The United States could significantly reduce its national debt in the next 24 years by creating a reserve of 1 million Bitcoin, as proposed in Senator Cynthia Lummis’ bill. Asset management firm VanEck has estimated that this reserve could cut the national debt by 35% by 2049.
The Estimate
VanEck’s estimate assumes a compounded annual growth rate (CAGR) of 25% for Bitcoin, which would increase from $200,000 in 2025 to $42.3 million by 2049. During the same period, the national debt is expected to grow at a CAGR of 5%, rising from $37 trillion to $119.3 trillion.
The Reserve’s Impact
According to VanEck’s head of digital asset research, Matthew Sigel, and investment analyst Nathan Frankovitz, the reserve could represent an estimated 35% of the national debt by 2049, offsetting approximately $42 trillion of liabilities. This optimistic scenario assumes that Bitcoin’s CAGR starts from a price point of $200,000 in 2025.
Challenges Ahead
However, for VanEck’s estimate to become a reality, Bitcoin would need to more than double its current price of $95,360. Additionally, the estimated growth rate of 25% is aggressive and may not be sustainable in the long term.
Global Implications
If the US were to create a Bitcoin reserve, it could have far-reaching implications for global trade and finance. As noted by Sigel, countries like those in the BRICS alliance (Brazil, Russia, India, China, and South Africa) may adopt Bitcoin as a settlement currency, potentially avoiding the parabolic increase in USD sanctions.
The Lummis Bill
Senator Cynthia Lummis’ bill proposes to create a reserve of 1 million Bitcoin, which could be used to offset national debt liabilities. The reserve could be financed through various means, including repurposing existing assets seized by law enforcement or selling a portion of the US gold reserves.
Impact on Global Finance
The creation of a Bitcoin reserve would have significant implications for global finance. As noted by Sigel and Frankovitz, the adoption of Bitcoin at the state, institutional, and corporate levels could bolster its growth rate estimates. Furthermore, the increased use of Bitcoin as a currency could lead to a more stable and efficient global financial system.
The Potential for Executive Action
Some speculate that President-elect Donald Trump’s incoming administration may take executive action on Bitcoin, potentially designating it as a reserve asset. However, this remains speculative at present, and the Lummis bill has yet to be reviewed by the Senate or House.
Conclusion
Reducing national debt through a Bitcoin reserve is an intriguing concept that warrants further exploration. While VanEck’s estimate assumes aggressive growth rates for Bitcoin, it highlights the potential for this asset class to have a significant impact on global finance.
Estimated US National Debt Rise with Bitcoin Reserve Growth from 2025 to 2049
| Year | US National Debt (trillions) | Bitcoin Value (millions) |
| — | — | — |
| 2025 | $37 trillion | $200,000 |
| 2040 | $50 trillion | $1.4 million |
| 2045 | $65 trillion | $7.3 million |
| 2049 | $119.3 trillion | $42.3 million |
Estimates US National Debt and Bitcoin Reserve Holdings and Bitcoin Value at a Presumed CAGR of 25%
| Year | US National Debt (trillions) | Bitcoin Value (millions) | % of Global Financial Assets |
| — | — | — | — |
| 2025 | $37 trillion | $200,000 | 0.22% |
| 2049 | $119.3 trillion | $42.3 million | 18% |
Proposed Financing Options for the Bitcoin Reserve
- Repurposing Seized Assets: The US could repurpose existing assets seized by law enforcement to finance the Bitcoin reserve.
- Selling Gold Reserves: A portion of the US gold reserves could be sold to finance the Bitcoin reserve, without printing money or using taxpayer funds.
- Emergency Support Functions: The remaining 801,900 Bitcoin required for the reserve could be financed through Emergency Support Functions.
Global Adoption and Impact on Bitcoin’s Price
As countries like those in the BRICS alliance adopt Bitcoin as a settlement currency, its price may increase due to increased demand. This could lead to a more stable and efficient global financial system.
Sources
- VanEck report (Dec 20)
- X post by Matthew Sigel (Dec 21)
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