Trump has been a vocal Bitcoin supporter for some time now. His presence at the Bitcoin conference in Nashville, talking about Bitcoin and crypto whenever he gets a chance, shows that he has become pro-crypto. In a Twitter space, he mentioned that his kids taught him things about crypto.
One interesting thing that Trump mentioned during his speech at the Nashville conference is that if he gets selected as president of the U.S., he will make a Bitcoin reserve for the country using the seized Bitcoin that are under U.S. government control. But is it really possible to create a strategic reserve out of those Bitcoin?
U.S. Government Bitcoin Holdings
According to Arkham data, the U.S. government holds 203,236 Btc, which is worth over $13 billion. That’s around 1% of the total Bitcoin supply. There are multiple things to focus on before thinking about making a national reserve out of this government BTC holding.
In 2016, a crypto exchange known as Bitfinex was hacked for 119,256 BTC, valued at $72 million at that time and now valued at $7.7 billion. Out of these, 94,643 BTC were seized by the feds in 2022. Another 15,085 from the hack was moved to a U.S. government wallet. That makes a total of 109,728 BTC recovered from the hack. This accounts for more than half of the total government Btc holding.
After the hack, the crypto exchange Bitfinex compensated its users in the next eight months, making the exchange the sole victim of the hack. If and when these coins are returned to the exchange, the government is only left with 93,511 BTC.
Silk Road Bitcoin Seizures
We all know the U.S. government holds a large volume of Bitcoin from the Silk Road case. The government seized 69,370 BTC stolen from the Silk Road in 2020. A long legal battle has been ongoing for these Silk Road-seized BTC, and last week, the court ruled that the U.S. can sell these coins.
Let’s say the government sells this Bitcoin. They would then be left with only 24,141 BTC, which is worth about $1.5 billion at a price of $64,754 per Bitcoin.
U.S. Debt Context
Now, if we take into account the debt on the U.S., it is so big that its interest for one day totals around $3 billion. The remaining amount of Bitcoin, after all deductions, would only cover half a day of U.S. debt interest.
Looking Ahead
The presidential candidate and former president Donald Trump is keen on making a Bitcoin reserve. Things can change for the U.S. There is also one more pro-crypto person in U.S. politics, Senator Cynthia Lummis, who proposes that the U.S. buy 1 million Bitcoin.
Bringing all things into account, the idea of making a strategic Bitcoin reserve may bear some significance. For the crypto community overall, it would be a very bullish thing.
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