The investment arm of the royal government of Bhutan, Druk Holding and Investments (DHI), along with Bitdeer Technologies, its Bitcoin mining partner, have announced plans to increase their BTC mining capacity in order to mitigate the potential impact of the mining rewards reduction following the Bitcoin halving. The two companies will invest in expanding their mining project’s capacity sixfold prior to the halving. Bitdeer’s chief business officer stated that these upgrades will boost Bhutan’s mining capacity to 500 megawatts by the first half of 2025, bringing the total mining capacity of the Himalayan kingdom to 600 megawatts.
To fund the necessary hardware upgrades, the pair will draw from the $500 million fund they established last year. This fund, which was announced on May 3, 2023, is a closed-end fund valued at $500 million. Bitdeer chairman Jihan Wu explained that their collaboration with DHI aims to leverage Bhutan’s zero-emission energy to support blockchain technologies. Wu also mentioned that the fund will facilitate the development of international stakeholder networks to benefit Bhutan’s technology sector.
It was recently revealed during the bankruptcy proceedings of crypto companies Celsius and BlockFi that DHI, which manages assets worth over $2.9 billion, had quietly amassed a crypto portfolio. Reports suggest that DHI invested millions in crypto and was a customer of the two bankrupt firms.
Bhutan has been using hydropower to mine BTC since 2019, even when the price was around $5,000. This demonstrates the country’s commitment to sustainable mining practices.
While DHI and Bitdeer prepare to offset potential losses after the Bitcoin halving, some experts believe that the halving of BTC rewards will not significantly impact profitability. Laurent Benayoun, CEO of liquidity firm Acheron Trading, argues that an increase in network fees will compensate for the reduction in mining rewards. Jimmy Zhao, senior solution architect at BNB Chain, suggests that Bitcoin-based nonfungible tokens could also contribute to miner profitability following the halving.
According to crypto asset manager Grayscale, as of February 2024, Bitcoin miners generated over $200 million in transaction fees from Bitcoin Ordinals.