Wyoming Senator Cynthia Lummis is advocating for the U.S. Treasury Department to convert a portion of its gold reserves into Bitcoin (BTC) to establish a strategic Bitcoin reserve.
Lummis told Bloomberg that by converting the U.S. Treasury Department's gold certificates into Bitcoin, the immediate impact on the U.S. government's balance sheet would be "neutral," in contrast to spending around $90 billion to purchase Bitcoin at the current market price.
The U.S. Senator has previously argued that the Treasury Department should convert a portion of its assets to purchase Bitcoin for a strategic reserve, but did not specify which of the Treasury Department's assets should be sold to acquire this cryptocurrency.
As the Strategic Bitcoin Reserve Act was introduced in the Senate, Senator Lummis stated that establishing this reserve is of utmost importance, "As families in Wyoming struggle with soaring inflation rates and our national debt reaches unprecedented levels.
U.S. government assets and liabilities in 2023. Source: U.S. Treasury Department
Overcoming opposition to the strategic BTC reserve
Senator Lummis' strategic Bitcoin reserve initiative includes purchasing 5% of the total Bitcoin supply — 1 million BTC — and holding it for 20 years. As mentioned earlier, this ambitious goal would cost around $90 billion at the current market price.
Investor and asset manager Anthony Pompliano recently argued that there is a global competition over Bitcoin among sovereign governments, and this multi-billion dollar cost is just a small price to pay:
"National debt has increased by $850 billion in the past 90 days. If we try to put that $850 billion into Bitcoin, that's about half the current market capitalization. So we're talking about $50-100 billion — small rounding errors when it comes to government spending. And I think that's a risk-reward worth taking."
Galaxy Digital CEO and founder Mike Novogratz recently expressed that a strategic Bitcoin reserve under a Trump presidency would be difficult to implement.
However, if the strategic reserve is established under the upcoming Trump administration, Novogratz predicts that the Bitcoin price could surge to $500,000 per BTC.
