FDI floodgates open. USD 2 Billion commitments for hydropower sector
KATHMANU, MARCH 31
In a stunning yet futuristic decision which may catapult Nepal into big league of economic superpowers, the Government has decided to allow Bitcoin mining on a commercial scale.
The radical decision which is already creating ripples in the global Bitcoin mining industry will be made realistic by tapping into the country's vast supply of surplus electricity.
A government spokesperson Deepak Fata told The Himalayan Times that the government has already begun discreetly inviting international companies to set up operations by offering a fixed USD-denominated electricity rate for the next two decades. With this move, Nepal is positioning itself as a future leader in the high-stakes world of cryptocurrency mining.
By monetizing its excess electricity, Nepal aims to generate significant USD revenue, both from direct electricity sales and from taxes on mining profits.
The government expects at least USD 2 billion in foreign direct investments and USD 800 million from sale of electricity and taxes in the first year alone. 'This initiative could turn the nation's electricity sector into a major economic driver, attracting massive foreign investment' Hasmukh Shrestha, a spokesman of the Nepal Power producers association said.
Bitcoin mining, an energy-intensive process, thrives on cheap and abundant electricity. Nepal, which has a potential to produce 20,000 megawatts of hydro power, has been an energy surplus country during the wet season, with its current installed capacity standing at 3300 MW.
During peak hours, around 2,700 megawatts of electricity is consumed, leaving a surplus of 400 to 500 megawatts during off-peak times.
The country already has several hydro power projects in different stages of construction
with a combined capacity of around 5000 megawatts.
'Nepal's hydropower surplus presents a prime opportunity, ' Mr Fata pointed out adding that and the government may even allow bitcoin miners to develop their own hydropower plants under a build-operate-transfer model spanning 35 years.
International firms are already taking notice. Talks are reportedly underway with U.S.-based BitMin and Roits to establish large-scale mining operations in Mustang and Manang-regions known for their cold climate, which naturally aids in cooling mining equipment.
With about 1 million bitcoins still left to be mined-currently valued at approximately $80 billion-Nepal is eager to claim a stake in the remaining supply. However, with Bitcoin's total supply capped at 21 million and new coins being mined at a diminishing rate, the long-term economic impact remains uncertain.
Nepal's approach mirrors that of neighboring Bhutan, which has already capitalized on Bitcoin mining. Bhutan's partnership with Bitdeer Technologies Group led to the development of a 600MW mining facility, and the country now holds an estimated $750 million worth of Bitcoin-surpassing even El Salvador's reserves.
Despite its economic appeal, large-scale Bitcoin mining has sparked environmental debates worldwide. Bitcoin mining produces around 65 megatons of CO2 annually, equivalent to the emissions of some entire nations. However, Nepal's reliance on hydropower ensures a cleaner energy source, potentially giving it an edge in sustainable mining.
Regulatory hurdles, however, remain. Nepal's Foreign Exchange (Regulation) Act, 1962, currently bans cryptocurrency transactions, including mining. As such the government is now weighing the pros and cons of revising these laws to allow regulated crypto activities while maintaining financial stability.
Nepal has struggled to export its surplus electricity, particularly as India remains cautious about purchasing power from Nepalese hydropower projects with Chinese involvement. Bitcoin mining presents a novel way to utilize excess energy that might otherwise go to waste, potentially transforming an economic challenge into an opportunity.
Disclaimer: Himalayan Times would like to remind our readers that today is April Fools' Day and as always we managed to pull a prank on you. However we would like to remind our readers that our bitcoin mining story could turn out to be a game changing reality if only our policy makers leverage Nepal's hydropower-rich terrain and make it the next global crypto mining powerhouse.
