Wednesday, 19 June 2024
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Inside Bhutan’s secretive Bitcoin mining operation

bhutan mining import export

The tiny Himalayan nation of Bhutan has never been a stranger to Bitcoin. Still, the latest bombshell report from Forbes shed light on the scope of the Kingdom’s secretive mining operation.

The Kingdom itself upended an investigation into Bhutan’s alleged mining scheme when it confirmed to a local newspaper that it was engaged in mining digital assets. The CEO of Druk Holding & Investments (DHI), Bhutan’s state-owned holding company, said that the company entered the mining space “a few years ago” when the price of BTC was around $5,000.

This aligns with information leaked by sources familiar with the matter, who told Forbes that the country has been developing sovereign mining operations since at least 2020.

However, Bhutan’s involvement in the crypto industry doesn’t stop there.

Behind Bhutan’s growing mining operation

First suspicions about the country’s involvement with mining began in 2021 when the Department of Revenue and Customs reported importing $51 million worth of “processing units.” This was a significant spike from the $1.1 million worth of these units imported in 2020. In 2022, the country imported $142 million worth of computer chips, representing just over 10% of its total inbound trade and 15% of its $930 million annual budget.

According to the Ministry of Finance’s 2022 macroeconomic report, total imports in 2022 increased by 35.8% compared to 2020. The primary driver of this growth was “processing and storage units” DHI imported for “special projects.”

Chart showing Bhutan’s trade performance from 2019 to 2023 (Source: The Kingdom of Bhutan, Department of Macroeconomic Affairs)

Further investigation found that Bhutan classified these processing units under the same export labels used by Bitcoin mining hardware manufacturers in Asia. Official data showing almost all of these units were sourced from Hong Kong and China confirmed suspicions that these were, in fact, ASIC miners.

The country’s involvement with mining was confirmed again in Bitdeer’s recent SEC filing. The NASDAQ-listed company disclosed that out of the 500 MW increase in power supply planned for this year, around 100 MW will come from Bhutan.

“We expect to generate 100 MW out of the 550 MW power supply from Bhutan, where the construction of the mining data center is expected to begin in the second quarter of 2023 and complete in the third quarter of 2023.”

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