The idea of using Bitcoin to cut down U.S. national debt is being discussed after Donald Trump's speech at the Nashville conference. VanEck examines this possibility.
Findings of VanEck’s Study
According to VanEck's latest findings, the U.S. government would need to purchase one million bitcoins over the next five years and hold them for 20 years. By 2049, their value could grow to $21 trillion, covering only 18% of the national debt, projected to rise to $116 trillion. To achieve these results, Bitcoin's price must grow at an average rate of 25% annually, while national debt is expected to increase by 5% each year. However, acquiring this many bitcoins presents challenges due to the limited supply.
Prospects of Fully Paying Off Debt
Despite rumors that Bitcoin can completely eliminate U.S. debt, VanEck's research suggests otherwise. Over five million bitcoins would be needed at current projected growth rates. Yet the total supply of bitcoins is capped at 21 million, making this impossible. Furthermore, even if Bitcoin reached $1 million per coin, the government would need 36 million bitcoins to clear the debt, which isn't feasible without crashing the market.
Bitcoin as a Partial Solution
While Bitcoin could help reduce debt, it is far from a complete solution. As Senator Lummis initially stated, the goal of the reserve is to reduce debt, not eliminate it entirely. VanEck supports this view, showing that a strategic Bitcoin reserve may assist but is not a cure-all. Following Senator Lummis's bill, similar proposals are being considered across other states, including Florida, Maryland, and Ohio.
While a strategic Bitcoin reserve could partially help reduce the U.S. national debt, it does not solve all financial issues. More comprehensive strategies are needed for a significant reduction.
