How the Bitcoin Rush Could Help Government Finances and Which Countries Hold BTC

As Bitcoin continues its meteoric rise, governments are increasingly exploring its potential as a strategic reserve asset. Much like gold, Bitcoin’s fixed supply and decentralized nature make it an attractive hedge against inflation and currency devaluation. Countries such as the United States, China, and Bhutan have begun accumulating Bitcoin through seizures, mining, or direct purchases. This shift reflects a growing belief that Bitcoin can serve not only as a store of value but also as a fiscal buffer in times of economic uncertainty.

Senator Cynthia Lummis’s proposed legislation to establish a U.S. Strategic Bitcoin Reserve exemplifies this trend. The idea is to gradually accumulate BTC and use it to offset national debt over time. VanEck’s research suggests that even a modest reserve—say one million BTC held over 20 years—could reduce U.S. debt by up to 18%.

BitBonds: A New Fiscal Instrument

One of the most innovative proposals to leverage Bitcoin for public finance is the concept of BitBonds—Treasury bonds partially backed by Bitcoin. Economist Andrew Hohns argues that BitBonds could reduce the U.S. government’s borrowing costs while simultaneously building a national Bitcoin reserve. These bonds would allocate 90% of funds to traditional government use and 10% to Bitcoin purchases. Upon maturity, investors would receive a share of the Bitcoin upside, while the government retains the rest to strengthen its reserve.

If demand for BitBonds mirrors corporate convertible bonds like those issued by MicroStrategy, the Treasury could issue them at significantly lower interest rates. Hohns estimates that issuing $2 trillion in BitBonds at 1% interest could save the U.S. up to $700 billion over a decade.

Seized Bitcoin as Budget Relief

Governments have also acquired Bitcoin through law enforcement seizures, turning illicit crypto into public assets. The U.S. government holds over 207,000 BTC, valued at more than $22 billion, largely from operations like the Silk Road and Bitfinex hacks. Similarly, China controls around 194,000 BTC, seized from the PlusToken Ponzi scheme. These holdings offer a unique opportunity: rather than liquidating the assets immediately, governments could retain them as part of a long-term fiscal strategy.

Finland, for example, seized nearly 2,000 BTC and considered auctioning them to fund public welfare initiatives. Ukraine, meanwhile, received over 46,000 BTC in donations during wartime, using them for defense and reconstruction.

Mining and Sovereign Accumulation

Some countries are actively mining Bitcoin to build reserves. Bhutan, leveraging its abundant hydroelectric power, has mined over 13,000 BTC, worth more than $1.1 billion. This approach allows governments to accumulate Bitcoin without direct market purchases, minimizing budgetary impact. El Salvador, which adopted Bitcoin as legal tender in 2021, has purchased over 6,000 BTC and integrated it into infrastructure projects.

These strategies reflect a broader shift toward sovereign crypto accumulation, where nations treat Bitcoin as a fiscal tool rather than a speculative asset.

Bitcoin Holdings by Country

Here’s a snapshot of notable government Bitcoin holdings as of mid-2025:

Fiscal Sovereignty and Inflation Hedging

Bitcoin’s role in hedging against inflation is particularly relevant for countries facing currency instability. By holding BTC, governments can diversify their reserves and reduce reliance on fiat currencies. This strategy is especially appealing to emerging economies like Venezuela and Bhutan, where traditional financial systems are vulnerable to external shocks.

Moreover, Bitcoin’s decentralized nature allows governments to bypass politically influenced institutions, offering greater autonomy in managing national wealth. As global bond markets face liquidity challenges, Bitcoin is increasingly viewed as a macrohedge—a structurally scarce asset that can protect against fiscal strain.