Bhutan Struggles to Expand Crypto Payments Despite Large Bitcoin Reserves

Bhutan introduced a nationwide crypto payment network last May, allowing tourists to pay for visas, flights, hotels, and meals in over 100 cryptocurrencies through Binance. Initially, over 1,000 merchants signed up, but adoption has remained minimal nearly a year later. Many businesses report that customers rarely use crypto payments, often unaware that such options exist. Experts suggest that the government’s push is motivated more by its substantial bitcoin reserves than by practical demand. Bhutan has been mining bitcoin since 2019 using surplus hydroelectric power, amassing reserves worth $1.4 billion by October 2024, the largest state-backed green-mined reserve globally. However, the country faces structural challenges: around one-third of the population is illiterate, internet penetration is limited, and power supply is unstable, making digital payments difficult. Comparisons with El Salvador and the Central African Republic show that introducing bitcoin as legal tender in small countries with infrastructure challenges has often failed. Currently, Bhutan’s crypto system acts more as a payment gateway converting crypto instantly to ngultrum rather than serving as a store of value, and its use remains largely restricted to the tourism sector. Legal and regulatory clarity on cryptocurrency is still vague, leaving businesses and citizens uncertain about its long-term adoption.