In Bhutan, the government is the largest single employer. Because the private economy is weak, the country’s machinery runs entirely on the civil-servant system. However, in recent years Bhutan has faced inflation and talent drain. Raising civil servants’ salaries is, in essence, to keep the government machinery running and prevent the government from shutting down. Bitcoin mining revenues are seen as “life-support money” to retain the country’s core talent. First comes “stop the bleeding,” then “development.”

In addition, supporting domestic industries is extremely difficult for Bhutan. Bhutan lacks an industrial soil for absorbing capital. With no infrastructure, no logistics advantages, and a very small domestic market (only about 800,000 people), even if the government scattered a few hundred million dollars into the private sector, it couldn’t magically produce a manufacturing or technology industry. The money would most likely flow into real-estate speculation or be converted into imported consumer goods, thereby consuming scarce foreign-exchange reserves.

Therefore, the commitment of 10,000 Bitcoins to GMC resembles a “helpless gamble.” GMC is not a tourist city; it’s a “special zone” located on the plains in southern Bhutan near the border with India. The plan is to establish an independent legal system (referencing Singapore and Abu Dhabi) to attract global capital.

It’s like “Cayman Islands under the Himalayas.” By partnering with institutions like Matrixport, it offers offshore trusts, legalization of digital assets, and an independent judicial jurisdiction based on English common law and U.S. law. The Bhutanese government recognizes that, under existing institutional and geographic constraints, the outlook for incremental reform remains full of fog. To try to break away from reliance on India alone—this may be the best option they can think of right now.

Although GMC’s projected total investment is as large as a trillion dollars, it doesn’t mean the Bhutanese government truly plans to go all-in with that much money. Their strategy is “invite the phoenix to build the nest”—using Bitcoin earnings and the sovereign wealth fund (DHI) to complete the first phase of infrastructure construction (such as expanding airports and building bridges). Then, by selling development rights of the special zone, they plan to attract wealthy individuals and global corporations for subsequent investment.

Bhutan is not only “gambling” off-chain; on-chain, their operations are also far from simply “mine coins—hold coins—sell coins.” Bhutan hasn’t put all its assets into cold wallets to gather dust. Instead, it converted a large amount of ETH into liquid staking tokens, deposited them into the decentralized lending platform Aave as collateral, and borrowed large amounts of stablecoins.

Earlier this year, Bhutan even encountered a risky “deleveraging” crisis. As the price of ETH fell, the value of Bhutan’s collateral on Aave shrank, and the health factor of its loans temporarily approached the liquidation line of around 1.0. To save itself, in early February 2026, DHI was forced to urgently sell 26,535 ETH (about $60 million) to repay USDT loans totaling up to $137 million. This operation pulled its health factor back to safely above 1.10, preserving the remaining position of approximately 78,245 stETH.

In fact, we can trace Bhutan’s “gamble” even further back—because although Bhutan has lots of hydropower to mine Bitcoin, it also needs mining machines.

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

Comprehensive assessments by organizations such as Forbes suggest that from 2021 to 2023, Bhutan’s total capital expenditure on crypto mining facilities was about $500 million. This directly led Bhutan’s foreign-exchange reserves in the same period to fall from $1.27 billion to a dangerously low level of over $500 million.

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

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

A country betting 9% of its GDP on Bitcoin could be among the most疯狂 (crazy) gambles in human history.

Fortunately, the pain from Bhutan’s gamble has already passed. In 2025, as Bitcoin’s price hit a new all-time high, Bhutan’s fiscal situation improved significantly. According to the latest IMF “Article IV consultation report for 2025” published in January 2026: “Bhutan’s foreign-exchange reserves have been significantly strengthened, thanks to reduced crypto-mining-related imports, increased remittances, and higher revenue from tourism and hydropower.” 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 period of “buying mining machines” is over, and Bhutan has moved into the “production and liquidation” phase.

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

National destiny and people’s destiny

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

From the data, the Bitcoin mining industry has indeed improved life for some Bhutanese people. But for Bhutanese, living in Bhutan still offers little to no hope.

It’s estimated that currently about 66,000 Bhutanese people live abroad, the vast majority in Australia. For a small country of only about 800,000 people, this figure is nearly 8% of the population.

In contrast, only about 3.6% of the global population lives outside their country of birth. In India, the proportion is 2.5%, and in Pakistan it’s 2.8%.

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

Even living within Bhutan’s cities doesn’t necessarily mean better employment prospects just because the cities are more developed. Among unemployed youth, 57.2% live in cities.

Every 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 caught the attention of the top leadership of the government. Bhutan’s Prime Minister Tshering Tobgay said that among the 66,000 Bhutanese diaspora abroad, many are experienced civil servants, teachers, nurses, and other professionals.

“We can’t demand that civil servants quit and we can’t stop people from leaving this country. I can’t guarantee that professionals won’t resign, and when they do resign they often mention that the working environment is harsh—that may be true.”

Chimi Dorji, chair of the Bhutanese Association in Perth, Australia, said that currently only in Perth alone, more than 20,000 Bhutanese people live there. He and his wife moved to Australia in 2019. Before that, he had been a forestry officer in Bhutan.

He said, “Many Bhutanese people living in Australia are still looking for permanent residency, because they plan to settle down and not return home.”

Tashi Zam left Bhutan with her boyfriend to go to Australia in 2018. When she and her boyfriend graduated in 2015–2016, they hadn’t even considered traveling abroad yet:

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

Over the past two years, they tried everything to find work, but nothing worked out. In the end, their family pooled money and encouraged them to get married officially, so they could apply for jobs together.

“Looking back now, we were right in our choices. Our income is pretty good now, and we can also help our relatives back home.”

Bitcoin mining operations are highly automated. GMC is a service platform for foreign elites. Bitcoin isn’t a cure-all, and it can’t rescue Bhutan’s severe unemployment crisis. Bhutan skipped from an agricultural society straight to a financial one, leaving a gap in manufacturing/services that could absorb large amounts of employment.

This country has skyrocketed in the field of crypto—but people are still scattered and displaced in real life.