Bhutan’s Hydropower Exports Plummet as Bitcoin Mining Soars
Thimphu: Bhutan’s hydropower exports to India have seen a significant decline in recent years, with the country’s energy consumption increasing sharply due to the growth of Bitcoin mining centers.
The Rise of Bitcoin Mining Centers
According to data compiled by experts, most of these mining centers are located near Indian-assisted hydropower projects in Bhutan. Map 1, released by researchers, shows that all but one of the identified Bitcoin mining sites in Bhutan are situated near India-assisted hydropower projects.
Impact on Hydropower Exports
The decline in hydropower exports is reflected in Table 1, which shows a significant decrease in the export of hydropower and total export revenues since 2020, when Bitcoin mining began in the country. The tariffs per unit have also decreased, indicating a shift towards internal consumption.
Internal Consumption and Exports
Bhutan’s Ministry of Finance has reported that the country is now consuming 53% of the energy generated by projects like Tala, Chukha, and Kurichu internally, while exporting only 47%. In contrast, the Mangdechhu project is seeing 77% of its exports and 23% internal consumption.
Trade Deficit and Economic Stability
The increasing demand for electricity from India has also contributed to Bhutan’s growing trade deficit. The World Bank estimates that the trade deficit between the two countries increased by 60% in 2022-2023. Experts warn that the growth of crypto mining in Bhutan is posing new challenges to its relationship with India and could impact its economic stability.
Concerns about Crypto Mining
The massive import of crypto mining equipment has also led to a decline in international reserves and a widening of the current account deficit to 34.3% of GDP in FY 22/23. The unpredictability of the crypto mining sector also raises concerns about lower-than-expected returns in the future.
Future Outlook
As Bhutan continues to bet on crypto mining, experts are left wondering if it will benefit the country’s economy and foreign policy in the long run. The complete implementation of the second phase of the investments will require more energy than the rest of the nation combined, leading to further declines in hydropower exports and revenues.
Key Statistics:
- 53%: Percentage of energy generated by projects like Tala, Chukha, and Kurichu consumed internally
- 47%: Percentage of energy generated by projects like Tala, Chukha, and Kurichu exported
- 77%: Percentage of exports from the Mangdechhu project
- 23%: Percentage of internal consumption from the Mangdechhu project
- 60%: Increase in trade deficit between Bhutan and India in 2022-2023
- 34.3%: Current account deficit as a percentage of GDP in FY 22/23