Governments Buying Bitcoin

Government Bitcoin accumulation comes in several different flavours and it’s worth knowing the difference.

El Salvador is the deliberate strategy case. Bitcoin as legal tender since 2021, buying consistently since then — often publicly announcing purchases. The holdings are modest by global reserve standards but the intent is explicit: Bitcoin as a national reserve asset.

Bhutan is the quiet mining case. This small Himalayan kingdom has been using its abundant hydroelectric power to mine Bitcoin since before anyone was paying attention. The operation was revealed in 2023. By the time the world found out, Bhutan had accumulated a Bitcoin holding that, as a percentage of GDP, is among the largest sovereign Bitcoin positions in the world. The strategy was simple: convert stranded hydro energy into a globally transferable asset.

The United States is the accidental accumulation case. Through law enforcement seizures — Silk Road, the Bitfinex hack recovery, and other criminal asset forfeitures — the US government has become one of the largest known Bitcoin holders in the world. This wasn’t a strategic choice. It happened through enforcement. But the question of what to do with those holdings has evolved: a growing policy debate has emerged about whether to hold them as a strategic reserve rather than sell at periodic auctions.

Three very different routes to the same destination. And in each case, the question of what to do with the Bitcoin — hold, sell, accumulate more — has become a real policy question rather than a theoretical one.

Tomorrow: the strategic Bitcoin reserve debate — what it is and why it matters.

— The Daily Bit