The Bhutanese Leading the way.
Four weeks ago the Druk Holding & Investments (DHI) had announced a strategic partnership with Bitdeer Technologies Group to develop environmentally sustainable, carbon- free digital asset mining operations in Bhutan.
The Fundraising was to start at the end of May.
However, there is still some confusion among the public on what the project is really all about, what it entails in Bhutan, possible risks and its impact.
The basic idea of the partnership is that Bitdeer will help DHI to raise the funds and the funds will be used to set up a digital assets mine in Bhutan that will require many mining computers and other related infrastructure. Bitdeer will bring in the machines and technology.
The fund will not be used to build any hydro project for the mine, but instead it will use some of the surplus power in the the summer months when power generation is very high.
A DHI official said, “The mining operation is only for summer months and is ready to shut down during winter months which is why it is so good for us, but if there is an opportunity to import power at a reasonable rate then we might want to do it for 12 months.”
In terms of the financial risk it is limited according to DHI.
The DHI official said that DHI is a Strategic Limited Partner in the project which means that DHI will be investing very very less in the total fund, but because DHI is a strategic partner it means the project cannot happen without DHI since Bhutan is providing the green energy, land, government policy support for them to come and set up their mine.
DHI will also have a shareholding in the mine.
“As a strategic partner our investment is very less because we are not going to put in a lot of money as it is mostly through international fund raising. Our revenue stream is profit sharing, energy sale in US dollars, taxation, employment and other economic activities as so many other things come up,”
The DHI official said there is no risk for as DHI is not putting up an asset and the equity input is very very small, but there will be a lot of revenue streams, foreign currency and around 400 to 500 jobs in the next five years.
There have been some international observers who are giving the cautionary tale of the Central Asian country of Kazakhstan who at one point was the world’s second largest Bitcoin producer, but it invited in too many players that overloaded the grid and led to power blackouts and protests with most miners then leaving.
The DHI official said that Kazakhstan was a power grid supply issue as they overdrew the power and there were policy support issues.
“For us crypto mining is just another load on the electrical infrastructure and so we need to manage the load and so we will ensure that our grid will not go bust. We manage our grid very well. From the electrical side we will shut it down if it is going to create any issues,” he added.
He said that Bhutan also has very strong policy support. He said that as mentioned in the past the first priority is domestic users and local industries and only remaining power, if any, will be used for mining.
Another query posed by both international commentators and also locals is on the sharp fluctuation of prices of Bitcoin.
“After a bearish cycle of crypto we have always seen a bullish cycle of crypto and so you better invest in the bear cycle when the machine costs are cheaper etc and so the investors will be interested. Of course there is a bull cycle established and there are limited numbers with demand and so we are very bullish on this particular industry but we are very cognizant of the risks and we plan our business strategy having a risk framework,” said the DHI official.
The main aim of the funds and the project is to do mining but the idea is as Bhutan goes for BTC mining other things will open up. The fund does not have any specific initiative at the moment apart from mining but many verticals are expected to open up.
“In the beginning the USD 500 mn is for BTC mining. However, already DHI is getting calls saying Bhutan is doing something with Bitdeer and if they can look at another sector to develop something. I think it has generated an international interest in Bhutan,” said the official.
The raising of capital has started and since it is a closed fund it has not been announced.
For now, apart from mining DHI is getting into blockchain and National Digital Identity based on blockchain which Bhutan is the first to do so.
DHI then plans to get into the Internet of Things Economy which is expected to be a trillion-dollar economy in the next five to seven years. It is more of hardware.
“We are also getting into Artificial Intelligence and Machine Learning and here it is not just about developing applications or apps like ChatGPT, but it is also about setting up high performance competing centers in Bhutan. DHI is working on these,” he said.
DHI had already invested local funds in mining before the Bitdeer deal and it was because DHI invested before that Bitdeer got confidence in DHI.
The official said that Bitdeer is a Nasdaq listed company and Jihan Wu, Chairman of Bitdeer Technologies Group who is the founder is one of the best in that industry and so his credibility is very high.
