Why has Bhutan reduced its Bitcoin holdings by over 70%? The decline of hydropower dividends and the country's mining industry dilemma

Bhutan, a landlocked small country located in the eastern Himalayas, once held a unique position in the global Bitcoin sovereignty narrative. It is neither a “fiat experiment” like El Salvador nor an “asset seizure management” model like those of the US or China—Bhutan has taken a path that almost no other country has replicated: using its surplus hydropower to mine Bitcoin, directly converting natural resources into digital asset reserves. This route once placed it among the leading global sovereign Bitcoin holders, but the latest on-chain data suggests that this road may be nearing its end.

Arkham Intelligence data shows that the Royal Government of Bhutan has cumulatively reduced its Bitcoin holdings by about 70% over the past eighteen months, with its holdings dropping sharply from a peak of about 13,000 BTC in October 2024 to the current range of about 3,774 to 3,954 BTC. At the same time, its water-powered Bitcoin mining pools have recorded no mining inflow of a single transaction exceeding $100,000 for more than a year, with mining activity all but coming to a halt. From “sovereign mining pioneer” to “systematic seller,” Bhutan’s shift provides a valuable case study for deep analysis of the crypto market.

Bhutan’s Bitcoin Reserves Plunge by 70% in Eighteen Months

In terms of total volume, Bhutan’s Bitcoin reserves have shrunk significantly. Using about 13,000 BTC in October 2024 as the peak reference point, eighteen months later its holdings fell to about 3,774 BTC, and its USD value dropped from more than $1.5 billion at the peak to about $272.5 million. Since 2026, the value of Bitcoin transferred out of wallets associated with the Bhutanese government has already totaled about $215.7 million, with net outflows of about $120 million.

In terms of pace, this divestment has not been a one-time operation; it shows clear characteristics of orderly, scheduled reductions. Starting in September 2025, Bhutan began realizing profits in batches of $5 million to $10 million each, with funds flowing to exchanges and market makers such as QCP Capital. In March 2026, the pace accelerated noticeably—over two days, Bhutan transferred 973 BTC (about $72 million), followed by another transfer of 519.7 BTC (about $36.75 million). On April 10, Bhutan transferred another 250 BTC (about $18 million) to a newly created wallet, bringing its holdings further down to about 3,774 BTC. This “batch-based, targeted, continuous” transfer pattern indicates a structural financial arrangement rather than a temporary market-timing move.

Bhutan Bitcoin holdings, source: X/Wu Blockchain

Key data indicators—side-by-side comparison

According to Gate market data, as of April 13, 2026, the Bitcoin price is $71,061.4, down slightly by 0.86% over the past 24 hours, with a market cap of about $1.33 trillion, and market sentiment in a neutral range. Compared with the all-time high of $126,080 reached in October 2025, the current price has retraced roughly 43%, and the downward pressure on asset prices has undoubtedly intensified the USD-denominated reserve shrinkage.

From Hydropower Dividends to Strategic Withdrawal

Bhutan’s sovereign Bitcoin narrative began in 2019. Druk Holding and Investments, a state-owned investment institution, started using the country’s abundant hydropower resources to mine Bitcoin, converting surplus electricity from the rainy season into digital assets at nearly zero cost. At its peak, this strategy once contributed nearly 40% to the country’s GDP.

But the turning point began to become visible in the second half of 2024. In October 2024, Bhutan’s holdings reached a peak of about 13,000 BTC, after which it entered a gradual divestment channel. In November 2024, Bhutan received its last mining reward from the Foundry USA mining pool address—about 0.9 BTC (worth about $75,730 at the time). After that, no large on-chain inflows of mining rewards were recorded. In September 2025, Bhutan focused on selling off about 3,500 BTC, accelerating the pace of divestment. From March to April 2026, the frequency and scale of transfers further increased, and holdings fell below 4,000 BTC.

It is worth noting that in December 2025, Bhutan publicly pledged to invest as much as 10,000 BTC to fund Gelephu Mindfulness City (Gelephu Mindfulness City), a special economic zone project. At the time, the market generally believed it would hold Bitcoin long term as a strategic reserve. However, less than four months later, its holdings had fallen to less than 4,000 BTC, and the gap between its actual actions and public statements is worth attention.

Why Sovereign Mining Comes to a Halt

On-chain data shows that Bhutan has gone more than one year without recording a single inflow of mining rewards exceeding $100,000, and Arkham also points out that its mining activity may have stopped around November 2024. This assessment is further corroborated by a Gate News report on April 11—Bhutan’s hydropower is currently used more to sell electricity to neighboring India rather than to mine Bitcoin.

The drivers behind the mining shutdown are multifaceted. From the global mining macro environment, CoinShares’ Q1 2026 mining report indicates that Q4 2025 was the most difficult quarter for miners since the 2024 halving. Bitcoin’s price fell sharply from an all-time high of about $124,500, while the network’s total hash rate remained at historical highs. The hash price slid from about $63/PH/day in July 2025 to around $28 to $30/PH/day in early March 2026, hitting a five-year low. About 20% of miners worldwide have entered “surrender mode,” and several publicly listed mining companies have significantly reduced their Bitcoin holdings.

From Bhutan’s specific situation, its Bitcoin mining scale is relatively limited, making it more sensitive to changes in the network hash price. According to analysis by CoinDesk, under the dual squeeze of falling coin prices and rising difficulty, the profitability of Bhutan’s small-scale mining operations has been severely hit, while the economic benefits of directly selling electricity to India are significantly higher. In fact, Gate News has already explicitly confirmed this shift—Bhutan’s hydropower is now used more for selling electricity for export.

In addition, Bhutan had planned to cooperate with Bitdeer Technologies to build a Bitcoin mining power project of up to 600 MW, but on-chain data shows that since the 2024 halving, its actual mining pace has already slowed, and large-scale expansion plans may have been put on hold. Overall, Bhutan is switching from a “mining Bitcoin by using electricity” model to a “using electricity to obtain fiat revenue” model—an “economic arithmetic” decision that makes sense in a context where mining profit margins are being continuously compressed.

Sovereign Players in the Global Mining “Surrender Wave”

Bhutan’s selling-down behavior is not an isolated case. When placed in the broader landscape of global Bitcoin mining and institutional holdings at the start of 2026, a more complete market picture emerges.

During the same period, several publicly listed mining companies also adopted different degrees of divestment strategies. MARA sold 15,133 BTC (about $1.1 billion) from March 4 to March 25 to repurchase convertible notes. Riot Platforms sold 3,778 BTC (about $289.5 million) in Q1 2026. Cango sold 2,000 BTC to repay loans, and Genius Group cleared its entire 84.15 BTC to repay an $8.5 million debt. This miner-led sell-off wave, resonating in timing with Bhutan’s actions, jointly forms a source of pressure on the market from the supply side.

However, not all institutions are reducing holdings. In March 2026, MicroStrategy bought 44,377 BTC against the trend, bringing its total holdings to over 766,970 BTC. El Salvador’s Bitcoin holdings have exceeded 7,618 BTC, starkly contrasting with Bhutan. At the sovereign level, according to Arkham, governments including the US, China, UK, Ukraine, El Salvador, and Bhutan together hold about 432,000 BTC, accounting for about 2.1% of the total supply. Although Bhutan has reduced by 70%, it still ranks as the sixth-largest government holder globally with about 3,774 BTC.

From a more macro perspective, Bhutan’s decision to exit mining may have subtle effects on the distribution of global hash power. CoinShares’ report indicates that in Q1 2026, the Bitcoin network hash rate fell by about 6%, reflecting industry-wide profitability pressure. While Bhutan’s share is limited globally, its exit further shrinks the “low-cost hydropower mining” segment. Meanwhile, some mining firms are reallocating resources from Bitcoin mining to AI and high-performance computing infrastructure, and the cumulative size of AI/HPC contracts has exceeded $70 billion. This trend of “reallocating hash power resources” may carry more structural significance than any single holding change.

Uncertainties Remain: Questions Still Unresolved in the Narrative

Although the on-chain data clearly points to divestment and mining suspension, several key elements in the narrative remain unresolved.

First, there is insufficient transparency about where the funds went. Of the Bitcoin Bhutan transferred out, a significant portion went to unlabelled wallet addresses. Of the total $215.7 million transferred out in 2026, some are believed to have gone to market makers such as QCP Capital, but the destination of the rest remains unclear. Are these funds converted into fiat for national fiscal spending, or transferred to other untracked addresses in new forms? At present, there is no conclusive evidence.

Second, there is a tension between the funding commitment for the Gelephu Mindfulness City project and the actual divestment. The 10,000 BTC funding pledge made in December 2025, compared with the current actual holdings of less than 4,000 BTC, creates a substantial gap. No official explanation has been provided yet for this discrepancy.

Third, since Druk Holding and Investments launched its divestment, it has never issued public comments regarding fund transfers or the status of its mining business. In the absence of official confirmation, the current judgment that mining has “completely stopped” remains speculative based on on-chain data.

Fourth, Bhutan still holds about 3,774 BTC. The fate of its remaining holdings—whether it continues to reduce or switches to long-term holding—will become a key variable to watch in the next stage.

Scenario Simulation: Three Possible Paths

Scenario 1: Ordered Exit, Continued Gradual Reduction of Remaining Holdings

If Bhutan continues its current “batch, targeted, continuous” divestment pattern, it is expected that during 2026 its holdings could be further compressed to below 1,000 BTC, or even completely liquidated. In this scenario, direct supply pressure on the market from Bhutan would marginally weaken as remaining holdings shrink due to their limited size, but its exit signal as a “sovereign player” could influence decisions by other small and medium-sized sovereign holders, creating a certain degree of “herding effect” risk. The global mining hash power redistribution process would continue, and the attractiveness of the low-cost hydropower model would decline further in the short term.

Scenario 2: Policy Shift, Stop Divestment and Seek to Resume Mining

If the Bitcoin price sees a significant rebound and mining profitability improves, Bhutan might pause divestment and consider resuming mining operations. However, factors such as aging mining equipment, the dissolution of operational teams, and the power resources that have already switched to a power sales model all pose practical obstacles to resuming mining. Even if mining restarts, capacity recovery would require at least a few months of ramp-up. The probability of this scenario depends directly on changes in Bitcoin price trends and the network’s total hash power level; under current market conditions, the requirements for a short-term resumption of mining are not sufficient.

Scenario 3: Asset Restructuring and Conversion of Holding Forms

It is also possible that Bhutan’s transfers are not all used for liquidation and cashing out; some funds may re-enter its balance sheet in the form of ETF shares or other digital assets. Because some transfers go to unlabelled addresses, the final holding form cannot be verified from publicly available on-chain data. If this path is true, the market’s current interpretation of “systemic sovereign exit” may be partly distorted. However, without further information disclosure, this scenario remains hypothetical.

Conclusion

Bhutan’s Bitcoin story reflects the real trade-offs of a small economy in the crypto asset space: when the marginal returns of “mining with electricity” are lower than the direct returns of “swapping electricity for fiat,” economic rationality naturally steers resources toward higher-return options. In this sense, Bhutan’s selling down is not a denial of Bitcoin’s value, but a calm recalculation of the current mining economics.

This event also reveals a broader market proposition: the way sovereign nations participate in crypto assets is evolving—from early “symbolic holdings” and “resource-driven mining,” gradually toward a more complex “asset-liability management” stage. In this stage, on-chain transparency turns every sovereign-level asset flow into a signal that the market can interpret in real time. This transparency is both a unique advantage of crypto assets and a new constraint on sovereign entities participating in them. Bhutan’s next moves, as well as how other sovereign players enter, will continue to shape the next chapter of this narrative.