The U.S. Could Acquire $200 Billion Worth of Bitcoin and Save an Estimated $354 Billion in the Process

During the Bitcoin For America event, Hohns presented a strategy that uses Bitcoin in bond issuance to cut government borrowing costs.

The U.S. could buy $200 billion of Bitcoin (BTC) and save an estimated $354 billion in the process, according to Andrew Hohns, CEO of Newmarket Capital.

During the Bitcoin For America event, Hohns presented a strategy that leverages Bitcoin in bond issuance to decrease government borrowing costs. The plan could also benefit from Bitcoin’s potential for significant long-term growth.

A Groundbreaking Bond Structure

Hohns's proposal involves issuing $2 trillion in bonds, with 10% of it, approximately $200 billion, being invested directly into Bitcoin. The remaining 90 percent would be used for government programs and operations.

The plan includes issuing the bonds at a 1% interest rate, which is lower than the current U.S. 10-year Treasury rate of 4.5%. This would generate annual savings of 3.5%, or $70 billion, on the $2 trillion total. Over 10 years, this amounts to $700 billion in savings.

After considering the $200 billion cost of acquiring Bitcoin, the net savings on interest would be approximately $554 billion in present value terms. Therefore, the government could purchase $200 billion of Bitcoin and save $354 billion on interest payments.

Bond investors would receive an annual return of 4.5%, and they would also benefit from a share of any Bitcoin gains. Both the U.S. government and investors would split any appreciation in Bitcoin. Additionally, Hohns proposed that gains from the Bit Bonds be exempt from income and capital gains taxes, providing a potential tax advantage for American households.

Bitcoin’s Role in Reducing National Debt

The plan aims not only to reduce borrowing costs but also to leverage Bitcoin’s potential for substantial appreciation to help manage the U.S. national debt. If Bitcoin continues its historical growth rate of 37% annually, the government’s Bitcoin holdings could surpass $1.7 trillion by 2035 and potentially exceed $50 trillion by 2045. This contribution could be instrumental in reducing the national debt over time.

Moreover, the strategy aligns with Treasury Secretary Bessent’s goal of diversifying debt maturities to mitigate refinancing risks.

Hohns highlighted that this proposal offers a “win-win-win” scenario, as it benefits taxpayers with lower taxes, investors with higher returns, and policymakers with lower borrowing costs.

Expert Support for Bitcoin-Based Debt Management

The concept of using Bitcoin to address national debt has also been discussed by other financial experts, such as Matthew Sigel, Head of Digital Asset Research at VanEck.

Sigel recently proposed a similar strategy to help manage the U.S. government’s $14 trillion debt. His version involves using the bond proceeds to purchase Bitcoin, with investors receiving all Bitcoin gains up to a 4.5% annual return. Any additional gains would be split evenly between investors and the government, creating a shared incentive for Bitcoin’s price to rise.

This idea also resonates with Senator Cynthia Lummis, who has advocated for the U.S. government to acquire Bitcoin. Lummis suggested that the U.S. could buy 200k BTC tokens annually over five years to reach 1 million units. She believes this could cut the national debt by as much as 50% over the next two decades.