By the end of 2024, the US federal debt had climbed to an all-time high of $36 trillion, representing more than 120% of GDP. This scenario has led some experts to warn of significant fiscal risk, describing it as an unsustainable situation. Recently, Bitcoin Policy Institute researchers Andrew Hohns and Matthew Pines announced a plan for the United States to issue a new type of Treasury bond, called BitBonds, to address this problem.
Faced with what they perceive as a crisis that will eventually make itself felt, several experts and key figures in the cryptocurrency sector have proposed strategies to diversify the country's reserves, while the industry debates what neutral measures the Donald Trump administration could adopt to increase its Bitcoin holdings. It's worth noting that the executive order signed weeks ago made it clear that the administration will not use public funds to acquire BTC.
Researchers Hohns and Pines' plan calls for the United States to issue a new type of Treasury bond, called BitBonds. These bonds are expected to be backed, at least in part, by bitcoin, similar to how some countries secure their debt with gold. The main objective is to manage debt more efficiently, as the US will need to refinance $9.3 trillion over the next 12 months, with interest rates close to 4.5%. This scenario entails a high cost for taxpayers and limits economic growth.
The proposal takes into account Trump's March 6, 2025, executive order, in which he recognized Bitcoin as a strategic reserve asset. BitBonds would be a neutral strategy, which, according to its creators, “would allow the government to diversify reserves and harness Bitcoin's potential without relying on public funds.”
The scheme outlined for BitBonds stipulates that 90% of the funds raised through their issuance would be used to fund regular government operations, while the remaining 10% would be used to acquire BTC. According to the authors, this approach seeks to balance the traditional stability of Treasury bonds with strategic exposure to the growth of the leading cryptocurrency, leveraging its potential as a reserve asset.
The initiative's proponents argue that if implemented on a large scale, for example, with $2 trillion in issuance, equivalent to 20% of the 2025 refinancing needs—it would generate significant savings in interest payments. They claim the plan could reduce financing costs by $70 billion annually, representing cumulative fiscal relief of $700 billion over a decade.
If the BitBonds program were implemented at a $2 trillion scale, it could generate annual savings of $70 billion in interest compared to traditional Treasury bonds. Over ten years, this would amount to $700 billion in total savings, with a present value of $554.4 billion. Even after deducting the initial $200 billion investment in bitcoin, the net savings for taxpayers would be $354.4 billion, even if BTC's price did not increase. However, if the leading cryptocurrency continues to grow as it has historically, the government could achieve returns significant enough to substantially reduce or even eliminate federal debt in the future.
Andrew Hohns and Matthew Pines detailed these ideas in their report, Bitcoin-Enhanced Treasuries.
Another expert who has expressed concern about the long-term sustainability of the dollar is Larry Fink, CEO of BlackRock. Fink recently stated that Bitcoin could threaten the supremacy of the US currency, especially if the country fails to control its debt. Even so, he acknowledged the advantages of decentralization, such as greater speed, transparency, and reduced market costs.
