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Macroscope | Despite bitcoin’s star fading, digital currencies are catching on in Asia and Africa

  • Pilot programmes, full launches and other initiatives by China, Nigeria, Japan and Singapore show the appeal of central bank digital currencies outside the West
  • The impact of digital currencies on African and Asian economies will be significant as they provide greater convenience, lower transaction fees and more

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An advertisement for bitcoin is displayed on a street in Hong Kong in February 2022. Cryptocurrencies may have lost their lustre in many parts of the world amid swings in their value, but that has not dampened enthusiasm in Asia and Africa for central bank digital currencies. Photo: AP
The happiness-seeking Himalayan nation of Bhutan made headlines recently when Forbes reported it has been secretly mining bitcoin for years. Local newspaper The Bhutanese confirmed reports that the early investor in the bitcoin bandwagon was Druk Holding and Investments, the commercial and investment arm of the Bhutanese government.
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It appears that the company entered the market in 2019, when the price of bitcoin was around US$5,000. The earnings, officials said, went towards subsidising the country’s power and hardware costs.
Like other nations dabbling in cryptocurrency, many economic factors seem to account for Bhutan’s interest in bitcoin. The Bhutan Development Update, a report from the World Bank, indicated that Bhutan’s hydroelectric power production – which provides 14 per cent of the country’s gross domestic product and 26 per cent of the government’s annual revenue – fell by 3 per cent in 2017-2018. Delayed hydroelectric projects cost the country dearly.
When the Covid-19 pandemic set in, tourism revenue took a hit as well. These developments probably motivated the government to mine bitcoin while keeping its citizens in the dark.

It’s not like this is a one-off, either. Earlier this month, Bloomberg reported that Bhutan’s investment arm has an agreement with bitcoin mining company Bitdeer Technologies to seek investors and build a US$500 million fund for further bitcoin investment.

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Bhutan’s surprising bitcoin journey is reminiscent of that of another nation. Two years ago, El Salvador made bitcoin legal tender in the country and invested about US$20.9 million in the cryptocurrency. However, the experiment backfired as bitcoin lost more than half its value a year later, resulting in a paper loss of about US$60 million for the government.
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