Bitcoin is standing at a very unique place in the current United States political sphere. For the first time in its history, both presidential candidates are debating the mere efficacy of bitcoin, and what it means for the future of the nation. It has risen from a niche cyberpunk experiment to being a significant strategic consideration for the US. While the current administration continues to sell off bitcoin, the leading GOP candidate is actively talking about ending the selling and instead adding bitcoin to the nation’s strategic asset reserves.
What does all of this mean for the future of the United States? How might each outcome unfold, if the US keeps selling bitcoin, versus establishing it as a critical component of the nation’s asset reserves?
Bitcoin Stockpiles By Country
To get a better idea of where the US stands in the Bitcoin race, first take note of how much bitcoin the US holds compared to other nations around the world.
- United States: 203,000 BTC
- China: 190,000 BTC
- United Kingdom: 61,000 BTC
- Germany: 4̶9̶,8̶5̶8̶ B̶T̶C̶
- El Salvador: 5,853 BTC
You’ll notice that Germany has been crossed out from the top Bitcoin holders among countries, and that is because they recently sold off the nearly 50,000 BTC they once held. According to BitcoinTreasuries, Ukraine now holds the #4 spot, with 46,351 BTC.
How The US Acquired Its Bitcoin
You may wonder where the US is getting all of their bitcoin from. Despite the fact that there is an infinite amount of cash at the Federal Reserve, the US isn’t using that printed money to buy up bitcoin. Instead, the US government acquired the vast majority of its bitcoin through law enforcement and criminal confiscation.
- In 2013, the US government seized 144,336 BTC from the Silk Road dark web marketplace.
- In 2017, the US government seized 38 BTC from the BTC-e exchange, which was involved in money laundering and other criminal activities.
- In 2020, the US government seized 69,370 BTC connected to a hack of the Silk Road marketplace.
- In 2021, the US government seized more than 50,676 BTC from James Zhong, who unlawfully obtained the bitcoin through exploiting a vulnerability in the Silk Road marketplace.
- In 2021, the US government seized nearly 64 BTC from the DarkSide ransomware group.
How Much Bitcoin Has The US Government Sold?
Taking a look at data from Dune Analytics, you can see the selling trend accelerating into 2024.
After stockpiling over 236,000 BTC, throughout the drawdown of 2022, the US government has been methodically selling that bitcoin back onto the market throughout 2023 and 2024, coinciding with bitcoin’s bull market recovery.
The US government is quite literally trading their bitcoin.
Despite still holding more than 200,000 bitcoin, the most recent sell off in late July put the US government’s Bitcoin balance below 1% of the total supply. An utter long-term strategic failure, and here’s why.
The Risks Of Selling Bitcoin
While the US government sells its bitcoin in order to uphold the strength of its own fiat currency, that opens the door for other countries to capitalize on the US’s short-sighted decision making by bolstering their own Bitcoin reserves, enabling them to gain relative financial strength against the US over the long run. It’s a concept called game theory.
1. Game Theory
Game theory is based on the assumption that players in a competition behave rationally and seek to act in their own best interests to maximize their own benefits. You can also think of it as “zero-sum theory” because it assumes that there is a fixed amount of resources available, meaning that one player’s gain will come at the expense of another player.
In the context of a fixed supply asset like bitcoin, one nation seeking to acquire bitcoin comes at the expense of other nations being unable to acquire that bitcoin for themselves. We saw this play out live between China and the US in 2021. As bitcoin had grown since 2009, China historically emerged to become the top Bitcoin-mining nation in the world. But in the midst of the 2021 bull run, China cracked down on Bitcoin mining, banning it within the country. As a result, we saw a flood of Bitcoin miners migrate to the United States, which made the US the world’s largest miner of bitcoin, dropping China down to the #2 spot.
Given that bitcoin is a fixed supply asset poised to disrupt traditional centralized payment networks that today’s world relies on, the US government’s selling of bitcoin demonstrates weakness to other nations, and an opportunity to close the gap of financial dominance that the US has long enjoyed over other nations.
2. Opportunity Cost
Purely looking at the potential fiscal losses the US is incurring against itself, it’s clear that selling bitcoin today could prove to be a very, very costly decision.
Since January 2023, the US government’s Bitcoin stockpile has dropped from 236,000 BTC to 203,000 BTC. Selling 33,000 BTC may not sound like a lot relative to the total amount, but consider this amount if bitcoin were to become more valuable than today’s largest asset classes.
Take a look at the data from Savills World Research to get an idea of the difference in scale we’re dealing with:
- At $12.2 trillion, flipping gold, 33,000 BTC would be worth ~$19.2 billion.
- At $98.9 trillion, flipping equities, 33,000 BTC would be worth ~$155 billion.
- At $379.9 trillion, flipping the total real estate market, 33,000 BTC would be worth ~$597 billion.
The entirety of the US government’s 203,000 BTC would be worth more than $3.6 trillion dollars, compared to its value today of just $13 billion.
Given that bitcoin carries *infinitely* superior store of value properties to real estate (and all other asset classes), there is no reason to think that bitcoin couldn’t one day surpass the value of real estate.
And if the government were to empty its Bitcoin balance prior to it flipping the real estate market, that’s trillions’ worth of lost capital that could have been stored in 21st century digital capital.
3. Loss Of Global Dominance
The ultimate consequence of choosing to sell off the US’s remaining bitcoin: the US, and its currency, lose financial dominance over the rest of the world.
As inflation becomes more pervasive, a nation’s economy slows down. In the event of hyperinflation, the country and its citizens are no longer able to effectively conduct trade as their currency is rapidly outpacing the true value of any goods and services. The end result being that its economy comes to a grinding halt.
The US dollar is already in the midst of great threat to its dominance as the BRICS movement grows larger and less international trade relies on the dollar. How then will the US effectively balance its status as a global superpower while upholding its economic integrity?
What Should The US Do Instead?
One of the leading presidential candidates in the US has publicly suggested that instead of selling the US’s Bitcoin reserves, the country should actually commit to holding 100% of its bitcoin long term and adding even more as part of its strategic asset reserve.
This candidate was Donald Trump.
He’s got the right idea, and while other candidates have openly demonized Bitcoin holders for threatening the US dollar’s integrity, any chance of maintaining its strength requires doubling down on Bitcoin ownership.
Taking The US Strategic Reserve A Step Further
There is a choice that our political system will have to make moving forward into the 21st century. Real estate capital, financial capital, and all other forms of money currently tied up elsewhere are all migrating to digital capital.
Like the movement towards online businesses after the emergence of the internet, companies and countries alike will not be able to keep themselves afloat if they don’t adapt to the competition. If the US really wants to stand apart from other nations, it would take a hint from El Salvador and legalize bitcoin as a valid currency to use for transactions, alongside the US dollar. Staying true to the principles of freedom that bitcoin upholds: Let it compete with all other currencies for trade. If it proves to be useless, let the free market determine it. But if it proves to be a great improvement to the lives of those who choose to use it, then let the free market raise it up to its fair value in the economy.
The more that governments try to place regulations around bitcoin, the more difficult it will be for society to adapt and seamlessly integrate it into their lives. Trying to prevent it from competing with the USD or any other currency for that matter only adds more friction, and inevitably won’t stop bitcoin from doing what it’s designed for. The US and all other nations need to embrace bitcoin’s innovation and lean into the disruption it inherently creates.
Final Thoughts
What’s more American than clinging to its old ways of monetary policy is leaning into the future that humanity’s innovations create for us. Taking the training wheels off of our inflationary monetary policy for the sake of a better, more prosperous, hyperbitcoinized future is what the true American spirit would want. Freedom above all else.
Of course, admitting and adapting an inferior monetary policy to a permissionless, nationless network requires a great deal of humility and nobility for any world leader. Not to mention handling the great deal of work, legal restructuring, and inevitable societal backlash that will arise from such drastic reshaping of society. But just as the bravery it took for pioneers to sail across the world in search of new beginnings, so too will humanity need that same bravery to venture into and embrace cyberspace.
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