Bhutan, a small country in South Asia, is making big waves in the crypto world.
The Kingdom, which has a population of around 770,000 and is located between India, China and Nepal, just made headlines after one of its cities adopted a crypto reserve strategy. This includes Bitcoin (BTC), Ethereum (ETH), and Binance’s BNB token (BNB).
El Salvador has already integrated bitcoin into the country’s national reserve and several other countries, including the United States, are considering similar measures to strengthen its already robust economy.
But Bhutan could serve as an example for smaller countries, where integrating crypto into their national reserve strategy could have a huge economic impact.
“They are bringing out loaded guns to show the world what is possible in the digital asset space by bringing in overseas companies to help them capitalize on the growing global interest in crypto as a whole,” Phillip said Shoemaker, executive director of Identity.com. a non-profit organization providing decentralized identity verification.
“I consider that this decision could trigger similar actions by other governments around the world, particularly in small countries subject to the vagaries of exchange rate volatility and geopolitical uncertainty,” he said. declared.
According to a World Bank report released in May this year, although Bhutan has a fairly robust economy, downside risks persist as the country’s budget deficit is expected to widen. To ensure economic growth, the country needs to attract more foreign investment, the report suggests.
Bhutan listened and acted by creating Gelephu Mindfulness City, the region that embraces crypto as part of its goal of “mindfulness, sustainability and innovation.”
“The special economic zone being created helps attract foreign investment, so its accumulation of digital assets more generally could be very compelling internationally,” Shoemaker said.
Bhutan was already well placed for this approach. The country has a technically feasible hydroelectric potential of around 24,000 megawatts, of which it has so far developed only around 7%.
“After all, it produces a huge amount of electricity from hydroelectric sources, and it makes sense that it would look at the mining side,” Shoemaker said.
Bitcoin mining requires a huge amount of energy, which has raised concerns about the negative environmental impact of cryptocurrency mining. However, using hydropower solves this problem as it is much more cost effective and reduces miners’ carbon footprint.
In April 2019, the country began using its massive amounts of hydropower to begin mining bitcoin, according to a Forbes article. Today, the country has more than 11,000 bitcoins, worth about $1.1 billion, according to Arkham data. This places Bhutan among the top five countries to hold bitcoin in its reserves, according to data from BitcoinTreasuries.
“Bitcoin mining, in particular, is a very good tool for mining various forms of renewable and stranded energy,” said Jagdeep Sidhu, lead developer at Syscoin and president of the Syscoin Foundation. “I imagine other governments are increasingly looking to Bhutan as an example of how to launch their own Bitcoin reserves, especially countries that have abundant energy sources that might otherwise go to waste.”
