The Bhutanese Leading the way.
The Jigmeling Industrial Park will host a 500 MW capacity Bitcoin mining data center operation, currently under construction as announced by Bitdeer on 7th November.
It will start operation in phases from the first quarter of 2025 or mid 2025 onwards going to December 2025 or latest by the first quarter of 2026 when all 500 MW will be operational.
The mine is the second project of the USD 500 million fund partnership between Druk Holding & Investments (DHI), the commercial arm of the Royal Government of Bhutan and Bitdeer Technologies Group a world-leading, NASDAQ-listed technology company for the crypto currency mining community.
The partnership had been announced on 3rd May 2023 and fundraising for the fund started by the end of May 2023.
The first project under the above fund was the 100 MW Bitcoin mine in Gedu which started operations in mid-2023.
The partnership is supposed to build a total of 600 MW of Bitcoin mines in Bhutan.
There is no risk for Bhutan since the money is raised entirely by Bitdeer, as Bhutan is only a strategic partner. Bhutan will make a relatively small investment in the project.
Bhutan will benefit by getting a stake, which means a share of the revenue, tax on the overall profits, sale of electricity, land lease charges and 120 to 150 Bhutanese jobs in the virtual mine.
Bitdeer announced that its 500 MW construction in Jigmeling, Bhutan, remains on track with the primary substation expected to be completed by the first quarter of 2025.
It said the 500 MW site is progressing well, with some key milestones achieved.
Civil work is anticipated to be completed by the end of September 2024. Construction of transformer and container foundations is in progress and will be completed in phases, with the last phase is expected by the end of February 2025.
132kv/140MW and 220kv/360MW substation designs are completed with construction anticipated to be ready by the end of the first quarter of 2025.
Orders for the procurement of transformers and electrical equipment have been placed, with delivery and installation to be completed in phases over the next two quarters.
Procurement and delivery of containers and hydro-cooling systems are in progress, with completion in phases by the end of the first quarter of 2025.
The unique feature of the Bitdeer and DHI project is that it can shutdown in winter when there is scarcity of power in Bhutan, and when imported power rates are very expensive.
The project with Bitdeer is different from Bhutan’s own Bitcoin mining data centers located across the country and all currently active.
The rising price of Bitcoin, which even touched USD 76,000 on 8th November, has made mining very competitive and increased the difficulty rate. Mining has also been made competitive due to the halving in April 2024 when the reward of mining blocks reduced from 6.25 to 3.125 Bitcoins per block mined.
However, despite the increased difficulty rate which is very high now, the 500 MW mine can produce between 9 to 10 Bitcoins in a day, which at current prices of USD 80,000 per Bitcoin is USD 720,000 to USD 800,000 per day.
If the whole 600 MW project including Gedu is taken into account then the total coins that can be produced every day is 11 to 12 which is USD 880,000 to USD 960,000 per day.
The context,however, is that around half the revenue will go into production costs. Of the remaining bit, Bitdeer will take the majority but in the bigger picture there will be major gains for Bhutan too.
The advantage for Bhutan compared to other mining operations around the world is a higher level of efficiency due to lower power costs generated by green hydropower from the country’s fast flowing run of the river projects.
Currently, the cost of production of one Bitcoin in Bhutan is USD 30,000 to USD 34,000 leaving a healthy margin given current prices. Even if a depreciation rate of USD 10,000 per coin is added for the cost of the mining machines, then that still leaves a healthy profit margin.
The Jigmeling Estate has 733 acres, but the mine will only occupy 70 to 90 acres. The location makes sense as it is close to major power infrastructure and the cost of construction on flatland is also cheaper.
One of the unintended impacts of the election of President Donald Trump is that Bitcoin prices have been hitting record highs.
This is because the Republican President is much more pro-crypto and pro-Bitcoin than his rival and is expected to back policies that help this sector.
