Dzongkha is the language of Bhutan, a South Asian country at the eastern tip of the Himalayas, and one of only two confirmed nation-states mining Bitcoin today.

Bhutan decided to establish a world-class hydropower generation infrastructure, taking advantage of the fact that it has one of the largest water reserves in the world and the steep geographical structure of the country creates fast-flowing rivers. This makes Bhutan a natural hydroelectric paradise.

Thanks to producing abundant electricity and sending most of this electricity to energy-deficient neighboring India, Bhutan began mining Bitcoin with the aim of achieving national economic independence and socio-economic development.

Indeed, Bhutan is ensuring its economic independence and socio-economic development by using its hydroelectric infrastructure for Bitcoin mining.

Bhutan may take this advantage even further and become the world’s first nation to adopt the Bitcoin standard.

According to Arkham Intelligence, Bhutan has more than 13,000 BTC today, and this company was the first to detect Bhutan’s Bitcoin addresses.

With these Bitcoin holdings, Bhutan ranks fourth in the world among governments holding Bitcoin. In this ranking, Bhutan is ahead of the USA, China and the United Kingdom only due to the number of confiscated Bitcoins.

Bhutan holds more Bitcoin than El Salvador and has continued to increase its Bitcoin mining capacity since 2023.

Bhutan has a population of 1 million people, stretching from the tropical southern lowlands to the northern Himalayas, where harsh winters and cool summers occur. Currently, Bhutan’s Bitcoin holdings amount to approximately 0.122 BTC per capita, or approximately $8,000.

As fiat currencies depreciate around the world, Bhutan’s Bitcoin assets and mining infrastructure are gaining more importance both domestically and geopolitically. Bhutan is poised to become a pioneer in innovating in the field of monetary policies and Bitcoin.

By switching to a Bitcoin standard, Bhutan could maintain its own currency, Ngultrum. This is similar to the gold standard in which countries pegged their currencies to gold in the 19th and early 20th centuries.

In this scenario, Bhutan’s currency circulates simultaneously with and is pegged to Bitcoin. That is, Ngultrum banknotes become exchangeable for BTC. Since the currency is not fully backed by Bitcoin, it remains a representative currency.

As with the gold standard, banknotes issued by central banks were partially backed by gold. Bhutan’s monetary authority will also likely determine how much Bitcoin to peg for its currency.

However, in case of switching to the Bitcoin standard, Bhutan will have to make some sacrifices. For example, the country cannot pursue interest rate policy to change economic conditions and may need to disrupt the Bitcoin peg to do so.

Bhutan lacked electricity until 1966. By comparison, England opened its first hydroelectric power plant in 1878, and the United States opened its first power plant in 1882. Ranking 133rd in area and 160th in terms of population, Bhutan is becoming one of the pioneers of the 21st century.

Bhutan’s investment in hydropower is already supporting the country’s economic growth. Bhutan’s decision to use some of this electrical energy in Bitcoin mining could radically change the country’s economic outlook with its Bitcoin holdings.

By backing Ngultrum with Bitcoin, Bhutan could shock the world by switching to a Bitcoin standard just like the classic gold standard. Bhutan could set the “Bitcoin standard rules” that other countries will follow as they transition from central bank fiat currencies to a better way of life.

If Bhutan adopts a Bitcoin standard, it could one day act as a last resort for countries and institutions facing economic crises. According to a 2015 thought experiment by Warren E. Weber of the Bank of Canada, Bhutan can expect “mild deflation, low nominal interest rates and good production growth” under the Bitcoin standard.