Globally, the interest of countries and enterprises in Bitcoin as a strategic reserve is increasing, reflecting a rethinking of the future monetary system.
Written by: Luke, Mars Finance
Recently, Bitcoin has once again become the focus of attention in the financial world: the Pennsylvania House of Representatives has officially proposed the "Pennsylvania Bitcoin Strategic Reserve Act," suggesting that 10% of the state's treasury funds, approximately $7 billion, be allocated to Bitcoin to combat inflation and optimize the investment portfolio. Meanwhile, U.S. Senator Cynthia Lummis has introduced a more ambitious proposal to Congress, recommending the establishment of a "Bitcoin Reserve" operated by the Treasury, with plans to purchase up to 1 million Bitcoins over the next five years. Trump also stated at the Bitcoin conference on July 28 that if elected president in November, he would push for the establishment of a "strategic Bitcoin reserve" in the U.S. and prevent the government from selling its existing Bitcoin reserves. Michael Saylor further emphasized at the Cantor Crypto Conference in Miami that Bitcoin is an asset with no counterparty risk, and that "strategic Bitcoin reserves will be the greatest trade of the 21st century." He believes that if the U.S. implements a strategic reserve, other countries will have to follow suit.
The reality is indeed so: not only the U.S., but an increasing number of countries and institutions worldwide are seriously considering incorporating Bitcoin into their strategic reserves. According to the latest report from Bitwise Europe, the optimistic sentiment regarding U.S. policy initiatives and the tightening supply of Bitcoin are jointly driving up Bitcoin prices. Betting activity on Polymarket also reflects a sharp increase in market expectations for the establishment of national Bitcoin reserves. On the corporate side, companies like MicroStrategy continue to purchase large amounts of Bitcoin, further solidifying this trend.
Former Binance CEO Zhao Changpeng (CZ) publicly stated: "Countries will compete to list Bitcoin as a reserve asset in the coming years; no country wants to be the last to take action." From the U.S. government's legislative attempts to corporate asset allocation trends, Bitcoin's status as "digital gold" in the global financial system is becoming increasingly solidified. Globally, the total number of Bitcoins held jointly by governments, institutions, and enterprises exceeds 2,669,855, accounting for 12.7% of the total Bitcoin supply.
Why are countries and enterprises choosing Bitcoin as a reserve asset? Is it merely a matter of investment strategy, or is it a redefinition of the future monetary order?
The Corporate Path to Bitcoin: Diverse Strategic Considerations and Layouts
As of 2024, the total amount of Bitcoin held by global enterprises has exceeded 1.3 million, accounting for 6.2% of the total Bitcoin supply. These enterprises span various fields, including tech giants, mining companies, and fintech firms.
MicroStrategy leads with a holding of 331,200 Bitcoins, accounting for 1.577% of the total Bitcoin supply. Since 2020, the company has continuously increased its Bitcoin holdings, with a cumulative investment exceeding $16.5 billion. Its Executive Chairman Michael Saylor has repeatedly claimed that Bitcoin is "the safest asset," effectively hedging against inflation and protecting the value of the company's reserve assets.
Tesla was one of the "huge pumps" of the last bull market. In early 2021, Tesla announced the purchase of $1.5 billion worth of Bitcoin, attracting widespread attention in the global market. Although it later liquidated some Bitcoin assets, Tesla currently still holds 9,720 Bitcoins, demonstrating its confidence in Bitcoin as a long-term asset allocation tool.
Square (now Block, Inc.) views Bitcoin as an important part of its payment and financial ecosystem. Currently, Block holds 8,211 Bitcoins, with a total investment exceeding $240 million. The company's CFO Amrita Ahuja has stated: "Bitcoin is not only part of asset management but also a continuation of our mission to drive economic empowerment and technological innovation."
Additionally, mining companies and trading platforms also play a significant role in Bitcoin holdings. For example, Marathon Digital Holdings holds 25,945 Bitcoins, primarily sourced from its mining operations. Coinbase, as one of the largest cryptocurrency trading platforms globally, holds approximately 9,000 Bitcoins, providing liquidity support for the platform's reserves.
Just today, the artificial intelligence company Genius Group announced that it would convert most of its reserve assets into Bitcoin. The company purchased 110 Bitcoins for $10 million, averaging about $90,932 per Bitcoin. This move is part of its plan to hold over 90% of its current and future reserves as Bitcoin, with an initial target of $120 million.
The motivations behind these enterprises' choices to hold Bitcoin are diverse, including hedging against economic fluctuations, enhancing asset returns, and participating in the digital economy ecosystem. From a global perspective, enterprises' focus on Bitcoin goes beyond short-term investment returns, reflecting a strategic layout for the future monetary and financial system.
1. Hedging Against Inflation Risk
In the context of ongoing global monetary easing policies, inflation expectations are rising, and many enterprises' cash reserves are facing the risk of diminishing purchasing power. For example, MicroStrategy, one of the earliest companies to purchase Bitcoin on a large scale, currently holds about 330,000 Bitcoins, with a total investment exceeding $4.9 billion, and its average purchase price is $49,874 per Bitcoin. As of November 2024, its overall investment return rate has exceeded 80%. The company's Executive Chairman Michael Saylor stated that they chose Bitcoin because they believe it can protect wealth from the erosion of fiat currency depreciation.
According to data provided by the International Monetary Fund (IMF), since 2021, the average annual inflation rate of major global economies has been around 5%, while Bitcoin's price has increased by over 300% during the same period. This growth rate indicates that Bitcoin has become an important choice for enterprises to cope with inflation.
2. Asset Diversification
Traditionally, enterprises' reserve assets are primarily composed of cash and short-term bonds, but in an increasingly complex global economic environment, Bitcoin is gradually becoming an effective means for enterprises to achieve asset diversification, helping to enhance financial flexibility. Tesla is an example of this, having purchased $1.5 billion worth of Bitcoin in early 2021 and still holding 9,720 Bitcoins in mid-2024. Although the price volatility of Bitcoin poses certain challenges to finances, Tesla CEO Elon Musk believes that Bitcoin's long-term return rate far exceeds that of traditional asset allocations. As mentioned in the company's financial report, "The addition of Bitcoin allows us to manage cash assets more flexibly while obtaining potential high returns."
This strategy is not uncommon among enterprises. According to data from treasuries.bitbo.io, there are currently 92 companies globally holding Bitcoin, with a total exceeding 2.6 million, accounting for 12.7% of the total Bitcoin supply. This data indicates that asset diversification strategies are increasingly favored and practiced by more enterprises.
3. Technological Innovation and Brand Image: Standing at the Forefront of the Times
For many enterprises, holding Bitcoin is not just an investment; it is also a way to showcase their technological innovation and values. By supporting decentralized technology and the digital economy, these companies demonstrate their commitment to the future. Block, Inc. holds 8,211 Bitcoins, with a total investment of about $240 million. The company promotes the development of Bitcoin payment technology, allowing users to directly purchase and hold Bitcoin through its payment platform Cash App. This strategic choice helps enhance the company's tech image among younger users while demonstrating its determination to promote the development of new economic technologies through practice.
The public generally holds a positive attitude toward companies that hold Bitcoin. According to a survey, over 50% of millennial consumers prefer to support companies that "value digital assets and blockchain technology." For tech companies, this strategy clearly helps enhance brand image and attract younger user groups.
4. Core Reason: Potential High Returns
The long-term growth potential of Bitcoin makes it an important choice for enterprises to achieve asset appreciation, as enterprises are ultimately profit-driven. Despite the significant price volatility of Bitcoin, its average annual growth rate has exceeded 100% over the past decade. Marathon Digital Holdings currently holds 25,945 Bitcoins, with a total investment exceeding $800 million. The company's CEO Fred Thiel stated that while Bitcoin's volatility brings risks, it also offers unprecedented growth opportunities. They firmly believe that by holding Bitcoin, the company will create tremendous value for shareholders in the coming years.
Historical data shows that since 2013, Bitcoin's price has increased more than 200 times, far exceeding the return rate of the S&P 500 index during the same period. Although there is volatility in the short term, the long-term appreciation potential presents a significant attraction for enterprises.
Sovereign Nations: The Motivations Behind Bitcoin Strategic Reserves
In recent years, in addition to companies actively incorporating Bitcoin into their asset allocations, some countries have also begun to experiment with Bitcoin as part of their national strategic reserves. On November 10, David Bailey, CEO of Bitcoin Magazine, revealed on social media: "At least one sovereign nation is actively acquiring Bitcoin and has entered the top five Bitcoin holders globally. We hope to hear news from them soon." This statement has sparked widespread attention regarding the situation of sovereign nations holding Bitcoin.
Currently, multiple governments worldwide, including the U.S., China, and Russia, are either actively or indirectly involved in holding Bitcoin. The U.S. is currently the country with the most Bitcoin holdings, with a reserve of 207,189 Bitcoins, primarily sourced from seizures and confiscations during law enforcement actions, currently valued at approximately $18.87 billion, accounting for 0.987% of the total Bitcoin supply. In the future, if Trump's proposal is passed, the U.S. will also actively establish a Bitcoin reserve.
China ranks second with 194,000 Bitcoins, valued at approximately $17.67 billion. These Bitcoins primarily come from government confiscations following crackdowns on illegal activities. Although China has implemented strict regulations on cryptocurrencies at the policy level, the Bitcoins confiscated during judicial disposal and law enforcement processes still constitute a source of its indirect holdings.
Russia's Bitcoin holdings are primarily achieved indirectly through its abundant mining resources. Although the Russian government has not publicly disclosed the specific amount held, its mining industry accounts for approximately 11% of the global Bitcoin mining share, ranking third in the world. This provides an important foundation for Russia to accumulate Bitcoin reserves through mining. Due to Western sanctions, Russia is seeking to bypass the SWIFT system using Bitcoin and explore new ways of conducting cross-border trade. In 2024, President Putin signed a bill that officially legalized Bitcoin mining and utilized the country's rich energy resources to support the Bitcoin mining industry. Russia has also proposed using cryptocurrency to pay for international trade, highlighting Bitcoin's position in Russia's financial sovereignty strategy.
Other countries are also gradually emerging in the Bitcoin space. The UK holds 61,000 Bitcoins, valued at $5.56 billion; Ukraine holds 46,351 Bitcoins, valued at $4.22 billion; and Bhutan holds 13,029 Bitcoins, valued at $1.19 billion. Additionally, El Salvador, as the first country in the world to make Bitcoin legal tender, currently holds 5,748.8 Bitcoins, valued at approximately $520 million. This action marks the country's proactive exploration of Bitcoin as an economic tool.
The motivations behind sovereign nations choosing to hold Bitcoin are diverse: hedging against economic risks, achieving financial sovereignty, bypassing economic sanctions, and promoting digital economic innovation.
1. Hedging Against Economic Sanctions and Enhancing Financial Sovereignty
For some countries facing international economic sanctions, Bitcoin's decentralized nature provides a way to circumvent traditional financial systems. For example, countries like Venezuela and Iran, which face financial sanctions from Western nations, encounter significant obstacles in international transactions and capital flows. Bitcoin does not rely on traditional banks and intermediaries, making it a tool for these countries to bypass sanctions, maintain international trade, and acquire foreign exchange.
Moreover, by holding Bitcoin, countries can reduce their dependence on the U.S. dollar to some extent, thereby enhancing their financial sovereignty. This is particularly important for developing countries that are concerned about dollar hegemony, as holding Bitcoin becomes a significant means of increasing financial independence. El Salvador is a typical example in this regard—the country adopted Bitcoin as legal tender in 2021 and included Bitcoin in its strategic reserves, attempting to reduce its reliance on the dollar while attracting global cryptocurrency investors.
2. Hedging Against Inflation and Currency Depreciation
Some countries are facing high inflation and currency depreciation issues, and Bitcoin's scarcity (with a cap of 21 million coins) and decentralized nature make it an effective hedging tool. For instance, countries like Argentina and Turkey have experienced high inflation rates in recent years, leading residents and governments to confront rapid currency depreciation.
In this context, Bitcoin is viewed as an attractive option, akin to "digital gold," helping these countries mitigate losses from local currency depreciation through strategic reserves. In fact, some central banks in developing countries have begun researching the inclusion of cryptocurrencies as part of their international reserves to have a store of value that is not affected by traditional monetary policies when facing currency depreciation.
3. Promoting Digital Economic Development and Attracting Foreign Investment
Another important motivation for holding Bitcoin as a strategic reserve is to promote national digital economic development by embracing cryptocurrencies. Countries like El Salvador are attempting to attract international cryptocurrency companies, investors, and entrepreneurs by legalizing Bitcoin and including it in their strategic reserves, aiming to create a blockchain-based digital economic ecosystem.
This approach not only promotes local economic development but may also generate tourism revenue and foreign exchange income. El Salvador's President Nayib Bukele has explicitly stated that the use of Bitcoin can help the country overcome past economic difficulties and usher in a new era of digital economy. Through this method, the country hopes to enhance its voice in international financial markets while encouraging the digital transformation of its domestic economy.
Future: Opportunities and Challenges of Strategic Reserves
Trump's promise to establish a Bitcoin strategic reserve for the U.S. upon taking office seems to be seen as a prelude to Bitcoin reaching its peak. The market is experiencing FOMO, and there is widespread optimism; most signals we encounter indicate that nations and enterprises will continue to buy in. However, will the future truly develop this way?
Regarding Bitcoin strategic reserves, the traditional financial industry is not without negative viewpoints. James Mackintosh, a senior market columnist for The Wall Street Journal, believes that for major economies like the U.S., the necessity of holding Bitcoin as a strategic reserve is minimal. He points out that the stability of the U.S. economy primarily relies on "government credit," rather than support from foreign exchange reserves. The high volatility of Bitcoin makes it difficult to serve as a reliable national reserve tool.
The billionaire head of cryptocurrency investment firm Galaxy Digital also holds a cautious attitude. He believes that the likelihood of Trump incorporating Bitcoin into the U.S. strategic reserve is low. Novogratz stated in an interview with Bloomberg on Wednesday: "I still think the possibility is small." He explained that although the Republican Party currently controls the Senate, the number of seats is still less than 60, which is insufficient to guarantee the smooth passage of this proposal.
The future of Bitcoin is undoubtedly filled with uncertainty, and both supporters and opponents have ample reasons to believe in their judgments. For enterprises and nations, holding Bitcoin may be an attempt to explore the future of finance, but it also means accepting the challenges of high volatility and uncertainty. The fate of Bitcoin depends on market sentiment, policy environment, and technological development. Perhaps, as Mackintosh said, "Bitcoin relies more on animal spirits than on economic analysis." Therefore, in this game of digital assets, who will ultimately win still needs time to prove.
Regardless, as investors, we need to find a balance between enthusiasm and rationality. In the vast wave of financial transformation, how the future will develop remains to be seen.
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