Bhutan was an interplanetary-area polity of Earth. It was a small nation in area (approximately 40,000 square kilometers) and in population (approximately 1 million baselines throughout the Information - and Interplanetary Ages) that sat on the southern edge of the Himalayan Mountains. Its terrain ranged from a thin southern border of tropical plains to subalpine mountainous heights in the north. The mountainous terrain and landlocked location allowed Bhutan to remain remarkably isolated from the rest of Earth even into the first century AT, when Bhutan limited visitors to thousands per year.
Bhutan's history is rather vague prior to the Industrial Age. Archeological evidence suggests initial settlements as recently as 4000 BT, while surrounding nations show signs of civilization millennia earlier. The nation converted to Buddhism around 1200BT and was a noted center of Buddhist monasteries. Much of its early history was shaped by relations between the government and various Buddhist schools, including a number of civil wars. It was also a poorly organized nation until the 300BT period, when its patchwork of warring fiefdoms were unified under a religious and military leader, Shabdrung Ngawang Namgyal. (Who, ironically, was from the neighboring nation Tibet and fled into Bhutan to avoid persecution in Tibet.) Ngawang Namgyal is considered critical in forging Bhutan's national identity.
Despite occasional internal unrest, Bhutan had remained politically independent throughout its history until the arrival of Europeans in the region. Even so, European empires - particularly the British and its imperialist megacorp, the British East India Company - were hard pressed to militarily defeat Bhutan. The Anglo-Bhutanese War (or Duar War) of 105BT forced Bhutan to concede some territory. Notably, this was territory Bhutan had recently conquered and was restive, so the loss was not crippling. Afterward, Bhutan improved ties with Britain and served as a mediator for relations with Tibet.
In 59BT, the invasion of Tibet by China and China's claim to Bhutan and surrounding territories led Bhutan to request British aid. In exchange for continued domestic autonomy, Bhutan accepted British suzerainty. This status would continue until India was granted independence from Britain in 22BT. Given the choice between joining India and independence, Bhutan selected independence, albeit with its diplomacy and defense determined by India. (Bhutan revised its relationship with India to take control of its foreign affairs in 38AT, but throughout the remainder of its known history Bhutan would be dependent on Indian military aid and training.)
Unlike many nations in the region, Bhutan did not put an emphasis on rapid modernization in the first century AT, instead preferring to emphasize "national happiness." Its modernization, climbing up from a backwater subsistence agricultural society to an information age society, was handled slowly and carefully. Traditional cultural practices were not just protected, they were enforced. As late as 150AT, Bhutanese were required to adhere to a national dress code in many occasions.
However, Bhutan did begin looking for sources of foreign trade income beyond its traditional forestry and agricultural exports to India. In the first decades AT, it began building a series of hydroelectric dams to export electricity to energy-starved India. With its mountainous terrain and regular monsoon season, Bhutan was estimated to be able to build 25 gigawatts of economically viable hydroelectric projects. Due to a lack of funding and small population, this process started slowing. By 50AT, its dams were producing barely a gigawatt of electricity. However, the rapid industrialization and economic growth of China to Bhutan's north provided an additional source of investment. By 75AT, Bhutan completed 15 gigawatts of hydroelectric projects. Many of the dams had pumped storage features (like secondary, low altitude reservoirs) to act as reversible, multi-gigawatt "batteries" for the contemporary wind and solar power projects that were proliferating in Asia.
Bhutan was not alone in its hydroelectric potential. Other territories on the edge of the Himalayan Mountains, the nation of Nepal and the Indian states of Sikkim and Arunachal Pradesh, benefitted from the same terrain and monsoon rains. However, for various reasons (Nepal's internal unrest, India's stifling bureaucracy), Bhutan began the process earlier and took it to fruition sooner than its neighbors. This left Bhutan with a surfeit of hydropower engineering and construction capabilities, and the profits resulting from its own completed hydroelectric projects were able to fund new projects. From about 65AT to 100AT, Bhutan's government-owned electric companies funded hydroelectric projects throughout the Himalayas, including the giant Yarlung Tsangpo Grand Canyon Dam in Tibet, which could produce up to 40GW. Bhutan's companies were hardly alone in their investment as substantial Indian and Chinese funds went into the projects, but by 100AT Bhutan's determined and coordinated financial maneuvering had shifted ownership largely into Bhutanese hands.
This energy (and financial control of the energy) arrived at an excellent time. By the 80s AT, Earth was starving for fossil fuels and energy in general. Wars were being fought over dwindling hydrocarbon supplies, while renewable energy resources and nuclear power was not taking up the slack with sufficient speed. In contrast to many "developing nations" (those with limited industry and infrastructure) that squandered sudden wealth, Bhutan intelligently invested its profits to improve services for its population and to diversify its industry. More than just exporting electricity to energy-starved China and India, Bhutan also used excess electricity to generate ammonia, artificial fertilizers, aluminum, titanium, and hydrocarbons (via the Fischer-Tropsch process).
The economic diversification, which made Bhutan a well-off nation, also happened at the correct time. The proliferation of newly-developed fusion reactors, biofuels, and improved hydrogen storage techniques made the need for Bhutan's hydroelectricity less critical (and thus less profitable) by the 120s.
The following two centuries of the Interplanetary Age were stable and profitable ones for Bhutan, unlike many contemporary nation-states. Bhutan was bound by a tight network of cultural memetics and the government carefully filtered the new technologies and social trends that were allowed into the nation. The cause for most social rancor in an otherwise prosperous time was the gradual domination of the Dzongkha language, which had been established as the primary language of education and government in 2AT. Despite a small population, Bhutan had been a melange of 19 languages as late as 50AT, but increasing literacy - based on schools primarily teaching Dzongkha - led to a steady erosion of other languages. By 200AT, Bhutan was dominated by Dzongkha, with only Nepali contending. However, the Third Century AT saw both Nepali and Dzongkha acquire large quantities of Chinese and English loan words as foreign technologies and memes entered Bhutan.
The roots of Bhutan's downfall grew in this era of internal stability. The problems were several-fold.
First and foremost, ecological notions slowly percolated into Bhutan, which included negative attitudes toward the massive hydroelectric dams. The dams had greatly altered the river systems upstream and downstream of the dams, blocking normal flow of sediments and migration of aquatic species despite some provisions to counter just those issues. The end result of this was political battles that gradually de-funded dam maintenance (especially, and ironically, dredging of accumulated silt in reservoirs behind the dams). Less expensive, more ecologically friendly alternatives were always promised: banks of fusion reactors to replace the dams, new breakthrough nanotech or synsect dredging techniques, nanotech maintenance of the dams, etc. However, the promises were rarely implemented. By the late 200s, the Bhutanese dams were only able to operate as run-of-the-river power generators with negligible reserves and little ability to function as pumped-storage systems.
Secondly, the loss of stable revenue from the dams exposed Bhutan's economy more closely to the rest of the world's hectic markets in the early 300s. Thirdly, complacency had left the Bhutanese population without the skills to shift with technological trends, so new directions for the national economy were hard to arrange. Fourth and finally, the internet and related modern communications undermined Bhutan's traditional memetic defenses. Arguably, the loss of so many local languages was a factor, too, as the loan word-laden Dzongkha allowed foreign memes to spread rapidly through the population.
As a result of those issues, Bhutan drifted through a series of economic depressions in the 300s and 400s and its standard of living dropped. Many Bhutanese emigrated to thriving centers of population, leaving Bhutan unable to afford up-to-date blue goo defenses. Its silted dam basins and pastoral fields thus became notorious for hosting wild genemod and nano threats that were easily cleaned up in neighboring districts. Various international ecological organizations eventually established permanent chapters in Bhutan to handle the mess, billing a moribund government for most of its revenue. It's hard to say if there was a functional Bhutanese government by the Technocalypse, but there certainly wasn't a government by 541AT.
Unlike Tibet and other neighbors, Bhutan never heavily exported its culture or established an offworld presence. It was an inward-focused nation. By the Great Expulsion, there were less than 100,000 Bhutanese nationals to expel and they were dispersed among many near-Earth habitats. Thus, outside of historical documents, little trace of Bhutan exists in the 11th millennium AT.