NEW DELHI: Indian Prime Minister Narendra Modi flew to neighbouring Bhutan on Tuesday to open a giant hydropower project with the king of the Himalayan nation, where electricity is its key export.

Carbon-negative Bhutan has aggressively promoted hydropower projects, earning substantial revenue by exporting electricity to energy-hungry India, as well as utilising the cheap power for its own drive to mine cryptocurrency.

Modi and King Jigme Khesar Namgyel Wangchuck are scheduled to inaugurate the 1020 megawatt Punatsangchhu-II hydropower project, co-developed with India and among the biggest in Bhutan.

“The visit will also mark another major milestone in our successful energy partnership”, Modi said in a statement as he departed New Delhi.

Tiny but strategic Bhutan is squeezed between giants China and India, and courted by both.

Modi said his visit would deepen ties and that their partnership was a “key pillar” of India’s “neighbourhood first” policy.

India is Bhutan’s main trading partner, making up more than 80 percent of its trade — $1.78 billion overall in 2024-25 — according to India’s commerce ministry.

Bhutan’s embassy in New Delhi says hydropower contributes nearly two-thirds of its total exports.

India’s exports to Bhutan totalled $1.3 billion in 2024-25, ranging from petroleum products to iron and steel, grains and smartphones. Bhutan in turn exported products totalling $513 million, including electricity and construction materials.

New Delhi said in September it would build the first cross-border railway to Bhutan.

Bhutan champions a policy of prioritising “Gross National Happiness” over growth but that has not helped the government deal with widespread unemployment, forcing thousands of young people to leave the country.

Bhutan’s GDP per capita is around $3,718, according to the World Bank.

The mountainous kingdom is seeking to diversify its economy, taking advantage of abundant hydropower and a cool mountain climate to power vast computer farms to mine cryptocurrency.

Its state-run Druk Holding and Investment (DHI) invested $539 million — nearly a fifth of its total GDP — to establish cryptocurrency operations in 2021-2022, according to the World Bank.

It has since developed sizeable crypto holdings, although the exact value is not public.