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Hyperbitcoinization starts at the edges
Bhutan going public with their bitcoin accumulation strategy is a data point that lends credence to the belief that hyperbitcoinization is likely to start at the edges.
- Marty Bent
- 4 min read
- 1 May 2023
This maybe the first bold effort or experiment of its kind where a Least Developed Country with major developmental disadvantages aims to leap frog into the future using the fourth industrial revolution. – The Buthanese
Over the weekend the world received confirmation that the Kingdom of Bhutan, a small country in the Himilayas with a population of 777,486, has been mining bitcoin since 2020 when bitcoin was trading around $5,000. Druk Holdings Investments (DHI), the official investment arm of the Bhutanese government, was essentially forced to come out and explain their “digital asset” strategy after it became apparent that they were involved in the space when their name was disclosed in the bankruptcy documents of Blockfi and Celsius. The Bhutanese, a local paper in Bhutan, wrote an article over the weekend walking through their mining and broader “digital assets” strategy. After reading the article, it is clear to your Uncle Marty that Bhutan is way ahead of the curve when it comes to a bitcoin strategy. Not only that, their involvement is a massive validation of a number of things that bitcoiners have been saying for many years.
The Kingdom of Bhutan is a very small country that has been struggling for decades to jump start their economy to the point that it is attractive enough to retain young talent while becoming economically self-sufficient. Getting into bitcoin is a great way for the country to kill two birds with one stone. By utilizing excess cheap electricity produced by the country’s hydroelectric dams, Bhutan is able to take previously stranded and wasted resources and turn them into a significant revenue stream. Not only that, the revenue is realized in bitcoin, which is a nascent monetary asset in the beginning stages of its monetization process. DHI simply has to sell some of the bitcoin they mine to cover the operational expenses of their mining operations and hold the rest on its balance sheet. In time, as bitcoin adoption continues to increase, the value of the bitcoin sitting on their balance sheet should increase and if DHI is holding a material stack that should allow Bhutan’s sovereign wealth fund to accrue a significant amount of value in a relatively short period of time. If bitcoin is as successful as we believe it will be and DHI is able to hodl their stack, it isn’t hard to imagine them reaching the point of economic self-succifiency by the end of the decade.
This is beautiful to see because it is a direct validation of something bitcoiners have been saying for well over a decade; smaller nations are highly incentivized to get into bitcoin as early as possible because if they accumulate a sizable stack at a relatively low price they will be able to benefit massively from its monetization process. Not only that, but that they’d likely start accumulating under the radar as to not send a signal to their counterparts around the world that they should be doing the same thing. If it weren’t for Blockfi and Celsius falling into bankruptcy the world would likely be completely unaware that Bhutan has been mining and accumulating bitcoin via their sovereign wealth fund. Now that this information is public one must ask “How many nations are out there who didn’t get caught up in the messes caused by Blockfi, Celsius and others that are also accumulating?”
I don’t think it’s crazy to say there are others out there. With the unveiling of DHI being allocated to the space, Bhutan joins Venezuela, El Salvador and Russia as countries that have publicly admitted that they are accumulating or mining bitcoin.
Bhutan going public with their bitcoin accumulation strategy is a data point that lends credence to the belief that hyperbitcoinization is likely to start at the edges. Countries with little to lose and everything to gain will make the conscious decision to begin getting exposure to bitcoin because it presents them with the best risk-reward profile. Everyone can see the writing on the wall as it pertains to the dollar’s status as global reserver currency. The US and the countries closest to its sphere of influence are almost forced to go down with the ship. If they admit that the dollar endgame is in sight and decide to posture favorably toward bitcoin they will accelerate the dollar’s demise and do a lot of harm in the process. Countries who are not in the direct orbit of the US’ sphere of influence and are able to clearly read the writing on the wall – the dollar is being debased, the rails that it runs on are becoming increasingly censored, and trusted custodians cannot be trusted – are going to take a chance on bitcoin. It’s really quite simple.
The question that remains now that Bhutan has been forced into the open is, “which countries are currently running onto the field from the sidelines to ensure that Bhutan doesn’t end up with a bigger stack than they do?”