How the US Strategic Bitcoin Reserve Will Benefit You

What is a strategic Bitcoin reserve? 

A Strategic Bitcoin Reserve is a national stockpile of Bitcoin. 

In his 2024 campaign for re-election, Donald Trump promised that the United States would hold a Strategic Bitcoin Reserve — which could potentially act as a hedge against inflation and financial instability. 

Think of it as a modern counterpart to the Strategic Petroleum Reserve (SPR), a government stockpile of crude oil meant to be utilized during global disruptions. Just as the SPR helps stabilize energy markets, a Bitcoin reserve could safeguard economic stability in an increasingly digital world.

One proponent described this initiative as “our Louisiana Purchase moment” — in other words, a strategic Bitcoin reserve could expand the United States’ economic potential and help the country establish a pioneering position in the digital asset space. 

Case study: What is the Strategic Petroleum Reserve? 

The Strategic Petroleum Reserve, created during the 1973–74 Arab oil embargo, shows how reserves can help countries fight inflation and navigate crises. 

• Managing supply disruptions: The SPR serves as a tool to stabilize oil markets, calm volatility and discourage price manipulation during periods of uncertainty. The SPR has alleviated oil shortages during emergencies — such as after Russia’s 2022 invasion of Ukraine. 
• Reduced dependence: The SPR helps reduce the American government’s reliance on foreign oil. 
• Material benefits: Historically, the government has sold from the SPR when prices were high and replenished it when prices were low — helping the US government generate profits. 

What are the benefits of Bitcoin?

Before we dive into the benefits of the Bitcoin Strategic Reserve, we should take some time to understand the value propositions of Bitcoin. 

1. Scarcity: With a maximum supply of 21 million coins, Bitcoin is a scarce asset just like gold. This limited supply drives long-term value appreciation, making it an attractive reserve asset in times of inflation or economic uncertainty.
2. Decentralization: Bitcoin operates independently of any central authority, reducing exposure to risks associated with traditional financial systems. Bitcoin’s decentralized nature ensures its value isn’t tied to a single nation’s monetary policy.
3. Borderless Accessibility: As a globally traded digital asset, Bitcoin offers liquidity and accessibility unparalleled by traditional reserves. This can allow governments to deploy assets quickly in response to economic or geopolitical crises.
4. Historical Performance: Bitcoin’s growth over the past decade has consistently outpaced traditional reserve assets like gold and oil. Its historical appreciation suggests it could serve as a powerful tool for boosting government reserves without relying on taxpayer funding.

What’s the case for a Bitcoin strategic reserve?

Let’s walk through the potential benefits of a Bitcoin strategic reserve. 

• Increased Government Asset Value: As Bitcoin’s price appreciates, the reserve's value could grow, strengthening the government's balance sheet. Bitcoin could be used to pay down the national debt and potentially fund projects in infrastructure and education. 
• Inflation protection: During periods of high inflation, the government could leverage Bitcoin's value appreciation to strengthen its financial position. 
• Strengthen the Digital Economy: Establishing Bitcoin as a reserve could signal confidence in innovative monetary systems, potentially attracting investments and helping to strengthen the digital economy. 
• Diversification: A national Bitcoin stockpile could help complement traditional holdings like gold and reinforce the stability of the US dollar. 

Case study: El Salvador Bitcoin reserve 

El Salvador became the first country to adopt Bitcoin as a treasury asset in September 2021. Currently, El Salvador holds more than 5,500 BTC. 

El Salvador went even further by introducing more crypto-friendly policies — offering free BTC through a state-sponsored wallet, requiring all businesses to accept BTC as payment, and even setting up volcano-powered Bitcoin miners. 

Let’s walk through some of the benefits that El Salvador has seen in its Bitcoin experiment. 

Financial gains: El Salvador’s decision to adopt Bitcoin as a reserve asset has resulted in an estimated 127% gain on their investment.

Remittances: It’s estimated that 20% of El Salvador’s GDP is remittances — money sent from abroad. Bitcoin makes it easier, cheaper, and more accessible to send remittances across national borders. 

Digital investment and tourism: In an interview with Time Magazine, El Salvador President Nayib Bukele claimed that Bitcoin brought the country increased business investment and tourism. 

How would a Bitcoin strategic reserve work? 

Let’s walk through how the United States may acquire and secure a strategic reserve (even without spending taxpayer dollars): 

Using seized Bitcoin as a stockpile 

The U.S. already holds more than 200,000 BTC, which were seized from criminal operations like the Silk Road marketplace. 

So far, only around 5% of this Bitcoin has sold off in auctions. However, it’s likely that the American government has missed out on financial appreciation through its BTC sales. 

For example, the US government sold $216 million worth of BTC in March 2023. Since then, the price of BTC has increased by almost 4x — which means the US government potentially missed on $600 million of gain. 

Some politicians, like Congressman Ro Khanna, have endorsed using the remaining seized assets to establish a strategic Bitcoin reserve. 

The Bitcoin ACT 

In July 2024, Senator Cynthia Lummis of Wyoming introduced the BITCOIN Act to establish a Bitcoin strategic reserve. Let’s walk through the act: 

• Bitcoin purchases: A 1-million-unit purchase program over 5 years, capped at 200,000 BTC per year. All purchases will be done in a transparent manner to prevent market disruption. 
• Funding: Bitcoin purchases are not funded by taxpayer dollars, but will instead be funded through treasury remittances, adjusted gold certificates, and a reduction in reserve banks’ surplus funds cap. 
• Holding period: A 20-year minimum holding period for purchased Bitcoin.
• Storage: Decentralized vaults located across the United States managed by the Treasury Department designed to hold Bitcoin reserves. The Treasury Secretary would be responsible for selecting locations based on geographic distribution and security. 
• Seized Bitcoin: All Bitcoin currently held by federal agencies will be transferred to the strategic Bitcoin reserve. 

Some analysts project that the program could halve the national debt over 20 years without taxpayer burden. Of course, this assumes that Bitcoin’s price will continue to appreciate over time. 

How would a Bitcoin strategic reserve impact Bitcoin investors? 

It’s likely that a Bitcoin strategic reserve would increase the price of BTC and benefit existing investors. 

• Increased demand and legitimacy: Many skeptics see Bitcoin as a ‘risky’ asset. A U.S. Bitcoin reserve would legitimize Bitcoin for institutions and governments all over the globe. 
• Strengthened position as “digital gold”: If Bitcoin is held alongside gold in government reserves, it would strengthen the narrative that Bitcoin is ‘digital gold’. 
• Innovation and adoption: Government endorsement could drive further development of crypto infrastructure and technologies.

Criticisms of a Bitcoin strategic reserve 

Let’s walk through some common criticisms of a Bitcoin strategic reserve. 

1. Necessity: Some argue Bitcoin lacks the strategic importance of resources like petroleum, which directly influence national security and energy stability. At this time, Bitcoin’s utility in critical infrastructure, defense, and disaster response is unproven. 
2. Perception of giveaways: A Bitcoin reserve could be seen as a government giveaway for existing investors. Critics claim that government purchases would artificially inflate Bitcoin's price, creating the appearance of favoritism towards certain groups and/or industries.
3. Volatility concerns: Bitcoin’s high price volatility poses substantial risk for a government portfolio. Critics highlight instances where Bitcoin’s value has fallen by more than 50% in short periods, questioning its reliability as a stable reserve asset.

In conclusion  

The strategic Bitcoin Reserve offers the potential to enhance national stability, address economic challenges, and create long-term benefits for Bitcoin investors.