The sovereign investment arm of Bhutan, known as Druk Holding and Investments (DHI), along with its Bitcoin mining partner Bitdeer Technologies, are planning to increase their Bitcoin mining capacity in anticipation of the mining rewards reduction that will occur after the Bitcoin halving. The two entities have announced that they will invest in expanding their mining project by sixfold before the halving. This will be achieved through planned upgrades that will raise Bhutan’s mining capacity by 500 megawatts by the first half of 2025, thus increasing the country’s total mining capacity to 600 megawatts. The necessary funds for the upgrades will be taken from a $500 million fund that was established last year.
Bitdeer’s chief business officer has stated that the aim of these upgrades is to use Bhutan’s zero-emission energy to support blockchain technologies. The funds will also help develop international networks that could benefit Bhutan’s technology sector. It is worth noting that DHI, which manages over $2.9 billion in assets, had quietly invested in cryptocurrencies before it became public knowledge through the bankruptcy proceedings of Celsius and BlockFi.
Bhutan has been using its hydropower resources to mine Bitcoin since 2019, even when the price was relatively low at around $5,000. With the Bitcoin halving approaching, DHI and Bitdeer are taking proactive measures to offset any potential losses. Some experts, Believe that the mining rewards reduction will not significantly affect profitability. They argue that any decrease in rewards will be compensated by an increase in network fees. Others suggest that Bitcoin-based nonfungible tokens (NFTs) could contribute to miner profitability after the halving.
As of February 2024, it was estimated that Bitcoin mining generated over $200 million in transaction fees for miners. With the increased mining capacity and potential developments in the industry, Bhutan’s involvement in Bitcoin mining could prove to be beneficial for the country’s economy and the growing technology sector.
