Bet on selling electricity for Bhutanese Bitcoin miners

Bhutan kicks off a $500 million project to build a 600 megawatt (MW) farm for Bitcoin mining in hopes of diversifying its economy.

According to Nikkei Asia , the happiest country in the world has joined hands with technology group Bitdeer, based in Singapore, to develop this farm. Bitdeer set up a $500 million endowment fund at the end of May to raise money from international organizations.

Jihan Wu, President of Bitdeer, said: "We are happy to cooperate with Bhutan in accessing zero-emission energy. This is an important premise to access blockchain technology, then create value. global rule".

According to the plan, the first 100 MW of electricity for Bhutan's Bitcoin mining will start in September. The capacity will gradually increase to 600 MW after three years. Electricity is sold to miners at an agreed price. If it reaches 600 MW, Bitcoin mining power will surpass the kingdom's electricity demand of 488 MW by December 2021.

The total hydropower capacity of Bhutan is currently up to 2,400 MW. Most of the electricity is sold to India in the summer. Winter comes, the kingdom has to import electricity. However, when a new hydroelectric plant with a capacity of 118 MW comes into operation and another 1,020 MW plant joins the national grid in October 2024, the power shortage problem will be resolved.

The kingdom's plan is to use the money from selling electricity to miners to improve the telecommunications network. The project is also expected to create 300-400 jobs for people, and open up a new industry related to blockchain.

Inside a power plant in Bhutan. Photo: AFP

Ujjwal Deep Dahal, CEO of Druk Holding and Investments, said: "Although Bhutan faces geographical limitations and connectivity challenges due to its landlocked landlocked and mountainous terrain, the country possesses a lot of green energy. and relatively cheap. This is an opportunity for a sustainable economy."

According to experts, Bhutan's decision gives its people the opportunity to access the new cryptocurrency industry. After Covid-19, the size of Bhutan's economy shrunk by 10% compared to 2020, foreign currency reserves, bad debt in the tourism sector, increased manufacturing, high unemployment rate, according to the Bank's report. world. The government of Bhutan is looking to diversify its high-income economy over the next decade. Not only focusing on blockchain, they also promote fields related to AI, robotics, biotechnology.

However, Bhutan's bet is also met with many doubts. The Bitcoin mining industry is controversial and volatile. Before Bhutan, Kazakhstan in Central Asia also gave a green signal for Bitcoin miners. However, the price to pay is the overloaded power grid system, the continuous local power failure that caused people to protest in January 2022.

China was also once a favorite destination for miners, but then banned it because cryptocurrency mining consumes huge amounts of energy. Bitcoin price has now dropped from a peak of $68,000 to just under $30,000.

In April, Bhutan criticized BlockFi - a cryptocurrency trading platform that had gone bankrupt. However, later, analysts discovered that the country has been involved in the Bitcoin market since 2019 when the price of this coin was around $ 5,000. According to Dahal, the Bhutanese government had anticipated the negative effects.

"The small Himalayan kingdom has a legal framework in place to run hydroelectricity as efficiently as possible. They consider Bitcoin mining an acceptable risk as their supply of foreign currency is getting scarcer," he said. Dahal said.

Out of a total of 21 million Bitcoins, more than 19 million have been mined, making the need to "mine" the remaining Bitcoins more severe. Many believe cryptocurrencies are becoming the future of the financial industry. Tshering Cigay, former CEO of Thimphu Techpark - Bhutan's IT Development Center, said: "When it comes to cryptocurrencies, Bhutan cannot stand aside. During my tenure, I received a number of international proposals about cryptocurrencies. the establishment of a large-scale Bitcoin mining facility. Bhutan should take advantage of this to diversify its energy market." However, he also acknowledged that the country's ambitions will face many complicated problems.