Key Points
- Bhutan’s sovereign investment arm and Bitdeer Technologies plan to increase their Bitcoin mining capacity.
- The increased capacity aims to offset the potential impact of the mining rewards reduction after the Bitcoin halving.
Druk Holding and Investments (DHI), Bhutan’s sovereign investment arm, and Bitdeer Technologies, a Nasdaq-listed company, have announced plans to expand their Bitcoin mining project.
The expansion is in anticipation of the Bitcoin halving, an event that could potentially reduce mining rewards.
Increasing Mining Capacity
The planned upgrades are expected to raise Bhutan’s mining capacity by 500 megawatts by the first half of 2025.
This expansion would boost the Himalayan kingdom’s total mining capacity to 600 megawatts.
The necessary funds for the upgrade will come from a $500 million fund that DHI and Bitdeer announced last year.
The two entities had previously announced the creation of a closed-end fund valued at $500 million on May 3, 2023.
Supporting Blockchain Technologies
Bitdeer chairman Jihan Wu stated that the company would collaborate with DHI to utilize Bhutan’s zero-emission energy to support blockchain technologies.
He added that the fund would aid in developing international stakeholder networks that could benefit Bhutan’s technology sector.
DHI, which manages over $2.9 billion in assets, had quietly built a crypto portfolio before it was revealed during the bankruptcy proceedings of crypto firms Celsius and BlockFi.
Reports indicate that Bhutan has been using hydropower to mine Bitcoin since 2019 when the price was around $5,000.
While DHI and Bitdeer prepare to counter potential losses after the Bitcoin halving, others believe that the halving of Bitcoin rewards would not impact profitability.
Laurent Benayoun, the CEO of liquidity firm Acheron Trading, argued that the mining rewards would be “compensated by an increase in network fees.”
Jimmy Zhao, BNB Chain senior solution architect, suggested that Bitcoin-based nonfungible tokens (NFTs) could also contribute to miner profitability after the Bitcoin halving.
As of February 2024, Grayscale, a crypto asset manager, estimated that Bitcoin Ordinals generated over $200 million in transaction fees for miners.
