How a Tiny Himalayan Country Became a Bitcoin Mining Paradise
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Download the Realtor.com app because you're nearly home. Make it real with Realtor.com. Pro's number one most trusted app based on August 2024 proprietary survey. Over 500,000 new listings every month based on average new for sale and rental listings. February 2024 through January 2025. Welcome to Tech News Briefing. It's Wednesday, July 2nd. I'm Katie Dayton for The Wall Street Journal. Would you become friends with a chatbot? No? What if it shared most of your deeply held beliefs?

That's what some tech leaders are banking on as they try to make their own chatbots stand out in a crowded market. Then we'll take a trip to Bhutan to learn how this tiny landlocked kingdom is becoming a major player in the Bitcoin economy.

But first, AI chatbots are everywhere, and tech CEOs want consumers to use them more. One strategy being tested is programming AIs with such winning personalities that they'll start to be seen less as tools and more as friends. But tech companies are finding that isn't an easy task. Our columnist, Tim Higgins, has the story. So, what's the story?

Tim, your column this week starts and ends with Elon Musk's issues with Grok, the chatbot designed by his company, XAI. Can you take us through a timeline of their love-hate relationship? Well, when Musk created XAI, it really was an environment where he was very critical of other tech companies, AI, chatbots, socials.

saying that they were woke, that they were leaning toward liberal ideals, perhaps more concerned about being politically correct than factually accurate. And he promised that XAI was going to be trying to what he described as maximizing truth seeking and

And it was the foundation of the creation of his AI company. And Grok was really part of that. It was its chatbot. It was a little spicy. Your interactions with it were probably different than what you might have been experiencing with other chatbots. That was kind of at the beginning. And then recently, it has come under criticism from those on the right, those who cheered on Grok early on, arguing that it had become woke.

And Musk took note and he felt like the training data was coming from more liberal sources and he said it needs to be retrained. So what are we to make of this reboot and Musk's desire to change Grok

because of the answers it was giving. It gets at the idea that these AI chatbots are more than just regurgitating information or answering questions. They are perhaps giving a worldview to users, maybe no different than a Fox News or MSNBC that has a specific kind of tone that users or viewers like. Now, Musk would likely say that

He is really pursuing maximum truth and that part of his goal with retraining Grok is to essentially take Grok with some advanced reasoning and retrain him.

retrain it by rewriting the entire corpus of human knowledge and adding the missing information and deleting the errors, which critics say that sounds a lot like some kind of 1984 nightmare. But it is an interesting way of thinking about how this AI interacts. It's almost, if you think about a publication in the kind of old technology, it's framing information for the consumption of the user.

And are any other tech leaders grappling with the tone and the beliefs, if we can call them that, of their AI chatbots? We're seeing from various tech leaders the idea that

The way to differentiate their AI chatbots from what's becoming a crowded field is that personal relationship or the personality or the kind of the idea that the user has a friendship with that system. And so whether that is data that they have stored up

and learn from. So the chatbot kind of knows you and knows some of the things you're looking for, shares perhaps a worldview, shares a similar way of communicating. They argue that this is going to be helpful. What are some of the ethical concerns around giving a

AI chatbots, these personalities that can feel like friends. There's academics are worried about these things, users falling in love or, you know, creating relationships that aren't really relationships. There are concerns of users going even deeper into kind of an echo chamber, the kind of thing we've seen with the rise of social media, maybe the unintended consequences of users'

seeking out voices that kind of go along with their own worldview and not being exposed to other ideas. It's part of the rise of new technology that we've seen this past generation and is one of the challenges that we have to navigate. That was WSJ columnist Tim Higgins. Coming up, what happens when you combine hydropower, a declining population, and a struggling economy? The answer is, apparently, Bitcoin.

Find out why after the break.

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Welcome to Bhutan, a tiny country wedged between China and India. It's known for its dramatic landscapes, adherence to tradition, and prioritizing the happiness of its citizens over the growth of its GDP. But also, Bitcoin mining.

According to the cryptocurrency platform Arkham, Bhutan has amassed the world's third largest Bitcoin stockpile held by a government. The Wall Street Journal's Shan Li has been looking into this story. Shan, I could maybe put Bhutan on a map if I tried, but I don't know much about it otherwise. You write about its natural beauty, but I want to start by asking about its economy. How healthy is it?

It's been struggling for a really long time. So Bhutan's economy is mostly primarily dependent on hydropower. The mountainous terrain has a lot of rivers that's fed with glacial melt and rainfall. So they get most of their government revenue from exporting hydropower to India. And the other two sectors are agriculture and tourism. But tourism, especially during the pandemic, it got completely choked off. Bhutan closed its borders for over two years from outsiders. And that just

killed the tourism industry. So it's been struggling for years, but the pandemic and the closure of the tourism industry just was a tipping point in the economy. And it's gotten so bad that the prime minister of Bhutan told me that about

About 10% of the population of Bhutan, which is roughly 800,000 people. So let's say 80,000 people have emigrated out of the country over the last five years for better jobs elsewhere. They've mostly gone to Australia, but that's just a sign of how the economy is struggling. So we have this fairly tiny, isolated state up in the Himalayas.

Why was the idea of mining Bitcoin a promising one for this country in particular? The key factor that made it economically viable is the cheap electricity from the hydropower. They have vast amounts of electricity and that's basically the core ingredient for Bitcoin mining.

Because to mine Bitcoin, you basically end up using tons of energy. These racks of servers use up tons of energy to solve essentially mathematical puzzles in order to mine Bitcoin. And that's what Bhutan had. And that was the key ingredient that made Bitcoin mining viable.

And was there one person or one group of people who spearheaded this initiative? So the king a few years ago basically threw out the idea. He's apparently very tech savvy and pro tech. And he said, what are some ideas for using technology to help give a boost to the economy? And the kingdom's sovereign wealth fund called Drew Colding and Investments said,

The head of R&D at that point came up with the idea of, hey, why don't we try Bitcoin mining? We have the electricity. It's possible maybe it could work. He had a personal interest in studying Bitcoin mining, just like cryptocurrency over the years. So he threw out that suggestion and they just took it and ran with it. They actually broke ground on the first mine at the end of 2020.

And how did that implementation and those early days of mining Bitcoin go for Bhutan? The way they described it, it was a little haphazard, a little bit ragtag. The head of the R&D, who is now actually the CEO of the Sovereign Wealth Fund, said he literally started doing the project by googling how to mine Bitcoin.

and watching YouTube videos. He said that's how he started around 2019. And then they eventually imported two computers just to tinker with him in the office, but they didn't realize how much heat it would generate. So they just got these frantic calls from security in the middle of the night going like, it's really overheating the office. And they realized that these computers use up so much energy. But fast forward to 2020, the CEO and a handful of employees were

basically set up the first Bitcoin mine themselves in this snowy mountain pass. They slept on site for months. Because remember, at this point, it was the middle of the pandemic. Bhutan had closed its borders completely to foreigners. So there was no way they could get any experts in from outside. So they just slept on site, set up the servers themselves, and experts from Malaysia and Singapore dialed in to try to give them some guidance. And how is this playing out for the Bhutanese economy so far? So far, it's been...

quite successful in the sense that they've amassed a stockpile of about $1.3 billion worth of Bitcoin, which is approximately 40% of their GDP. So they got in at the right time, which let's remember they broke ground in 2020. And at that point in 2020, it was below about $10,000 per Bitcoin. And now Bitcoin's at about $100,000. And at this point, they've held on to most of it, except they did tell me that they essentially sold off about $100 million worth of Bitcoin to finance Bitcoin.

pay hikes for two years for civil servants. One young man who works at the National Land Commission, he said he got a 65% salary raise, which he said it was astonishing because he had no idea that Bhutan was even doing Bitcoin mining. He only heard about it when he got this giant pay raise. Good for him. And you know, so you mentioned otherwise Bhutan is keeping this in a stockpile. Is that the largest strategy with this mining project? Yeah.

Yes. So the prime minister, all the officials involved said that they're not planning to sell off really any more to fund government spending. The plan is to hold on to this long term as a strategic reserve.

And it's part of Bhutan's future plans to incorporate crypto into every facet of the country. So in May, they launched this payment system for tourists where tourists can pay with over 100 different kinds of cryptocurrencies for hotels, visas, flights. They're going to have a digital currency. They're probably going to accept cryptocurrency as legal tender. So this is the idea for the future of Bhutan as a very tech forward country, which is a

quite unusual for this country because in many ways it's held on to old traditions. Like if you go around Bhutan, it's actually a really, really interesting place. Like government officials are still required to wear traditional dress. Archery competitions are very popular as like a pastime.

Basically, Bhutan is planning to leapfrog in technology and Bitcoin is part of that. And I wonder, so we have these civil servants that got their pay bumps. But what about the rest of the Bhutanese population? Are they seeing any payoff from this Bitcoin mining so far?

No, not yet. And the vision is not to sell off the mining, but develop the crypto industry and just other tech industries with the hope that that will provide more white-collar jobs and hopefully lure some of the young people back. Because primarily the people that moved, left the country are young people. That was the WSJ's South Asia correspondent, Shanli. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with supervising producer Chris Zinsley.

I'm Katie Dayton for The Wall Street Journal. We'll be back this afternoon with TMB Tech Minute. Thanks for listening.