Himalayan Kingdom Emerges as a Model for State Crypto Strategy
At the TOKEN2049 conference in Dubai, Binance co-founder Changpeng Zhao (CZ) commended Bhutan’s strategic initiative to incorporate cryptocurrencies into its national reserves, highlighting the country’s forward-thinking approach to digital asset adoption. Speaking about strategic reserves, he noted that “there are a few countries that are very advanced already… like Bhutan.” According to CZ, this small Himalayan kingdom has been quietly mining Bitcoin using clean energy for years, effectively accumulating a national BTC reserve which, according to industry reports, may currently exceed $1.1 billion.
Bhutan’s “Middle Path”: From Gross National Happiness to Bitcoin
Bhutan—a small Himalayan kingdom with a population of less than 800,000—is known for its unique approach to development based on the concept of Gross National Happiness rather than traditional GDP. Sandwiched between India and China, the country has historically adhered to a conservative development path, preserving cultural traditions and emphasizing environmental sustainability.
This makes Bhutan’s progressive cryptocurrency strategy all the more surprising. Since 2019, the country’s sovereign investment arm, Druk Holding & Investments, has been mining Bitcoin using renewable hydroelectric power. Notably, this activity wasn’t publicized until 2023, when information about it became public through court documents in the bankruptcy case of crypto lender BlockFi.
“Bhutan’s approach is unique in that it combines traditional values with cutting-edge technology,” comments Maria Kovaleva, a specialist in Asian financial markets. “It’s an example of how even a culturally conservative country can implement innovative financial instruments if they align with its long-term strategic goals.”
Eco-Friendly Mining and Strategic Reserves
Experts pay particular attention to the environmental aspect of Bhutan’s crypto strategy. The country is the world’s only carbon-negative state—it absorbs more carbon dioxide than it produces. Extensive forests and strict environmental protection policies, combined with abundant hydroelectric resources, make Bhutan an ideal location for environmentally sustainable cryptocurrency mining.
“While Bitcoin mining is often criticized for its high energy consumption, Bhutan demonstrates that this activity can be environmentally sustainable with the right approach,” explains Alexei Fedorov, an analyst specializing in sustainable development in the crypto industry. “Bhutan uses only renewable hydropower, much of which might otherwise go unused due to limited domestic demand and difficulties exporting electricity across the Himalayas.”
Bhutan’s strategy gained new momentum in early 2025 when the country’s special administrative zone, Gelephu Mindfulness City (GMC), announced plans to include not only Bitcoin but also Ethereum and BNB (Binance ecosystem token) in its strategic reserves. GMC represents an initiative to create an environmentally sustainable “smart city” supported by crypto investments.
From Covert Mining to Public Strategy
An interesting aspect of Bhutan’s cryptocurrency strategy is that the country kept its activities secret for an extended period. Only in 2023, when court documents in the BlockFi bankruptcy case revealed that Druk Holding & Investments had interacted with bankrupt crypto lenders, did the world learn about the scale of Bhutan’s crypto initiatives.
“Bhutan’s sequence of actions demonstrates a well-thought-out approach to implementing cryptocurrencies at the state level,” believes Dmitry Karpov, an expert on state cryptocurrency strategies. “First, the country quietly accumulated experience and assets, and only after strengthening its position did it begin to speak more openly about its strategy. This contrasts with the approach of some other countries that make loud announcements about cryptocurrencies but don’t always back them up with concrete actions.”
Court documents also revealed that Druk Holding & Investments actively engaged with various cryptocurrency platforms, took loans, and invested tens of millions of dollars in crypto-related projects. This indicates a multifaceted strategy that goes beyond simple Bitcoin accumulation.
CZ as a Global Crypto Diplomat
Notably, this isn’t the first time CZ has highlighted Bhutan as an example. In January this year, he praised the country’s openness to cryptocurrencies, calling it a smart move to attract crypto companies, investments, and innovation.
CZ’s endorsement at the international TOKEN2049 conference draws additional attention to the Bhutanese model in the context of his recent statements about advising various countries on establishing strategic cryptocurrency reserves.
“CZ is positioning himself as a kind of crypto diplomat, promoting the idea of state cryptocurrency reserves,” notes Mikhail Stepanov, a specialist in international cryptoeconomics. “In this context, Bhutan becomes a convenient example of successful implementation of such a concept, especially considering the inclusion of BNB in the GMC special administrative zone’s reserves.”
Potential Impact on Other States
Bhutan’s approach could become a model example for other small states seeking innovative paths for economic development and diversification of national reserves. This model might be particularly attractive for countries with excess renewable energy resources.
“We’re observing growing interest in the concept of cryptocurrency reserves among developing countries, especially after the US decision to create a national Bitcoin reserve,” comments Elena Shevchenko, a researcher at the Institute of International Finance. “Bhutan’s example is particularly valuable as it demonstrates years of practical implementation of such a strategy by a small state, not just theoretical discussions or plans.”
Potential followers of the Bhutanese model might include:
- Countries with excess hydro or geothermal energy, such as Iceland, Norway, Paraguay, or Laos
- Small states seeking ways to diversify away from the US dollar
- Developing countries with unstable national currencies
Challenges and Risks of the Bhutanese Model
Despite obvious successes, Bhutan’s crypto strategy faces certain challenges and risks that should be considered when assessing its applicability in other contexts.
“The high volatility of Bitcoin and other cryptocurrencies creates significant risks for national reserves,” warns Alexander Ivanov, a former financial markets advisor. “The market downturn in 2022, when Bitcoin lost more than 60% of its value, could have substantially undermined the stability of reserves if they were predominantly formed of crypto assets.”
Additionally, regulatory uncertainty at the global level creates additional risks for states actively implementing cryptocurrencies. Changes in international regulation could potentially affect the legal status and liquidity of crypto assets held in state reserves.
“Bhutan benefits from its relatively isolated position and limited integration into the global financial system,” explains Yuri Smirnov, a regulatory risk specialist. “For countries more closely tied to international financial institutions, such an approach could create additional regulatory complexities and potential conflicts with partners.”
Conclusion: A Quiet Revolution from the Himalayas
Bhutan’s emergence as a notable player in the crypto space represents one of the most interesting examples of blockchain technology implementation at the state level. The long-term strategy combining digital asset investment, Bitcoin mining using renewable energy, and sovereign wealth management demonstrates an unexpectedly progressive approach for a country known for its traditional values and conservative development path.
As global interest in digital assets continues to grow, Bhutan’s proactive measures may inspire other countries to evaluate the role of cryptocurrencies in their economic strategies. Endorsement from influential figures in the crypto industry, such as CZ, only heightens attention to the Bhutanese model.
“Bhutan shows that even a small state can not just follow global trends but shape them according to its unique conditions and values,” concludes Professor Richard Lee from the National University of Singapore. “In this sense, including Bitcoin in national reserves is not merely a financial decision but reflects a broader vision of the future where traditional values can harmoniously coexist with cutting-edge technologies.”