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 officially proposed the Pennsylvania Bitcoin Strategic Reserve Bill, suggesting allocating 10% of approximately $7 billion in state treasury funds to Bitcoin to cope with inflation and optimize the investment portfolio. Meanwhile, U.S. Senator Cynthia Lummis introduced a more ambitious proposal to Congress, suggesting the establishment of a 'Bitcoin Reserve' operated by the Treasury Department, with plans to purchase up to 1 million Bitcoins within 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' and prevent the U.S. government from selling its existing Bitcoin reserves. Michael Saylor further emphasized at 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 strategic reserves, other countries will have to follow suit.
The reality is indeed as such: not only in the U.S., but an increasing number of countries and institutions around the world are seriously considering including Bitcoin in their strategic reserves. According to a recent report from Bitwise Europe, the optimistic sentiment surrounding U.S. policy initiatives and the tightening of Bitcoin supply 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 consolidating this trend.
Binance's former CEO Changpeng Zhao (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 legislative attempts of the U.S. government to the asset allocation trends of enterprises, Bitcoin's status as the 'digital gold' of the global financial system is becoming increasingly solidified. Globally, the total number of Bitcoins held by governments, institutions, and enterprises exceeds 2,669,855 coins, accounting for 12.7% of the total Bitcoin supply.
Why do countries and enterprises choose to hold Bitcoin as a reserve asset? Is this purely an investment strategy, or is it a redefinition of future monetary order?
The Bitcoin Journey of Enterprises: Diverse Strategic Considerations and Layouts
As of 2024, the total amount of Bitcoin held by global enterprises has exceeded 1.3 million coins, accounting for 6.2% of the total Bitcoin supply. These enterprises span multiple sectors, including technology 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 been continuously increasing its Bitcoin holdings, with a total investment exceeding $16.5 billion. Its executive chairman, Michael Saylor, has repeatedly declared that Bitcoin is 'the safest asset' that can effectively hedge against inflation and protect the value of corporate reserve assets.
Tesla is 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 from the global market. Although it later cashed out some Bitcoin assets, Tesla 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 continues our mission of economic empowerment and technological innovation.'
Moreover, mining companies and trading platforms also play an important role in Bitcoin holdings. For example, Marathon Digital Holdings holds 25,945 Bitcoins, mainly from its mining operations. Coinbase, as one of the largest cryptocurrency trading platforms in the world, holds approximately 9,000 Bitcoins, providing liquidity support for its platform reserves.
Just today, the AI company Genius Group announced that it will convert a significant portion of its reserve assets into Bitcoin. The company purchased 110 Bitcoins for $10 million, averaging about $90,932 per coin. 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' interest in Bitcoin goes beyond short-term investment returns; it also reflects a strategic layout for the future currency and financial system.
1. Hedging Against Inflation Risks
In the context of ongoing global monetary easing policies, inflation expectations are rising, and many enterprises' cash reserves face the risk of purchasing power erosion. For example, MicroStrategy, as one of the first enterprises to purchase Bitcoin on a large scale, currently holds approximately 330,000 Bitcoins, with a total investment exceeding $4.9 billion, and its average purchase price is $49,874 per coin. As of November 2024, its overall investment return rate has exceeded 80%. The company's executive chairman Michael Saylor stated that they choose Bitcoin because they believe it can protect wealth from the erosion of fiat currency devaluation.
According to data provided by the International Monetary Fund (IMF), since 2021, the average annual inflation rate of major global economies has been about 5%, while Bitcoin's price has risen by over 300% during the same period. This growth rate shows that Bitcoin has become an important option for enterprises to cope with inflation.
2. Asset Diversification
Traditionally, corporate reserve assets have primarily been cash and short-term bonds. However, in an increasingly complex global economic environment, Bitcoin is gradually becoming an effective means for companies to achieve asset diversification, helping to enhance financial flexibility. Tesla is such an example, having purchased $1.5 billion worth of Bitcoin at the beginning of 2021, and still holding 9,720 coins by mid-2024. Although the price volatility of Bitcoin presents certain challenges, Tesla CEO Elon Musk believes that the long-term return on Bitcoin far exceeds traditional asset allocations. As mentioned in the company's financial reports, '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, currently, 92 companies globally hold Bitcoin, totaling over 2.6 million coins, accounting for 12.7% of the total Bitcoin supply. This data indicates that asset diversification strategies are increasingly favored and practiced by more companies.
3. Technological Innovation and Brand Image: Standing at the Forefront of the Times
For many enterprises, holding Bitcoin is not just an investment but a way to showcase 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, with its payment platform Cash App allowing users to directly purchase and hold Bitcoin. This strategic choice helps enhance the company's tech image among young users while showcasing its determination to drive the development of new economic technologies.
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 their 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 companies prioritize profit-making. Although Bitcoin prices are highly volatile, the average annual growth rate of Bitcoin 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 although Bitcoin's volatility poses risks, it also provides 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 by over 200 times, far exceeding the S&P 500 index's return rate during the same period. Despite short-term volatility, the long-term appreciation potential presents enormous appeal to enterprises.
Sovereign Nations: 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 their news soon.' This statement has sparked widespread attention regarding sovereign nations holding Bitcoin.
Currently, multiple governments around the world, including the United States, China, and Russia, are either actively or indirectly involved in Bitcoin holdings. The United States is the country with the most Bitcoin holdings globally, with a reserve of 207,189 coins, primarily sourced from confiscations and seizures 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 passes, the United States will also actively establish Bitcoin reserves.
China ranks second with 194,000 Bitcoins, valued at approximately $17.67 billion. These Bitcoins mainly come from government seizures after cracking down on illegal activities. Although China has implemented strict regulations on cryptocurrencies, the Bitcoins confiscated during judicial 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 disclosed specific holding numbers, its mining industry accounts for approximately 11% of 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 use Bitcoin to circumvent the SWIFT system and explore new ways of cross-border trade. In 2024, President Putin signed a bill officially legalizing Bitcoin mining and using abundant energy resources to support the Bitcoin mining industry. Russia has also proposed using cryptocurrencies 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, valued at $4.22 billion; while Bhutan holds 13,029, valued at $1.19 billion. Additionally, El Salvador, as the world's first country 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, circumventing economic sanctions, and promoting digital economic innovation.
1. Hedging Against Economic Sanctions and Enhancing Financial Sovereignty
For some countries facing international economic sanctions, the decentralized nature of Bitcoin provides a way to circumvent traditional financial systems. For instance, countries like Venezuela and Iran encounter serious obstacles in international transactions and capital flows due to financial sanctions from Western countries. Bitcoin does not rely on traditional banks and intermediaries, thus becoming a tool for these countries to bypass sanctions, maintain international trade, and acquire foreign exchange.
Additionally, by holding Bitcoin, countries can reduce their reliance on the dollar to a certain extent and thus enhance their financial sovereignty. This is especially important for some developing countries concerned about dollar hegemony, where holding Bitcoin becomes a significant means to increase financial independence. El Salvador is a typical example in this regard—the country adopted Bitcoin as legal tender in 2021 and added it to its strategic reserves, attempting to reduce its dependence on the dollar while attracting global cryptocurrency investors.
2. Hedging Against Inflation and Fiat Currency Depreciation
Some countries are facing high inflation and fiat currency depreciation issues. The scarcity of Bitcoin (with a cap of 21 million coins) and its decentralized characteristics make it an effective hedging tool. For example, countries like Argentina and Turkey have seen high inflation rates in recent years, and residents and governments in these countries are facing rapid depreciation of their fiat currencies.
In this context, Bitcoin, viewed as 'digital gold', is seen as an attractive option that can help these countries reduce losses from their local currency depreciation through strategic reserves. In fact, some central banks in developing countries have begun to study the inclusion of cryptocurrencies as part of their international reserves, in order to have a means of storing value that is not affected by traditional monetary policies when facing local currency devaluation.
3. Promoting Digital Economic Development and Attracting Foreign Investment
Another important motive for Bitcoin strategic reserves is to promote national digital economic development by embracing cryptocurrency. Particularly for countries like El Salvador, by legalizing Bitcoin and adding it to their strategic reserves, they aim to attract international cryptocurrency companies, investors, and entrepreneurs, creating a blockchain-based digital economic ecosystem.
This practice not only promotes local economic development but may also bring certain tourism and foreign exchange revenues. 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 approach, the country hopes to enhance its voice in international financial markets by holding Bitcoin while encouraging the digital transformation of its domestic economy.
Future: Opportunities and Challenges of Strategic Reserves
Trump has promised to establish a Bitcoin strategic reserve for the United States after taking office, which seems to be seen as a prelude to Bitcoin's ascent. The market is experiencing FOMO, and there is general optimism, with most signals we encounter indicating that countries and enterprises will continue to buy. However, will the future truly develop this way?
Regarding Bitcoin strategic reserves, traditional financial sectors are not short of negative opinions. (The Wall Street Journal) Senior market columnist James Mackintosh believes that for major economic powers like the U.S., the necessity of holding Bitcoin as a strategic reserve is not significant. 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 has also expressed caution. He believes the likelihood of Trump including Bitcoin in the U.S. strategic reserves is low. Novogratz stated in an interview with Bloomberg on Wednesday, 'I still think the odds are low.' He explained that while the Republican Party currently controls the Senate, the number of seats is still fewer than 60, which is not enough to guarantee the smooth passage of this proposal.
The future of Bitcoin is undoubtedly full of uncertainty, with supporters and opponents having ample reasons to believe in their own judgments. For enterprises and countries, holding Bitcoin may be an attempt to explore future 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.
