Investment manager VanEck has proposed the establishment of a US Bitcoin Reserve as a potential solution to reduce the national debt. This proposal aligns with Senator Cynthia Lummis's BITCOIN Act, which aims to acquire one million BTC by 2029.
VanEck's analysis suggests that a US Bitcoin Reserve could potentially reduce the national debt by up to 35% by 2050. The value of the Bitcoin Reserve is projected to reach $42 trillion by 2049, assuming a conservative annual growth rate of 25%. This estimation takes into account the expected increase in the US national debt, which is estimated to rise by 5% annually from $37 trillion in 2025.
VanEck's Head of Research, Matthew Sigel, supports the establishment of a US Bitcoin Reserve, highlighting the potential benefits it could bring to fiscal stability and as a hedge against fiscal unsustainability and geopolitical uncertainty. Sigel suggests that even a small allocation of Bitcoin could provide significant advantages, and a gradual implementation of a Bitcoin Reserve could align with existing political interests.
VanEck estimates that acquiring one million BTC would cost around $320 billion. To mitigate financial strain on the government, they advocate for a gradual accumulation strategy. This approach would help manage the costs and ensure a sustainable implementation of the Bitcoin Reserve.
Sigel also emphasizes the potential for Bitcoin mining to support US energy goals and contribute to energy independence and grid resiliency. This highlights the broader benefits that a US Bitcoin Reserve could bring beyond reducing the national debt.
While the Federal Reserve currently prohibits government Bitcoin purchases, future administrations may reconsider this stance. The discussion around a US Bitcoin Reserve reflects the need for innovative solutions to address the national debt and the potential for Bitcoin to stabilize the US economy.