Bhutan's sovereign investment arm, Druk Holding and Investments (DHI), along with its Bitcoin mining partner Bitdeer Technologies, are set to expand their BTC mining capacity to counteract the potential impact of the mining rewards reduction post the Bitcoin halving.

DHI, representing the royal government of Bhutan, and Bitdeer Technologies, listed on Nasdaq, have announced plans to invest in expanding their mining project's capacity by sixfold before the halving. According to Bitdeer's chief business officer, this initiative will boost Bhutan's mining capacity by 500 megawatts by the first half of 2025, bringing the kingdom's total mining capacity to 600 megawatts.

The funding required for introducing new hardware for the upgrade will be sourced from the $500 million fund established by the two entities last year. In May 2023, they announced the creation of a closed-end fund valued at $500 million, with Bitdeer chairman Jihan Wu expressing intentions to leverage Bhutan's zero-emission energy to support blockchain technologies. Wu emphasized that the fund would aid in developing international stakeholder networks to bolster Bhutan's technology sector.

While DHI, managing assets over $2.9 billion, had quietly accumulated a crypto portfolio, it was brought to light during the bankruptcy proceedings of crypto firms Celsius and BlockFi. Reports also indicate that Bhutan has been utilizing hydropower for BTC mining since 2019, when the price was approximately $5,000.

Despite preparations to mitigate potential losses post the Bitcoin halving, some experts believe that the reduction in BTC rewards will not significantly impact profitability. Laurent Benayoun, CEO of liquidity firm Acheron Trading, suggests that the decline in mining rewards will be offset by an increase in network fees. Additionally, Jimmy Zhao, senior solution architect at BNB Chain, opines that Bitcoin-based nonfungible tokens could contribute to miner profitability post the halving.

As of February 2024, crypto asset manager Grayscale estimated that Bitcoin transactions generated over $200 million in transaction fees for miners.