Why India's Neighbour Bhutan Is Quietly Planning A $500 Million Crypto Fund In The Country

While the Indian government and the central bank's stance against cryptocurrency continues to keep the industry's future uncertain in the country, our neighbouring nation is quietly taking big steps towards crypto.

Bhutan's $500 Million Crypto Fund

bloomberg

Bhutan¡¯s investment arm, Druk Holding & Investments, and Nasdaq-listed Singapore-based company Bitdeer Technologies Group are planning to seek investors for a fund worth up to $500 million that will be used to develop green crypto mining in the Himalayan kingdom.

Fund-raising targeting institutional investors will begin at the end of May, and the goal is to set up carbon-free digital mining that taps Bhutan¡¯s abundant hydroelectric power, according to a joint statement on Wednesday, as per a Bloomberg report.

Crypto mining is the least risky way for Bhutan to tap crypto opportunities, and for now the nation will focus on Bitcoin, Ujjwal Deep Dahal, the CEO of the investment arm, Druk Holding & Investments, said in an interview.

¡°It¡¯s important for us to look at assets that are low volume, high value, or digital assets for that matter, and try to position ourselves in a way that we can be competitive globally over time to build our economy,¡± Ujjwal Dahal said.

For the unversed, crypto mining is the process that several cryptocurrencies use to generate new coins and verify new transactions. It involves vast, decentralised networks of computers around the world that verify and secure blockchains. In return for contributing their processing power, computers on the network are rewarded with new coins, as per Coinbase. It¡¯s a virtuous circle: the miners maintain and secure the blockchain, the blockchain awards the coins, and the coins provide an incentive for the miners to maintain the blockchain.

Also Read: From Bhutan To Nepal-List Of Countries Adopting UPI For Payments

What Is Bhutan's Economic Strategy?

shutterstock

Forest-laden Bhutan, sandwiched between China and India, reportedly has a population of about 777,000 and has long sought to diversify an economy reliant on hydropower revenues. Druk manages the government¡¯s investments in traditional areas like stocks, bonds, technology, energy, and real estate, as well as crypto mining and investment, under what it calls a "future-facing" strategy.

Bitcoin miners race to solve complex mathematical puzzles using energy-hungry computing rigs, earning new supplies of the token in return. That¡¯s led to criticism of the environmental fallout when dirty fuels supply the power.

Miners were squeezed by a crash in digital asset prices, rising energy costs, and increased competition last year. Conditions have improved in 2023 amid a rebound in the crypto market.

Singapore-based Bitdeer, owned by Chinese entrepreneur Jihan Wu, is one of the top crypto miners by computer power and has one of the largest centres in Texas. The firm began trading on the Nasdaq last month after a long-delayed merger with a special purpose acquisition company finally closed.

Construction Is Expected To Be Completed By July

getty

Singapore-based Bitdeer reportedly expects to set up a 100-megawatt operation in Bhutan, with construction slated to start in the second quarter and be completed in July through September, a regulatory filing shows.

The company and Druk will also invest in the planned new fund, Bitdeer¡¯s Chief Executive Officer, Matt Linghui Kong, said in an interview. Druk ventured into crypto mining under a "sandbox" approach when Bitcoin was at about $5,000, Dahal said. It also had some investments with the now bankrupt US digital-asset lenders BlockFi Inc. and Celsius Network LLC, but they were a small part of Druk¡¯s portfolio and have been "settled," Dahal added.

Also Read: Germany Ranked Most Crypto-Friendly Country