Key Points
- Senator Cynthia Lummis introduced a Bitcoin reserve bill to reduce U.S. debt, which could potentially offset 18% of the national debt.
- Investment management company VanEck has developed a tool to measure the potential impact of this Strategic Bitcoin Reserve on U.S. debt.
In July 2024, during a Bitcoin conference in Nashville, former President Trump delivered a significant speech. Following this, Senator Cynthia Lummis put forward a Bitcoin reserve bill, designed to lessen the U.S. debt. New research from VanEck suggests that if the bill is passed, Bitcoin has the potential to counterbalance 18% of the national debt before the government is permitted to sell Bitcoin reserves.
VanEck’s Bitcoin Debt Tool
On February 21, 2025, VanEck, an investment management company, unveiled a tool that demonstrates the potential influence of a Strategic Bitcoin Reserve on U.S. debt under certain conditions. This tool allows the government to determine the number of bitcoins to be purchased annually, the average purchase price in 2025, and the average compound growth rate of the BTC price and U.S. debt.
The tool is grounded in VanEck’s research, which estimates when the debt could be counterbalanced by the BTC reserve based on factors such as the BTC price. It’s important to note that this research presumes that the Bitcoin Act proposed by Lummis will be accepted this year without significant alterations.
Understanding VanEck’s Research
VanEck’s research is predicated on the concept of the U.S. treasury amassing a million bitcoins over five years and holding them for two decades. As per the act, during this 20-year period, the bitcoins held in the treasury can only be used to offset the national debt.
According to a study conducted by VanEck in December 2024, by 2049, the U.S. will accumulate one million bitcoins. The total value of these bitcoins will reach $21 trillion, offsetting approximately 18% of the national debt, which is expected to reach around $116 trillion by 2029.
These figures hold true at specific average compound growth rates of U.S. debt and BTC price. VanEck’s researchers predict that the national debt will grow by 5% per year, escalating from the current $36 trillion to $116 trillion in 2049. They also forecast that the BTC value will grow by 25% each year, rising from nearly $100,000 to $21 billion per coin in 2049.
The government could accumulate more than one million bitcoins through seizures, donations, and other means. However, VanEck’s research suggests that the Strategic Bitcoin Reserve will not significantly reduce U.S. debt in the near future, aligning with Lummis’s assertion in July 2024 that the purpose of the bill is to reduce, not eliminate, the debt.
To fully offset the national debt (assuming the growth rates are accurate), the government would need to acquire over five million bitcoins.
Can Bitcoin Fully Offset U.S. Debt?
In an interview in August 2024, Donald Trump suggested that Bitcoin could potentially offset trillions of U.S. debt. However, even without factoring in potential debt growth, the U.S. government would require 36 million bitcoins valued at $1,000,000 each to fully offset the debt.
The issue is that obtaining such a quantity of bitcoins is impossible due to Bitcoin’s maximum supply limit of 21 million. This programmed scarcity is considered one of the primary drivers of Bitcoin’s value.
As of February 2025, the largest holder of Bitcoin is BlackRock, which owns over half a million bitcoins. Another Bitcoin enthusiast, Michael Saylor of Strategy, stated that only one nation-state could own 20% of the Bitcoin network, while he himself owns approximately half a million bitcoins.
Accumulating even one million bitcoins is a challenging task, which is why strong Bitcoin advocate Senator Lummis has given the U.S. government five years to achieve this goal. For the Strategic Bitcoin Reserve to be used to offset U.S. debt, the BTC price must reach $36 billion by 2030. However, even the most optimistic predictions do not foresee such a price increase.
Another issue is the difficulty of converting these bitcoins into cash, as the U.S. would need to find enough buyers. Selling such a large amount could negatively impact the price, devaluing the remaining reserves.
In conclusion, while Bitcoin could potentially serve as a partial solution, Trump’s claim that Bitcoin could fully offset U.S. debt currently lacks a solid foundation.
