Bhutan, a small country in South Asia, is causing big changes in the world of cryptocurrencies.
The Kingdom, which has a population of approximately 770,000 people and is located between India, China and Nepal, just made headlines after one of its cities adopted a cryptocurrency reserve strategy. This includes bitcoin (BTC), ethereum (ETH), and Binance’s BNB token (BNB).
El Salvador previously made Bitcoin part of the country’s national reserve and several other countries, including the United States, are considering taking similar measures to strengthen their already strong economy.
But Bhutan could set an example for smaller countries, where making cryptocurrencies part of their national reserve strategy could have a huge economic impact.
“They are coming out guns blazing to show the world what is possible in the digital asset space by bringing in foreign companies to help take advantage of the growing global interest in cryptocurrencies as a whole,” said Phillip Shoemaker, CEO of Identity. .com. a non-profit organization that provides decentralized identity verification.
“I believe this measure could trigger similar actions among other governments around the world, especially in smaller countries that are subject to the vagaries of currency volatility and geopolitical uncertainty,” he said.
According to a World Bank report from May this year, although Bhutan has a fairly robust economy, downside risks remain as the country’s fiscal deficit is expected to increase. To ensure economic growth, it is necessary to attract more foreign investments, the report suggests.
Bhutan listened and acted by creating Gelephu Mindfulness City, the region that is embracing cryptocurrencies as part of its goal of “mindfulness, sustainability and innovation.”
“The special economic zone that is being created helps attract foreign investment, so their overall digital asset buildup could be really compelling internationally,” Shoemaker said.
Bhutan was already well positioned for this measure. The country is estimated to have a technically viable hydroelectric potential of 24,000 megawatts, of which only around 7% has been developed so far.
“After all, you get so much electricity from hydro sources, and it makes sense that they would lean into the mining aspect,” Shoemaker said.
Bitcoin mining requires enormous energy, which has raised concerns about the negative environmental impact of crypto mining. However, the use of hydroelectric energy solves that problem, as it is much more profitable and reduces the carbon footprint of miners.
In April 2019, the country began using its massive amounts of hydroelectric power to begin mining bitcoins, according to a Forbes article. Today, the country has more than 11,000 bitcoins, worth approximately $1.1 billion, according to Arkham data. This places Bhutan among the top five countries that have bitcoins in their reserves, according to data from BitcoinTreasuries.
“Bitcoin mining, in particular, is a very good tool for harnessing various forms of renewable and stagnant energy,” said Jagdeep Sidhu, Syscoin lead developer 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.”
