Even if Trump were to limit the reserve to bitcoins seized by law enforcement, his administration would also have to consider the opportunity cost of holding bitcoins. While some assets, such as bonds, generate a steady stream of income for holders, bitcoin does not, making it steep to hold.
“The question comes down to what the government would get from its bitcoin holdings,” says George Selgin, director emeritus of the Center for Monetary and Financial Alternatives at the Cato Institute, a U.S. think tank promoting libertarian principles. The U.S. government has bitcoins periodically put up for auction confiscated by law enforcement. But when he decides to own bitcoin, he “doesn’t realize the market value that he could use for a variety of other things, from forgiving federal debt to paying for other government programs,” Selgin says.
While Selgin is a supporter of bitcoin because of its independence from state control, he opposes the U.S. government speculating on its price on behalf of its citizens. “Governments are not particularly astute investors,” Selgin says. “It doesn’t make much sense for a government to act on behalf of its citizens as some kind of investment trust or investment fund.”
During his speech in Nashville, Trump named a number of well-known bitcoiners, including Cameron and Tyler Winklevoss, who founded the cryptocurrency trading platform Gemini, thanking them for their guidance. Tyler then I took it to X to celebrate Trump’s plan and congratulate the conference organizer for “treating” the former president with the orange pill.
While bitcoin has enjoyed popularity among huge holders of the cryptocurrency and industry executives, the ambition to create bitcoin reserves could come at a cost to almost everyone else, especially if the government expands its current holdings, said Michael Green, chief strategist at asset manager Simplify.
“The only possible path for the U.S. government is to buy bitcoin from current holders,” Green says. “But if the government uses tax revenues [or issues bonds] to buy bitcoin creates a situation where the taxpayer is subsidizing an extremely small subset. Ultimately, we’re talking about creating exit liquidity for a small subset of the population.” It would be like the U.S. government promising to pay above-average amounts for real estate in California, Green says, but in no other state. “It’s not a fundamentally different situation,” he says.
Meanwhile, the bigger the government’s bitcoin pot, the more beholden it would be to those who maintain the underlying network—the bitcoin mining companies—whose job it is to process transactions and protect the network from attacks. In effect, the bitcoin mining industry would become “another special interest group,” Green says, “that the U.S. government would have to step in and save” if the sector—known for its sensitivity to factors beyond its control—were to falter.
Neither Trump nor Lummis responded to requests for comment on criticism of the bitcoin stockpiling plan.