Sean Li (3:50)

And are any other tech leaders grappling with the tone and the beliefs, if we can call them that, of their AI chatbots?

Tim Higgins (3:58)

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 learned 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.

Sean Li (4:33)

What are some of the ethical concerns around giving AI chatbots these personalities that can feel like friends?

Tim Higgins (4:41)

There's academics are worried about these things, users falling in love or creating relationships that aren't really relationships. They're concerns of users going even deeper into 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 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.

Katie Dayton (5:16)

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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Katie Dayton (6:03)

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 Sean 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?

Shan Li (6:43)

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. 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 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.

Sean Li (7:40)

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.

Shan Li (7:50)

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.

Sean Li (8:18)

And was there one person or one group of people who spearheaded this initiative?

Shan Li (8:23)

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, the head of R and D at that point came up with the idea of, hey, like, why don't we try bitcoin mining? You know, 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.

Sean Li (9:00)

And how did that implementation and those early days of mining bitcoin go for Bhutan?

Shan Li (9:06)

The way they described it, it was a little haphazard, a little bit ragtag. The head of the R and D, who's 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 them 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 midd the night going like, it's really overheating the office. And they realize that these computers use up so much energy. But Fast forward to 2020. The CEO and a handful of employees basically set up the first bitcoin mine themselves in this, like, 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.

Sean Li (10:03)

And how is this playing out for the Bhutanese economy so far?

Shan Li (10:08)

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 a hundred thousand dollars. And at this point, they've held onto most of it, except they essentially sold off about $100 million worth of Bitcoin to finance 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.

Sean Li (10:55)

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?

Shan Li (11:07)

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 onto 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, 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 quite unusual for this country because in many ways it's held onto old traditions. Like if you go around Bhutan, it's actually 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.

Sean Li (12:04)

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?

Shan Li (12:14)

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.

Katie Dayton (12:33)

That was the WSJ's South Asia correspond London Shan Li 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.