Bhutan Pioneers Crypto Reserve Strategy, Sets Example for Smaller Countries
In a groundbreaking move, the Kingdom of Bhutan has adopted a crypto reserve strategy, making it one of the first countries to integrate digital assets into its national reserves. This innovative approach includes the inclusion of bitcoin (BTC), ethereum (ETH), and Binance’s BNB token (BNB) in the country’s reserve. El Salvador has previously taken a similar step by incorporating bitcoin into its national reserve, but Bhutan’s move could have far-reaching implications for smaller countries seeking to strengthen their economies.
The decision to adopt crypto as part of Bhutan’s reserve strategy was driven by the need to diversify the country’s economy and reduce its reliance on foreign exchange. According to a report by the World Bank in May this year, although Bhutan has a relatively robust economy, downside risks persist due to the country’s widening fiscal deficit. To mitigate these risks, Bhutan needs to attract more foreign investments, which is precisely what the adoption of crypto aims to achieve.
Foreign Investment and Economic Growth
The creation of Gelephu Mindfulness City, a special economic zone designed to promote mindfulness, sustainability, and innovation, provides a framework for attracting foreign investment. By accumulating digital assets as part of its reserve strategy, Bhutan can showcase its commitment to embracing emerging technologies and demonstrate its potential as a hub for crypto-related investments.
Bhutan’s unique position in the region makes it an attractive destination for foreign investors. The country boasts an estimated 24,000 megawatts of technically feasible hydropower potential, with only about 7% developed so far. This abundance of renewable energy provides an opportunity for Bhutan to leverage its resources and contribute to the global efforts towards reducing carbon emissions.
Hydropower and Crypto Mining
Bitcoin mining requires enormous amounts of energy, which has raised concerns about the environmental impact of crypto mining. However, Bhutan’s reliance on hydropower solves this problem by providing a clean and cost-efficient source of energy. In April 2019, the country began using its hydropower to start mining bitcoin, with impressive results.
Today, Bhutan owns over 11,000 bitcoin, worth roughly $1.1 billion, according to data from Arkham. This makes Bhutan one of the top five countries holding bitcoin in its reserves, according to BitcoinTreasuries data. The successful integration of hydropower and crypto mining has opened up new avenues for Bhutan’s economic growth and demonstrates the potential for smaller countries to leverage emerging technologies.
Global Implications
Bhutan’s pioneering move is likely to have far-reaching implications for smaller countries seeking to strengthen their economies. By embracing crypto as part of its reserve strategy, Bhutan sets an example that can be followed by other nations facing similar challenges.
"This move is potentially triggering similar actions among other governments around the world, especially in smaller countries that are subject to foreign-exchange volatility and geo-political uncertainty," said Phillip Shoemaker, executive director of Identity.com. "Bhutan’s decision to accumulate digital assets more generally could be really compelling at the international level."
Expert Insights
Jagdeep Sidhu, Core Developer at Syscoin and President of the Syscoin Foundation, sees Bhutan as a trailblazer in the adoption of crypto reserves. "Bitcoin mining, in particular, is such a good tool for leveraging various forms of renewable and stranded energy," he said. "I imagine that other governments are increasingly looking at Bhutan as an example of how to launch their own Bitcoin reserves, especially countries that have abundant sources of energy that could otherwise be wasted."
Conclusion
Bhutan’s adoption of crypto reserve strategy marks a significant milestone in the country’s economic development. By embracing emerging technologies and leveraging its renewable energy resources, Bhutan sets an example for smaller countries seeking to strengthen their economies. As more nations follow suit, it will be interesting to see how this trend unfolds and what implications it holds for the global economy.
The success of Bhutan’s crypto reserve strategy has far-reaching implications for the world. It not only provides a model for other countries but also highlights the importance of embracing emerging technologies in the pursuit of economic growth. As we continue to navigate the complexities of the digital age, it will be crucial to explore and adapt innovative approaches like this one.