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Bhutan spent years quietly building one of the world's largest sovereign Bitcoin reserves, using its hydroelectric surplus to power a national mining operation. Then the coins began disappearing from public view on-chain.
The kingdom's mandate for Canadian asset manager 3iQ, and a royal decree this week creating a central bank for Gelephu Mindfulness City with authority to hold crypto reserves, show what Bhutan is now doing with that Bitcoin. Holding it is no longer the whole plan. Bhutan wants it managed, put to work and built into the financial system of its new special administrative region, even as it discloses less about the coins themselves.
The Disappearing Reserve
At their peak in October 2024, wallets that Arkham Intelligence attributes to Druk Holding and Investments (DHI), Bhutan's sovereign investment arm, held around 13,000 BTC. That was more than twice the roughly 5,900 BTC El Salvador held at the time.
The visible balance has fallen sharply since. Arkham data showed about 3,100 BTC by mid-May, CoinDesk reported, and about 1,750 BTC by June 17, after a transfer of 533 BTC to Binance, according to The Block. Posts on social media this week put the tracked figure near 500 BTC, which would be a decline of more than 95% from the peak, though that number has not been independently confirmed.
From Mining to Managing
DHI disputes the idea that the coins were sold. In July it told The Bhutanese that it had moved "the majority of its Bitcoins" from the public wallets Arkham tracks into "professional custody wallets and trading platforms," which on-chain trackers cannot easily follow. The newspaper reported that Bhutan "retains well above 10,000 Bitcoins," that DHI is mining at full capacity from facilities "under 500 MW in capacity," and that there had been no major sales in the previous 12 to 18 months beyond small sales to cover running costs.
In DHI's account, the gap is a data problem and not a liquidation. Arkham has said on-chain transfers alone cannot show whether coins were sold, moved or pledged. The timing of the 3iQ mandate makes the custody explanation more significant.
The 10,000 BTC Pledge
In his National Day address in December 2025, the King of Bhutan, Jigme Khesar Namgyel Wangchuck, announced a pledge of up to 10,000 BTC, worth about $1 billion at the time, to finance the development of Gelephu Mindfulness City, the special administrative region in southern Bhutan that is positioning itself as a hub for finance and digital assets.
On July 30, GMC named Toronto-based 3iQ to manage part of its Bitcoin reserve. Neither side has disclosed the size or source of the mandate, and neither has said whether the strategy includes lending or derivatives. GMC said it aims "to generate long-term returns through a low-risk, market-neutral investment approach," CoinDesk reported, meaning the Bitcoin will be invested for yield instead of sitting idle.
Market-neutral strategies in crypto include basis trades, which capture the spread between spot and futures prices, and collateralized lending. DHI told The Bhutanese it had chosen strategies targeting returns of "around 5 to 6% in BTC itself" over riskier options offering 15% to 20%.
That choice marks a shift in how Bhutan treats its Bitcoin. A mining experiment that began with hydro-powered rigs has become a treasury operation, and the government has concluded that idle Bitcoin is an underused asset. Hiring 3iQ signals that it wants professionals to run that strategy.
3iQ's Track Record
3iQ's history matters here. Founded in Toronto in 2012, the firm listed The Bitcoin Fund on the Toronto Stock Exchange in April 2020, the first exchange-listed Bitcoin fund in North America, followed by The Ether Fund in early 2021. In October 2023 it launched staking in what it called North America's first staking exchange-traded products.
Japan's Coincheck Group completed its acquisition of about 99.8% of 3iQ's parent company on February 28, 2026, linking the manager to Monex Group and its institutional distribution network in Asia. For a sovereign client worried about reputational risk, that pedigree matters.
The mandate's vagueness still sits awkwardly with GMC's stated commitment to transparency. Neither GMC nor 3iQ has disclosed how much Bitcoin is under management, where it came from or which market-neutral strategies are in use.
In the press release announcing the deal, GMC board director Jigdrel Singay welcomed 3iQ "as one of our founding institutional partners," while 3iQ chief executive Pascal St-Jean promised to bring "institutional discipline" and to put Bhutan's capital to work "responsibly, transparently and for the long term." The release contained no figures.
3iQ is building a sovereign business beyond Bhutan. In December 2025 it launched a market-neutral, multi-strategy hedge fund with UAE-based Further, seeded with $100 million from institutional, family office and sovereign investors. If it can generate steady returns on a national Bitcoin reserve without political controversy, other governments may consider similar arrangements.
Hold or Manage
Bitcoin traded around $77,400 on Wednesday, according to CoinGecko, nearly 40% below its all-time high, after a week of ETF outflows and the Binance hack. A source quoted by The Bhutanese estimated the current cost of mining one Bitcoin in Bhutan at around $45,000 to $50,000, so the operation remains profitable at today's prices.
Holding through a downturn still carries a large opportunity cost. A yield of 5% to 6% in Bitcoin terms does not remove price risk, but it reduces it.
Gelephu's Crypto Central Bank
This week added another layer. The King has signed a Royal Decree that turns the Gelephu Financial Services Office into the Gelephu Central Bank, an autonomous central bank with full central banking powers for the city, the Bhutan Broadcasting Service reported. GMC announced the decree on November 2.
According to Daily Bhutan, the new bank's mandate covers monetary policy, foreign reserve management, financial stability, payment and settlement systems, liquidity support and the development of money and capital markets. It will continue to regulate and supervise financial firms in the city. It will also be authorized to invest in digital assets and cryptocurrencies alongside conventional reserve assets, though the decree does not require it to buy any particular token. The decree also opens a path to a city currency, including a digital form, subject to the King's approval.
Several questions remain open. Bhutan's Royal Monetary Authority remains the national central bank and the sole issuer of the ngultrum, and the two institutions have not explained how they will coordinate on currency, foreign exchange, payments and monetary policy. No transition timetable, leadership or operating rules have been published, though more than 50 roles are expected to be advertised, including in virtual asset supervision and payment systems.
The direction is clear even if the details are not. Gelephu is being built as a financial jurisdiction where crypto is part of the system, from licensing exchanges such as BTSE to managing reserves. Blockhead has more on the decree here.
For 3iQ, that makes Bhutan an unusual client: a sovereign fund with years of mining output, a royal pledge of 10,000 BTC and a newly chartered central bank with the power to hold crypto.
The Downside Risk
If the strategy works, Bhutan becomes an example of a small country turning hydropower and technical capacity into an income-generating digital asset reserve.
If the market-neutral strategy underperforms or a custody arrangement fails, it will reinforce the doubts of those who read the drop from 13,000 BTC in tracked wallets as a sign of mismanagement rather than a change in strategy. Because the size of the 3iQ mandate is undisclosed, the market cannot properly assess that risk.
Bhutan's approach contrasts with El Salvador's. El Salvador treats Bitcoin as a public statement of national policy, while Bhutan treats it as an asset class that needs institutional custody, yield and discipline.
The real test of the 3iQ mandate is whether that discipline produces returns or simply makes losses harder to see. For now, the coins are quiet, the manager is busy and outsiders can only estimate how much Bhutan's Bitcoin is earning.
