Last week, Senator Cynthia Lummis and Congressman Nick Begich introduced the Bitcoin Act, a bill designed to classify Bitcoin as both a commodity and a store of value, akin to gold. The bill calls on the Federal Reserve to establish a strategic Bitcoin reserve — a bid to protect the U.S. from currency devaluation and reinforce its dominance in the digital economy. While this could solidify America’s financial future and fuel a significant BTC price surge, it risks undermining Bitcoin’s very foundation: decentralization. In pursuing short-term economic gain, the bill may inadvertently trade Bitcoin’s soul for centralized control.
The Potential Virtues of a Strategic Reserve
Proponents argue that a Bitcoin reserve could bolster economic resilience. In times of inflation or geopolitical uncertainty, a Bitcoin reserve offers a non-sovereign hedge that’s immune to monetary policy manipulation. Additionally, it may foster innovation in blockchain technology, spurring investment in mining and digital infrastructure within the U.S.
A reserve would also likely drive up the value of Bitcoin, as absorbing liquidity from the market would reduce supply, potentially increasing demand and fueling price growth.
For smaller nations, a reserve could stabilize financial systems heavily reliant on volatile foreign currencies. By adopting Bitcoin reserves, countries may reduce exposure to U.S. dollar dependency while enhancing their economic sovereignty. Yet, such a move would not be without downside risks.
Scarcity, Strain, and The Soul Dilemma
Bitcoin’s finite supply has always been a key factor in its appeal as a store of value. With approximately 2-3 million BTC actively traded on exchanges, a strategic U.S. reserve could absorb a significant portion of that liquidity. This would reduce the available supply, potentially driving up prices and amplifying speculative volatility.
But here’s the real kicker: Who gets left behind? We’ve already seen wealthy nations like China reportedly accumulating Bitcoin, with Chinese billionaire Li Xiaolai notably amassing significant amounts of Bitcoin, including 2,100 BTC in 2011. North Korea’s Lazarus Group, now holds a massive 13,562 BTC worth approximately $1.14 billion. This makes it the third-largest government holder of Bitcoin, after the U.S. and U.K. If marginalized economies or retail investors are boxed out of the market, Bitcoin’s vision as “the people’s money” starts to crumble.
Bitcoin’s rising geopolitical importance will likely spark a new mining arms race. While investment in mining infrastructure could spur technological advancements, it comes with a dark side: consolidation of mining power. Countries with access to cheap energy and resources, such as China, may gain an outsized influence on the Bitcoin network. And what happens if China or another power controls 51% of the network’s hash rate? The very decentralization that defines Bitcoin could be jeopardized.
More alarmingly, we face a potential crisis in mining capacity. With only so much computing power available, can we even sustain the pace at which governments may want to accumulate reserves? If miners can’t meet demand, what happens next?
As governments stockpile Bitcoin as a strategic reserve, it becomes less accessible to everyday people. Imagine trying to buy BTC for your small business or personal savings — only to find nations hoarding it like gold.
This isn’t just theoretical; a client recently attempted to mine 1,000 BTC but struggled due to market constraints/machine availability/tariffs, etc. The combination of national hoarding and declining liquidity could further push Bitcoin away from its ideal as an inclusive global asset to yet another tool wielded by the powerful.
The Ethical Crossroads
Bitcoin’s original promise was freedom — freedom from centralized control, from fiat economies, from financial censorship, and from manipulation. Yet, as governments pile into reserves, we risk seeing Bitcoin turned into the very thing it was designed to avoid: a tightly controlled economic asset manipulated by elite powers.
If the U.S. and China dominate reserves, will Bitcoin even feel like a choice anymore? Will nations effectively “own” Bitcoin’s future? For those of us who believe in Bitcoin’s original ethos, this feels dangerously close to selling its soul.
For Bitcoin to remain true to its principles, nations adopting reserves must embrace transparent acquisition strategies and support mining decentralization. Investment in open-source mining solutions and education in underserved regions can help ensure Bitcoin remains accessible as a truly global asset.
The Bitcoin Act reflects BTC’s undeniable arrival on the geopolitical stage. Yet, as governments race to secure digital gold, we must ask ourselves: Will Bitcoin’s value be defined by those who hold it, or those who uphold its founding ideals?
