A bold new idea suggests the US government could tackle its debt and build a Bitcoin reserve simultaneously using a novel type of bond.
The Bit Bond Proposal
Newmarket Capital CEO Andrew Hohns proposed a “Bit Bond” – a $2 trillion bond issuance where 10% ($200 billion) is used to buy Bitcoin, and the remaining 90% funds regular government spending. These bonds would have a low initial interest rate of 1% for the first 10 years, but offer a guaranteed 4.5% annual return afterward, plus a share of any Bitcoin price appreciation. The government would keep half of any Bitcoin profits.
Massive Savings and Potential for Growth
Hohns argues this approach offers significant savings. The lower interest rate (compared to the current ~4.5% 10-year rate) would save the government roughly $70 billion annually, or $700 billion over 10 years. Even after accounting for the Bitcoin purchase, he estimates a net savings of $354 billion.
He also points to the potential for massive gains if Bitcoin continues its historical growth. He believes the government’s share of Bitcoin profits could even offset the national debt if Bitcoin’s price performs as well as some projections suggest.
Benefits Beyond Debt Reduction
Hohns envisions additional benefits:
- Lower Borrowing Costs: The reduced 10-year interest rate could lower borrowing costs across the board, impacting mortgages, auto loans, and small business financing.
- Wealth Building for Americans: He proposes making Bit Bonds tax-free, allowing everyday Americans to participate and potentially build wealth through Bitcoin’s growth. He uses an example where a family’s share could be around $2,900.
A Win-Win-Win?
Hohns calls his Bit Bond proposal a “thought experiment,” but its potential impact is undeniable. He believes it offers a triple win: reduced government debt, a substantial Bitcoin reserve, and increased savings opportunities for citizens. He’s advocating for the Treasury and Congress to seriously consider this innovative approach. (Note: At the time of this writing, Bitcoin was trading at $82,495.)