As an analyst with extensive experience in blockchain technology and a deep understanding of monetary systems, I find Bhutan’s approach to Bitcoin mining and its potential adoption of a Bitcoin standard truly intriguing. Having worked in various sectors, from government operations security to tech startups, I can appreciate the strategic thinking behind Bhutan’s decision to leverage its hydroelectric power for Bitcoin mining and economic development.
Let’s begin your journey into mastering the Dzongkha language. This is the tongue spoken in Bhutan, a fascinating South Asian country nestled along the eastern edge of the Himalayas. Interestingly, Bhutan is one of only two recognized countries globally that are actively mining Bitcoin (BTC) today, with El Salvador being the other.
Bhutan chose to construct advanced hydropower facilities, taking advantage of one of the world’s largest water resources and the nation’s geographical transformation that results in rapid river currents, making Bhutan an ideal location for hydropower production.
Utilizing an excess of ample electrical power, a significant portion of which is exported to electricity-starved India, the country embarked on the project of establishing Bitcoin mining operations with the primary intention of fostering the nation’s financial independence and social-economic progress.
In essence, Bhutan utilizes its hydroelectric power facilities for Bitcoin mining, thereby securing its independence and promoting economic growth. This self-sufficiency could be amplified significantly if Bhutan were to become the world’s pioneer in adopting a Bitcoin monetary system.
Mining Bitcoin now creates new currency possibilities
Today, as per Arkham Intelligence’s findings, Bhutan is reported to have more than 13,000 Bitcoins in its possession, as they were the ones who initially discovered Bhutan’s Bitcoin wallets.
Bhutan ranks fourth globally among governments holding the most Bitcoin, with nations that seized their Bitcoin during police operations such as the U.S., China, and UK holding more. Interestingly, Bhutan surpasses El Salvador in terms of Bitcoin holdings. Additionally, since 2023, Bhutan has been expanding its Bitcoin mining capabilities.
As a crypto investor, I find it fascinating to consider that the population of Bhutan, spread across their tropical lowlands and chilly Himalayan highlands, collectively owns around 0.122 Bitcoin each – equivalent to roughly $8,000 per person at the time of writing.
With Bitcoin holdings and mining operations becoming increasingly significant for Bhutan domestically and geopolitically due to the global weakening of traditional currencies, Bhutan is poised to lead in the development of monetary policy and Bitcoin technology.
In a Bitcoin-based system, Bhutan could continue using its currency, the Ngultrum. This aligns with how nations during the gold standard of the 19th and early 20th centuries pegged their own national currencies to gold, while still maintaining their unique monetary units.
Essentially, Bhutan’s currency and Bitcoin will coexist, with each note having a corresponding value in Bitcoin. This means that the currency can be exchanged for Bitcoin. However, it’s important to note that Bhutan’s currency would still function as a fiduciary currency, meaning it is not fully backed by Bitcoin.
In a gold standard system, central banks guarantee some value of their issued notes by holding gold reserves. Similarly, Bhutan’s monetary authority might decide on the equivalent amount of Bitcoin to tie to its currency.
Under a Bitcoin standard, Bhutan would have to make concessions. Adopting Bitcoin as its standard means that Bhutan cannot manipulate interest rates to influence domestic economic conditions without detaching from Bitcoin. This is an action that any sovereign nation may ultimately consider.
The times are changing in Bhutan
It wasn’t until 1966 that Bhutan began utilizing electricity, while England established its first hydroelectric plant as early as 1878, and the United States opened its first power plant in 1882. Despite being ranked 133rd by size and 160th in population today, Bhutan is demonstrating remarkable leadership in the 21st century.
1) Investment in hydropower has spurred economic advancement in the country. If Bhutan decides to tap into its water resources for electricity generation and uses some of it for Bitcoin mining, this could significantly alter the nation’s financial prospects, potentially relying heavily on their Bitcoin holdings for future development.
By adopting Bitcoin as the basis for its currency, Bhutan would astonish the global community by transitioning to a Bitcoin standard, similar to how the world once operated under the Classical Gold Standard. This move would involve establishing guidelines for the Bitcoin standard that other countries could follow as they too seek a more prosperous lifestyle compared to central bank-issued fiat currencies.
If Bhutan were to implement a system using Bitcoin as its primary currency, it could potentially serve as a backup financial resource for countries and organizations in severe predicaments. According to Warren E. Weber’s 2015 hypothesis for the Bank of Canada, Bhutan might experience “moderate deflation, low real interest rates, and robust economic growth” under such a Bitcoin system.
As a seasoned crypto investor, I’ve traversed the realms of blockchain development, operations security, and currently hold the role of Chief Technology Officer at Komodo Platform. My diverse background encompasses work in operations security within the government sector, launching technology startups, application development, and cryptography. My initiation into blockchain technology dates back to 2011, and I proudly joined the Komodo team in 2016.
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2024-10-08 14:14