The case for a bitcoin adoption in Andorra

When speaking of Andorra, people –including Europeans- usually respond, “what is this? A country?... never heard of it”.

Andorra is a small sovereign country in the Pyrenees Mountains, located between France and Spain. 

Andorra on a map

While Andorra has slightly over 77,000 inhabitants, only 30,000 are Andorrans. In other words, 65% of the population is composed of foreign residents who have chosen to live in the country because of how it is managed and the quality of life it offers. Andorra is one of the smallest countries in the world.

Andorra ranks between the UK and France, above Italy, Spain or Japan in terms of GDP per capita. It’s a relatively wealthy country with very low unemployment. 


The main sources of income for the country are:

  1. Tourism & the service industry: the breathtaking mountains, clean air, world-class ski resorts, bicycle and hiking trails, combined with the 4.5% sales tax attract a large number of visitors and shoppers. To illustrate this in international terms, a beer costs 1.40€ and a premium cigar costs 7€.
  1. Foreign businesses:  the absence of crime, predictable policies and low-tax environment, combined with all inclusive health care for your family for 470€/month attracts an increasing number of foreign entrepreneurs and businesses.
  1. Hydro-energy also plays a part in the country's economy. Andorra produces 100 million KWh/year (= 100 GWh/year) and plan on tripling that output in the next 20 years. Remember that there are only 30 000 thousands citizens in the country, that's a lot of energy per citizen !

The country's efficient management is demonstrated by the fact that the government's budget accounts for roughly 25% of the nation's GDP, when government spending in nations such as France account for 55 to 60% of the GDP, or 40% to 50% in the USA.

Yet, a frugal government means good management in Andorra. The crime rate is one of the lowest on earth and the infrastructure is top notch.

Andorrans enjoy 4G everywhere (5G everywhere soon) and fiber optic in every home, well maintained roads and utilities network. The country's hospital also has all the modern equipment and can handle any kind of health care on site. Andorra’s healthcare system tops all global rankings every year.

Andorra operates efficiently and has therefore been attracting numerous entrepreneurs looking for a high quality of life and fair taxes. Since it is a small country in the mountains, it imports most of the things it consumes, which means it has to maintain its relationship with neighbouring France and Spain.

Politically, Andorra is an independent country, one of the oldest countries in Europe, dating back to the year 905.

Andorra within Europe

Andorra is not part of the European Union nor of the Eurozone, but it does use the euro as its currency. This creates a difficult situation for the country, where it relies on a currency that it does not control, emitted by a central bank it has no relationship with, while not benefiting in any way from the meagre reserve assets of the ECB / European Union.

Every time the European Central Bank prints money in order to "help the European economy", it dilutes the purchasing power of Andorrans and the country’s businesses. 

Andorra entered talks a few years ago to reinforce its integration with the EU. At first glance, closer relations with the EU and the Eurozone may seem like a pertinent move for Andorra as it would make them benefit from some of the advantages the EU can offer. 

However, Andorra has not joined because the country has managed to keep a strong backbone: while they would benefit from having access to reserve assets and some other aspects, they don't want all the constraining frameworks that come with joining the EU.

Andorrans want to have control on immigration, and don’t want to charge high taxes as it would deprive them of the quality immigration they get from entrepreneurs looking for a fair government when looking at where to locate their business.

If Andorra was to join the EU, the country would hand over the control of its destiny as a nation, while having to welcome lots of non-chosen and non-wanted immigrants who would arrive because of the free travel laws with the EU. 

However, being outside of the EU means that Andorran banks and government must own their own reserve assets as they don’t have access to the ECBs reserves, even those that look more pale by the day as the central banks keeps on printing money like never before.

You get the picture? The well managed, business-friendly profitable country that managed to stay independent for centuries is now getting dumped on by the ECB.

Now let’s try to discuss the case for bitcoin in Andorra. 

What would Andorra on a bitcoin standard look like?


Unlike the U.S., the UK, France or even Switzerland, Andorra has no army to back its financial institutions and treasury.

The country would therefore have to rely on France (or Spain) in case of  hypothetical aggression. Storing significant quantities of gold, while physically possible, could prove risky.

Moreover, the country doesn’t have access to the sea nor does it have an airport. Moving gold in and out can only be achieved via one of the two roads that connect the country to its neighbours, or… using a helicopter.  

Andorra therefore needs a reserve asset that is liquid throughout the globe, easy to protect and easy to store. And bitcoin is exactly that.

Bitcoin as a reserve asset is relatively easy to store: you simply need a digital signature consisting of 24 words to secure your assets. No army can seize your bitcoins as long as you're able to protect your private keys.

The fact that bitcoin is highly liquid means that if the state needed to dig into those reserves, it could easily be done in terms of minutes, with a simple internet connection.

And for higher security, here’s a fun fact : Andorra consists of seven parishes (i.e. « counties »), and the country's chart of independence granted by Charlemagne is protected in the parliament by seven locks that open with the seven keys held by each parish of Andorra.

Casa de la Vall Andorra

Andorrans implemented a physical version of what bitcoiners know as a “multi-sig” scheme, a few hundreds years ago !

Andorra's bitcoin reserves could be stored for free in a bitcoin multi-signature vault, and be transferred only if 4 (or 5 or even 6) out of the 7 parishes approved the movements of the funds (e.g signed the bitcoin transaction).

Such a strategy would be a very innovative way to sovereignly and securely store the reserves of a country in a hard asset, without relying on a third-party. It would also ensure a maximum level of legitimacy over the use of the reserve funds that ultimately belong to a country's nationals: they can easily be audited online.


In addition to being able to buy bitcoin as a reserve asset like El Salvador did, Andorra could also produce, or precisely “mine”, its own reserve assets (as if the country had gold mines) by simply using its hydro power plants.

In the bitcoin economy, Andorra can already plug in about 3800 AntMiner S19 110TH on hydro power.  Each of those miners would produce about 0.27 BTC each year.

Mining difficulty (i.e. hash rate) will most likely increase, but even mining less than 1026 bitcoins per year could finance the construction of hydroelectric dams, or high-density fluid hydro-power plants, and reinforce Andorra’s energy grid while shortening the time it would take to pay back the initial investment.

Another financial incentive for mining bitcoin in Andorra is the ease of cooling miners down during about 6 months of the year because of the cold climate. Stranded energy (including renewables) could be harvested anywhere in the country without having to transport it. Bitcoins can just be mined where the energy source sits, even if there’s no one around, generating money for the country.

The Andorran government also welcomes foreign investment in new hydropower plants in order to meet the country's objective of tripling its energy production. Solar energy is also part of Andorra’s strategy. Renewables effectiveness can greatly be improved by mining bitcoin when there’s an excess in production.

Bitcoin mining acts as a renewable energy storage facility. Bitcoin mining allows intermittent energy production to operate asynchronously with energy consumption. It’s just a great deal, which happens to be green too !

View in Andorra la Vella

Foreign investments

By making its first steps inside the bitcoin economy, Andorra would also likely attract a significant number of bitcoin entrepreneurs and investors who would benefit from the location of the country.

It would grant them access to the Schengen area with a simple 30-minute drive, without being submitted to EU taxes and legislations. It’s the best of both worlds !

El Salvador has attracted over a hundred foreign innovative companies within 12 months after announcing its Bitcoin Law. Andorra, as a safe and politically stable country with robust banks, world-class infrastructure and connectivity, would simply thrive within a bitcoin economy.

There’s also already a number of well established high net worth individuals within the country, which means Andorra could easily beat El Salvador at the foreign investment game and become a thriving bitcoin innovation hub in Europe.

Switzerland has already sent signals to bitcoin entrepreneurs by implementing clear and favorable regulations, which Andorra could imitate to claim its legitimate slice of the pie.

Banks in Andorra

Banking in Andorra has its own specificities: the country is not part of the Eurozone but does use the euro as its currency, and therefore has, on the positive, easy access to SEPA transfers, but on the negative, must face the nefarious impacts of the ECB’s irresponsible monetary policy.

In simple terms, the ECB dilutes the purchasing power of Andorrans and their businesses, without providing any of the supposed advantages of Quantitative Easing.

Andorran banks therefore need to maintain their own reserves to justify their solvency without the backing of the ECB. Note that those reserves are denominated in euros and are therefore continually being diluted by the ECB’s monetary policy. Bitcoin fixes this.

The Andorran government is doing a great job at controlling its deficit and debt levels (only 35.4% of GDP as of 2019, trending downward from previous years), while maintaining a fiscal pressure under 25%, which is way lower than any other European country.

However, because Andorra is not part of the Eurozone and as such, cannot sell bonds to the ECB to finance its public spending, its credit score has always been relatively lower than neighbouring countries that are effectively not as properly managed as Andorra.

As with any household, there’s no one to bail out Andorra if it defaults. It is important to note that Andorra joined the International Monetary Fund in October 2020. The supposed benefits of integrating the IMF are from a reputation, reporting and financial support standpoint only.

Andorra’s financing ability is supposed to increase after joining the IMF because its bonds are more saleable on the market. But it implies giving up some sovereignty for Andorra. And as such, the IMF requires that Andorra increases its external reserves from 2% to 12% of GDP.

Andorra as a Safe Haven

Standard & Poors rating almost immediately improved, thus improving financing conditions for the Andorran government. This scheme is obviously a risk for Andorra’s sovereignty in the future. And once again, bitcoin reserves fix this.

By accumulating ("stacking") –nationally mined- bitcoins, Andorran banks and treasury could truly own a reserve currency that is instantly exchangeable in any of the world's currencies, or even used to settle international transactions, while being able to easily and safely take custody of it.

It does not require an army, it doesn’t require violence : all it takes is knowledge of a few words. Bitcoin can conveniently be secured through private key encryption, it is defended worldwide by a censorship resistant network that enforces predictable rules.

This treasury could also open a lot of economic activities, as it would allow Andorran banks and businesses to transact outside of the SEPA and SWIFT system, and settle transactions on the Bitcoin blockchain, while allowing Andorran businesses and citizens to make daily transactions on the Lightning network. There’s already a law coming for that in early 2023.

They could obviously still transact in euros with their neighbouring countries. But bitcoin provides this additional resilience to legacy channels while preserving Andorra’s financial independence.

With reserves in a hard asset such as bitcoin, Andorra could sustainably maintain its credit score and financing ability, possibly using its bitcoin reserves as a collateral, while keeping its longstanding sovereignty.

Andorra a Bitcoin country ?

In conclusion, Andorra is a well-managed state, business-friendly environment with high quality connectivity infrastructure that desperately needs to build a stack of reserve currency to maintain its reputation and sovereignty.

It has the capacity to actually produce such reserves on its own. By attracting innovative entrepreneurs who want to enjoy a high quality European lifestyle in a safe environment, the country could climb up some more ranks towards the most prosperous nations on earth, while remaining in control of its future, and that’s great!

Thank you for reading!