Senator Cynthia Lummis’ Bitcoin reserve bill, introduced after Trump’s pro-Bitcoin speech in July 2024, aims to use BTC to ease the national debt. A new study by VanEck explores how effective this strategy could be.
Can Bitcoin Reduce U.S. Debt? VanEck’s Findings Explained
Their research suggests that if the U.S. government adopts a Strategic Bitcoin Reserve, it could offset 18% of the national debt before selling off any holdings. However, fully eliminating debt through Bitcoin alone seems unlikely.
VanEck’s Bitcoin Debt Calculator
📅 Release Date: February 21, 2025
🔍 Goal: Assess Bitcoin’s impact on U.S. debt
📊 Factors Considered: BTC purchase rate, price growth, national debt increase
VanEck’s tool allows users to simulate how BTC reserves might impact the national debt. It calculates potential outcomes based on Bitcoin price growth and government BTC purchases. However, the study warns that these predictions rely on past trends and assumptions.
Key Takeaways from the Research
- The U.S. plans to accumulate 1 million BTC over five years and hold them for 20 years.
- By 2049, these reserves could be worth $21 trillion, offsetting 18% of the projected $116 trillion debt.
- The study assumes Bitcoin will grow 25% per year, reaching $21 million per coin by 2049.
- National debt is expected to grow 5% annually, increasing from $36 trillion to $116 trillion.
Despite the potential benefits, Bitcoin alone won’t erase the U.S. debt anytime soon. Even Lummis acknowledged this, saying the goal is to reduce debt, not eliminate it.
Can Bitcoin Fully Pay Off U.S. Debt?
In August 2024, Donald Trump claimed that Bitcoin could potentially erase trillions in debt. But is that realistic?
🔹 To fully cover $50 trillion in debt by 2035, the U.S. would need 36 million BTC at $1M each.
🔹 Bitcoin’s total supply is only 21 million, making this scenario impossible.
🔹 Even accumulating 1 million BTC is challenging, requiring five years under Lummis’ plan.
Major Bitcoin holders like BlackRock (500K BTC) and Michael Saylor’s MicroStrategy (500K BTC) highlight how scarce BTC is. Even if the U.S. amasses 1M BTC, selling them without crashing the price would be difficult.
Why Selling Bitcoin Reserves Is Complicated
- Dumping BTC in large volumes could crash its price, reducing its effectiveness in debt repayment.
- Finding buyers for such large amounts wouldn’t be easy.
- Bitcoin’s scarcity means competing governments or institutions could limit the U.S.’s ability to buy more.
Even the most bullish BTC predictions don’t suggest Bitcoin could single-handedly eliminate U.S. debt. Instead, it may serve as a supplementary asset to reduce the burden.
Bitcoin as a Partial Debt Solution
While Bitcoin won’t wipe out U.S. debt, it could become a valuable financial tool for the government. The Strategic Bitcoin Reserve may provide long-term benefits, but relying solely on BTC for debt repayment isn’t feasible.
As VanEck’s research suggests, Bitcoin could offset 18% of the national debt—but a full payoff remains out of reach.
What do you think? Could Bitcoin play a bigger role in national debt reduction, or is this strategy flawed?
