As National Debt Levels Continue to Rise, the United States Is Exploring New and Unconventional Solutions

With Bitcoin emerging as a serious contender in future fiscal planning, the idea, once considered fringe, is now gaining traction

As national debt levels continue to soar to new highs, the United States is exploring a unique and unconventional solution—integrating Bitcoin into its fiscal planning. While the idea may seem radical, it's being driven by necessity. With the government already in possession of nearly 200,000 seized bitcoins, some experts argue that it’s time to stop selling these digital assets and instead incorporate them into a long-term strategic reserve.

This proposal is born out of a pressing need for new solutions. At present, the U.S. is juggling an enormous national debt, currently around $32 trillion, and vast social security and Medicare liabilities, ultimately adding up to over $150 trillion in total obligations over the next 75 years. To service this debt, the Treasury issues bonds, currently yielding 4.5% over ten years. This translates to an interest expense of roughly $70 billion per year, or $700 billion over a decade.

Now, several financial executives, including Mark Zoren, a managing director at Athena Capital, have devised a suggestion to combine Bitcoin with these bonds. Their proposal is to issue up to $2 trillion in bonds, allocating 10%—roughly $200 billion—for direct Bitcoin investment, with the remaining funds covering regular government expenditures.

The crux of the suggestion lies in the structure of the bond. By offering these so-called “Bit Bonds” with a reduced interest rate of just 1%, compared to the standard 10-year Treasury yield of 4.5%, the government could save approximately $70 billion annually in interest payments. Over ten years, those savings could amount to a staggering $700 billion. After subtracting the cost of acquiring the Bitcoin, which is estimated at $346 billion over ten years, the net savings would still sit around $354 billion.

Moreover, these bonds wouldn’t just help reduce debt—they’d also provide a unique value proposition to investors. Under the proposed structure, both the U.S. government and bondholders would share any profits made if Bitcoin’s price rises. To lessen the tax burden on investors, gains from these bonds could be exempt from income and capital gains taxes, encouraging wider public participation and bringing more Americans into the crypto economy.

This proposal also aligns with broader goals in government debt management. Treasury officials have long considered ways to reduce refinancing risks, especially given the massive sums involved in servicing the national debt. Diversifying the debt structure using innovative financial tools could be a step in that direction.

Furthermore, this strategy is being echoed by other influential figures in finance and politics. Several experts, including digital asset analysts and senators, have proposed similar approaches, suggesting that Bitcoin-backed reserves could become a central part of national fiscal policy.

Senator Cynthia Lummis, a vocal advocate for Bitcoin adoption, has proposed that the U.S. acquire up to 1 million BTC over the next five years—an aggressive plan she believes could cut national debt in half over two decades.

Meanwhile, others, like Ari Melamed, the chief legal officer at the crypto exchange FTX, argue that simply holding onto already-owned bitcoins from federal seizures, instead of liquidating them at auctions, would generate value through long-term appreciation.

Of course, there are risks. Bitcoin is still a highly volatile asset, and its integration into sovereign financial systems would represent uncharted territory. Critics, like economists Paul Krugman and Mark Zandi, warn of the dangers of placing public funds in such a speculative market, especially given the potential for scams and fraud in the cryptocurrency industry.

Despite these concerns, the growing institutional adoption of Bitcoin globally suggests that the digital asset is maturing, and its use as a strategic reserve is becoming more plausible by the day. With institutions like BlackRock and Ark Invest increasingly investing in Bitcoin, and countries like Argentina and Vietnam showing interest in using it for macroeconomic stability, the stage is set for a new chapter in fiscal policy.

As the global financial system continues to evolve, the United States faces a critical choice—whether to stick with legacy tools or embrace emerging technologies like Bitcoin to drive innovation in fiscal policy. If executed carefully, a Bitcoin-backed bond strategy could mark the beginning of a new era in government finance—one where digital assets and traditional economic planning converge for a more sustainable future.