Bhutan’s investment arm and Bitdeer Technologies Group are planning to ramp up their Bitcoin mining operation to help offset the revenue impact of an upcoming event known as the halving.
The partnership between Druk Holding & Investments and Nasdaq-listed crypto mining firm Bitdeer aims to invest in boosting Bhutan’s mining capacity sixfold through the introduction of cutting-edge hardware.
The planned upgrades will increase the Himalayan kingdom’s mining capacity by 500 megawatts by the first half of 2025, Matt Linghui Kong, chief business officer at Bitdeer, said in an interview. That would bring Bhutan’s total capacity to 600 megawatts.
The capital will be drawn from a $500 million fund that the pair began raising in May last year, when they unveiled plans to leverage Bhutan’s abundant hydroelectric power for Bitcoin mining. Kong said he expects to close the fund by July.
Bitcoin miners operate power-hungry computers that secure the blockchain, earning new tokens as a reward. These rewards are programmed to be cut in half every four years, part of the process of capping the total supply of the original cryptocurrency at 21 million coins.
The upcoming halving in April will see mining rewards slashed from 6.25 to 3.125 coins per block.
DHI and Bitdeer said they are confident they can maintain operational efficiency even if the price of Bitcoin declines post-halving. Bitdeer has one of the lowest costs per Bitcoin mined in the industry at $20,000 per coin, Kong said.
Some miners went bankrupt during the crypto rout of 2022, when a combination of soaring energy costs and Bitcoin’s price falling below $16,000 proved a stern test of the sector’s durability.
The 140% Bitcoin rally over the past 12 months brought much needed relief to firms that survived, which are once again splashing cash on hardware upgrades and capacity expansion. The digital asset was trading at $68,581 as of 7am in Sydney on Friday.
Computing costs are rising due to a surge in Bitcoin’s mining difficulty, a measure of how much computing power is needed to add a new block to the network. Network difficulty has hit record highs ahead of the halving, offsetting some of the gains from the price rally.
Ujjwal Deep Dahal, chief executive officer at DHI, said the nation’s 500-megawatt boost “will be built on Bitdeer’s latest hardware to lower costs and improve computing power.”
Singapore-based Bitdeer, controlled by Chinese entrepreneur Jihan Wu, is one of the top crypto miners by compute power globally and runs one of the largest facilities in Texas.
Sandwiched between China and India, Bhutan has long sought to diversify its hydropower-reliant economy. DHI, which manages the government’s diverse investments, sees blockchain technology as a core part of efforts to build “an innovation ecosystem for a startup economy.” The investment outfit has been experimenting with asset tokenization and is also building out “Bhutanverse,” a metaverse project.
