VanEck Research Head Details How a Strategic Bitcoin Reserve Could Help the US Debt Problem

Matthew Sigel, Head of Digital Assets Research at VanEck, outlines how the strategic Bitcoin Reserve could help the United States’ growing debt problem.

His disclosure makes some assumptions for the growth of Bitcoin and the U.S. debt in the future. The recent commentary comes shortly after Sigel confirmed that VanEck endorses the concept, especially after asset management giant BlackRock declined to do so.  

Sigel’s calculations present a conservative picture of how Bitcoin reserves could reduce the burden of rising national debt.  

How the Strategic Bitcoin Reserve Could Help National Debt Problem

For context, the model assumes that by 2025, the U.S. Treasury starts acquiring 1 million Bitcoin over a five-year period at an average price of $250,000 per BTC. This is in line with Senator Cynthia Lummis’ proposal. 

Assume the US Treasury starts buying 1M Bitcoin over 5 years at a starting price of $250k.

Assume US debt grows at 5% (vs. last 10 years 8% CAGR) & BTC price compounds at 25%.

In such a scenario, the US Strategic BTC Reserve would hold assets equivalent to 44% of debt by 2050. pic.twitter.com/sm7RhRAa8d

— matthew sigel, recovering CFA (@matthew_sigel) November 29, 2024

Sigel also assumes that the national debt will grow at 5% annually—a reduction compared to the past decade’s 8% compounded growth rate—reaching approximately $119.3 trillion by 2049. Additionally, he estimates Bitcoin’s price to grow at 25% annually, much lower than its historical 50% 10-year compound annual growth rate.  

Under these assumptions, the value of the Bitcoin reserve by 2049 would reach $52.9 trillion, equivalent to 44.4% of the projected national debt. This analysis has fueled further discussions. 

Some questioned whether a 25% annual growth rate for Bitcoin is realistic over 25 years. Sigel pointed out Bitcoin’s historical performance but suggested lowering the projection to 20% CAGR, which would still result in the reserve holding 30% of federal debt.  

He further stated that even if debt growth increased to 10% annually, Bitcoin’s 25% CAGR would still lead to the reserve accounting for about 15% of U.S. debt.  

Bitcoin Reserve Discussions Gaining Momentum

Notably, the proposal for a Bitcoin reserve has gained traction among U.S. policymakers. Senator Cynthia Lummis introduced a bill earlier this year proposing the U.S. government acquire 1 million Bitcoin, or roughly 5% of Bitcoin’s total supply, to stabilize its fiscal position. 

Lummis has argued that Bitcoin’s finite supply and consistent appreciation make it an ideal asset to counter rising deficits. She compared this plan to the Louisiana Purchase, describing it as an important moment for U.S. economic security.  

The bill is under consideration for bipartisan debate. While some lawmakers recognize Bitcoin’s potential as a long-term reserve asset, others are skeptical about its volatility. 

However, Lummis is optimistic. Forthcoming president Donald Trump himself has voiced support for a Bitcoin reserve, describing it as part of his broader plan to make the U.S. a global leader in cryptocurrency innovation.  

Meanwhile, at the state level, Pennsylvania has already introduced a bill to allocate 10% of the state’s fund to a strategic Bitcoin reserve. Similarly, Texas lawmakers have also proposed the adoption of a strategic Bitcoin reserve. 

The bill to establish a ‘Strategic Bitcoin Reserve’ in the state of Texas was filed live on X spaces. History has been made. pic.twitter.com/8IZdoMmKYj

— Dennis Porter (@Dennis_Porter_) December 12, 2024

Globally, countries like El Salvador have adopted Bitcoin as a national reserve asset. Bhutan has continued to purchase and distribute Bitcoin. Also, a Russian lawmaker has presented the idea of the country adopting a strategic Bitcoin reserve.