Bitcoin Becomes a New Focus of Economic Strategy for Small Countries

On the global financial stage, Bitcoin is gradually becoming an important component of national strategy. Recently, a table revealing the Bitcoin holdings of various countries has attracted widespread attention. Data shows that the United States ranks first with 207,189 Bitcoins, valued at nearly $2.2 billion; China follows closely with 194,000 Bitcoins. Notably, some small countries like Bhutan and El Salvador are also on the list, holding 13,029 and 6,089 Bitcoins, respectively. Governments around the world hold a total of 529,705 Bitcoins, accounting for 2.522% of the total Bitcoin supply.

However, what has recently sparked heated discussions is Pakistan. This South Asian country has announced the establishment of a national Bitcoin strategic reserve and has committed to holding it long-term. This move not only makes Pakistan a new focal point in the cryptocurrency space but also prompts people to think about why small countries are so keen to embrace Bitcoin.

Pakistan's Bitcoin Ambitions: From Energy to National Reserves

Pakistan's Bitcoin strategy was officially unveiled at an international conference in May 2025. The government's special assistant and advisor on blockchain and cryptocurrency affairs announced that Pakistan will follow the United States in establishing a national Bitcoin strategic reserve. Although the specific scale of holdings has not been disclosed, its ambitions are already evident.

Pakistan's Bitcoin strategy is not limited to reserves. The government has also announced the allocation of 2000 megawatts of surplus electricity to Bitcoin mining and artificial intelligence data centers. This initiative aims to address the country's underutilization of energy, especially since some large coal-fired power projects are currently operating at only 15% capacity. Through mining, Pakistan hopes to convert this "idle energy" into economic value.

At the same time, Pakistan's digital asset management framework is also accelerating its improvement. On May 22, 2025, the Pakistan Digital Asset Authority (PDAA) was officially established, responsible for regulating cryptocurrency trading, DeFi applications, and asset tokenization, as well as promoting the application of blockchain technology in government affairs, land records, and the financial sector. The PDAA is also tasked with promoting the tokenization of government bonds and supporting Web3 startups, aiming to position Pakistan as a cryptocurrency hub in South Asia.

The cryptocurrency user base in Pakistan is also remarkable. It is expected that by 2025, the number of crypto users in the country will exceed 27 million, accounting for more than 10% of the total population. This figure not only reflects the enthusiasm of the young population for digital assets but also provides public support for the government to promote the crypto economy.

The Bitcoin Craze of Small Countries: From Bhutan to El Salvador

Pakistan is not an isolated case. Looking globally, several small countries have made significant achievements in the field of Bitcoin.

Bhutan, this small country at the foot of the Himalayas, has become an "invisible player" in Bitcoin mining thanks to its abundant hydropower resources. The latest data shows that Bhutan holds 13,029 Bitcoins, worth approximately $138 million, accounting for 0.062% of the total. These Bitcoins have been accumulated by state-owned enterprises through mining, and the low cost of hydropower gives Bhutan a competitive edge in mining.

El Salvador is the pioneer of small countries' Bitcoin strategy. In 2021, this Central American nation became the first country in the world to make Bitcoin legal tender and has continued to increase its reserves. As of May 2025, El Salvador holds 6,089 Bitcoins, valued at approximately $64.53 million, accounting for 0.029% of the total. Its unrealized gains from Bitcoin reserves have reached $357 million, showing the returns brought by price increases. However, El Salvador's Bitcoin journey has not been smooth, as international financial institutions are cautious about its policies.

Ukraine's Bitcoin holdings have a special background. During the conflict, Ukraine raised over $100 million through cryptocurrency donations, becoming an important source of its 46,351 Bitcoins (worth approximately $491 million). Ukraine's crypto policy is relatively open, attracting a large number of Web3 startups, and its Bitcoin holdings account for 0.221% of the total, ranking among the top for small countries.

In contrast, the 66 Bitcoins in Georgia (worth about 6.99 million USD) seem trivial, possibly a symbolic holding of early confiscated assets, and a clear national strategy has yet to be formed.

The Motivations of Small Countries Embracing Bitcoin

Behind the enthusiasm of small countries for Bitcoin lies a complex interplay of economic, geopolitical, and technological factors.

First, Bitcoin is regarded as a tool for hedging economic difficulties. Many small countries face pressures from insufficient foreign exchange reserves, inflation, or high debt. The volatility of traditional financial markets leads these countries to seek Bitcoin as an alternative asset. Its decentralized nature makes it immune to the constraints of a single country's monetary policy, providing small nations with the possibility of enhancing their economic autonomy.

Secondly, energy utilization is the direct driving force behind the Bitcoin strategy of small countries. Bhutan's hydropower mining and Pakistan's electricity distribution plan are similar. Many small countries have underutilized renewable energy or surplus electricity; Bitcoin mining can not only monetize these resources but also attract international mining companies and technology firms.

Furthermore, Bitcoin policy has become a "magnet" for attracting foreign investment. In the global Web3 and blockchain boom, small countries are attracting startups and capital inflow through relaxed cryptocurrency policies. This strategy not only brings direct investment but also promotes technology transfer and job growth.

Finally, geopolitical considerations play an important role in the Bitcoin strategy of small countries. In the dollar-dominated international financial system, small countries often find themselves in a passive position. The decentralized nature of Bitcoin makes it a potential "financial weapon" that helps small countries gain more voice in the global game.

Comparison between Large and Small Countries

Unlike small countries, the Bitcoin held by large countries is mostly from law enforcement seizures. The Bitcoin held by the United States, China, and the United Kingdom primarily comes from assets confiscated through law enforcement actions. The Bitcoin holdings of these large countries resemble "windfalls" rather than proactive strategies.

Small countries are more inclined to accumulate Bitcoin through mining or policy purchases. Bhutan's Bitcoin comes from hydropower mining, while El Salvador's is a product of national strategy. Although part of Ukraine's Bitcoin comes from donations, it also reflects its proactive embrace of cryptocurrency policy. The proportion of Bitcoin holdings in small countries may be low, but their strategic significance is greater, aiming to achieve economic diversification or hedge risks through Bitcoin.

It is noteworthy that Germany emptied its Bitcoin reserves in 2024 to pay off its debts. This move contrasts sharply with the long-term holding strategy of smaller countries and also reflects the divergence in Bitcoin policies among larger nations.

The Scrutiny of International Financial Institutions and the Persistence of Small Nations

The path for small countries to embrace Bitcoin is not smooth, as the scrutiny of international financial institutions is always present. The case of El Salvador is the most representative. In December 2024, a certain international financial institution reached a loan agreement with El Salvador, but required it to maintain its existing Bitcoin reserves unchanged and to amend relevant laws. The institution warned that Bitcoin reserves could exacerbate El Salvador's debt risk.

The situation in Pakistan is more forward-looking. Its Digital Asset Management Bureau emphasized compliance with international regulatory standards from the outset, trying to gain policy space under the scrutiny of international financial institutions. Pakistan's cryptocurrency policy is not limited to Bitcoin reserves; it also includes the extensive application of blockchain technology in government affairs and the financial sector. This "comprehensive layout" may give it greater flexibility in negotiations with international financial institutions.

The cautious attitude of international financial institutions reflects the dual nature of Bitcoin: it is both an opportunity for economic transformation in small countries and a potential threat to financial stability. When embracing Bitcoin, small countries must find a balance between innovation and compliance.

Pakistan's Unique Advantages and Challenges

Compared to other small countries, Pakistan's Bitcoin strategy has its uniqueness. Firstly, its demographic dividend and cryptocurrency user base provide vast market potential. With 27 million crypto users, they are not only a consumer group but also a driving force for blockchain technology innovation. Secondly, Pakistan's energy resources and geographical location make it a potential crypto hub in South Asia. The electricity distribution plan not only absorbs excess energy but may also attract investment from mining companies in neighboring countries.

However, the challenges are equally significant. Pakistan's power infrastructure is aging, and coal-fired projects may face environmental pressures. Furthermore, the volatility of the cryptocurrency market could pose a threat to its reserve value. More importantly, Pakistan needs to cautiously advance policies under the regulatory framework of international financial institutions to avoid restricted loan conditions.

Conclusion: The Bitcoin Gamble of Small Countries

Pakistan's Bitcoin strategy is a microcosm of small countries embracing the digital economy. From Bhutan's hydropower mining to El Salvador's fiat currency experiment, and to Ukraine's wartime donations, these countries see hope for economic revival in the wave of Bitcoin. Bitcoin is not just an asset; it is also a convergence point of energy, technology, and geopolitics. Small countries are using Bitcoin to try to find their place in the global financial system.

However, this gamble is not without risks. The volatility of Bitcoin, international regulatory pressures, and infrastructure limitations can all thwart the ambitions of small nations. But for Pakistan and countless small countries, Bitcoin is not just an asset, but a belief — they do not want to be absent in the future of the digital economy.