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- The U.S. national debt has reached $35.14 trillion, prompting discussions on a strategic Bitcoin reserve.
- A report by River suggests that holding 5% of the total Bitcoin supply could help the U.S. manage its debt.
The United States faces mounting challenges as its national debt reaches a staggering $35.14 trillion. As the 2024 presidential election approaches, more and more people have been talking about the economy and possible ways to address the issue of debt. Among the less traditional concepts is the notion of creating a strategic Bitcoin reserve to alleviate the financial pressure on the country.
River, a Bitcoin exchange based in the United States, presented in a recent report how a Bitcoin reserve might help to solve the problem of the increasing national debt. As stated in the report, if the United States were to obtain and maintain 5% of the total Bitcoin supply, it could present a challenge to the country’s debt management. This idea is based on the historical trend of Bitcoin, which has registered an annual compounded rate of more than 60% in the last decade.
According to the report, the U.S. could benefit from investing in an asset such as Bitcoin, which has proven to have higher growth rates than fiat currencies. This notion has come to the fore at a time when Bitcoin is being noticed by institutional investors and policymakers.
Trump and Lummis Voice Support for Strategic Bitcoin Reserve
The proposal that was initially called the ‘strategic purchase of bitcoins’ has gained backing from some politicians. Former President Donald Trump recently touched upon the concept with the CEO of Bitcoin Magazine, noting its possible place in the American economy. Also, Senator Cynthia Lummis has proposed forming a Bitcoin reserve.
At the Bitcoin Conference 2024, Lummis recommended that the US government should buy one million Bitcoin or 5% of the total circulation within the next five years. She asserted that this could help cut the national debt in half by 2045.
This is the solution.
This is the answer.
This is our Louisiana Purchase moment!#Bitcoin2024 pic.twitter.com/RNEiLaB16U
— Senator Cynthia Lummis (@SenLummis) July 27, 2024
Lummis referred to this proposal as a modern-day Louisiana Purchase, arguing that purchasing such a large amount of Bitcoin is a potential new direction for the country’s financial future. This has created controversy within the political and financial sectors, with her supporters perceiving it as a radical solution to the national debt.
US Already Leads in Government Bitcoin Holdings
The United States already holds a large amount of Bitcoins, with 213,246 BTC in its assets. This is more than any other country’s holdings, and it gives the U.S. a good starting point if it wishes to increase its Bitcoin holdings in the future. Thus, the U.S. can become a world leader by increasing its share to 5% of the total number of bitcoins and, perhaps, help solve some of its economic problems.
The idea of using Bitcoin to solve the issue of national debt is not new. El Salvador, a country in Central America, has also adopted Bitcoin and has already built a strategic Bitcoin reserve of 5,800 BTC with a value of $340 million. This investment has been profitable as it has given the country a 38% return on investment.
