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Viraj Randev
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Viraj Randev
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Elena Bozhkova
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Elena Bozhkova
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Key takeaways:
- Donald Trump plans to use over 210,000 BTC held by the U.S. as the seed for a national Bitcoin reserve, but the plan may face legislative challenges.
- Analysts warn that implementing the plan would require new legislation, bipartisan consensus, and support from regulatory bodies like the Federal Reserve.
- Trump’s commitment to increasing fossil fuel use for Bitcoin mining raises major environmental concerns.
- Kamala Harris is surprisingly warming up to Bitcoin, with a new “Crypto for Harris” initiative launched. The move means she’s ready to compete with Trump to win the crypto-native vote.
Donald Trump has emerged as the cryptocurrency champion the sector never knew it needed. Coming to the Bitcoin Conference in Nashville, Tennessee, in late July, the former president looked to position himself for the growing influence of crypto on U.S. elections. By the end of his speech, he had made some of the conference’s most bullish statements.
The presumptive Republican presidential nominee said his government will not sell any of the 213,246 Bitcoin seized by U.S. law enforcement from criminal activities. Much of the BTC was taken from the defunct darknet marketplace Silk Road in 2013. Along with future acquisitions, Trump promised, “This will serve, in effect, as the core of the strategic national Bitcoin stockpile.”
The real estate billionaire made a series of ambitious promises throughout his address. Besides the strategic government reserve of Bitcoin, Trump also said he will:
- Double electricity production to support Bitcoin mining
- Relax restrictions against fossil fuels to allow miners, AI, and other tech to compete against other countries
- Remove the Securities and Exchange Commission (SEC) chairperson Gary Gensler from office on his first day as president
- Appoint a Bitcoin and Crypto Presidential Advisory Committee to come up with a policy for the sector in 100 days
- Stop the creation of a central bank digital currency
- Create a framework for the responsible expansion of stablecoins
The U.S. holds the biggest amount of Bitcoin of any other government, about $13 billion worth, according to the crypto tracking website Bitcoin Treasuries. That’s the equivalent of 1% of the global supply of BTC, which currently stands at around 19.7 million coins. Bitcoin’s total supply is capped at 21 million tokens.
However, plans for a Federal stockpile faced a reality check days after the conference as the U.S. government moved $2 billion of its Bitcoin to a new wallet address, according to data from Arkham Intelligence. Such actions are typically followed by a sale, with the proceeds used to compensate victims of criminal activities involving the crypto asset.
If Trump wins the election, the U.S. Bitcoin cache could be significantly depleted by the time he assumes office in January 2025.
Analysts say that Trump’s Bitcoin reserve plan will require a new law to bring it into effect. The lack of bipartisan consensus for crypto bills, the potential for litigation over appointments, and ethical considerations could make it hard for Trump to fulfill his promises.
“The Federal Reserve is the biggest obstacle to making Bitcoin a reserve currency because they control monetary policy in the U.S.,” Courage Kimber, crypto consultant, told Cryptonews. “In order to make changes to the way the FED operates, Congress – the legislative branch – would need to introduce and approve new legislation to have Bitcoin named the new reserve currency.”
Crypto in 2024 Elections – What Are the Stakes?
According to Trump’s own estimate, 175 million people in the United States use cryptocurrency in some form. A conservative estimate puts the figure at 52 million. Meanwhile, recent data by the Blockchain Trust shows crypto is a key issue for 20% of all voters in the so-called swing states for the November election.
The Biden-Harris administration is not known for its enthusiasm for cryptocurrency. Senior policymakers and regulators, such as Elizabeth Warren and SEC Chair Gary Gensler, are widely recognized for their strict approach to the sector.
The Republican policy of minimal interference allowed the price of BTC to surge 3,900% during Trump’s reign between 2017 and 2021—all despite his stated criticism of Bitcoin and crypto at the time. Now that the former president has identified the crypto vote as a thing, he is ready to claim that legacy.
Trump doesn’t need to reinvent himself for his May 2024 shift towards cryptocurrency. A recent op-ed suggests that the former president’s anti-establishment reputation aligns with the Bitcoin community, which shares a similar ethos. His speech at the 2024 Bitcoin Conference maintained his combative MAGA attitude, integrating cryptocurrency into his “America First” campaign. Trump effectively positions Bitcoin as a new battleground in the economic competition with countries like China. He aims to make America “the crypto capital of the planet and the Bitcoin superpower of the world.”
Double Energy for the Miners
Donald Trump’s geopolitical crypto race will require more electricity. The former president wants to deliver double the supply of energy currently available to Bitcoin miners, AI firms, and other innovators in the U.S. “We’ll be releasing people from certain ridiculous requirements, and we’ll be using fossil fuel to make electricity,” Trump said at the Bitcoin conference. “We’ll be using nuclear power. We’ll be doing it in an environmentally friendly way.”
According to the Cambridge Centre for Alternative Finance (CCAF), Bitcoin mining accounts for up to 2.6% of U.S. electricity consumption every year. Nearly 40% of the energy used in cryptocurrency mining is derived from coal, a major source of greenhouse gas emissions.
In recent years, Bitcoin mining has increasingly come under scrutiny for its environmental impact. Companies like Gridless have pushed a green energy mining drive. El Salvador, the only country that has made BTC legal tender, is using its volcano energy to mine the token and buying one Bitcoin per day for its national reserve.
In contrast, Trump’s promise to double the U.S. energy supply for Bitcoin mining makes no promises to protect the environment. He does not address the tension between using fossil fuels and the need for sustainable, green energy. This approach shows a classic disregard for environmental concerns.
Trump’s plan to pump up fossil fuels for mining is likely to be met with opposition from several quarters, including Congress, leftist radicals, and the crypto community itself. Prominent thinkers such as Slavoj Zizek and Yanis Varoufakis have previously questioned crypto’s claims of championing individual freedoms, considering its toll on the environment.
Recent innovations within crypto, such as the replacement of mining with staking on the Ethereum blockchain, also reflect the community’s sensitivity to the problem. Trump’s proposed extractive regime risks undermining Bitcoin’s socially progressive ethos.
Bitcoin Legislation Would Cut Both Ways
Analysts note that Trump would need to get Congress and Senate on board for a new law enabling his BTC stockpile. The bullish parade of Republicans, such as Senator Cynthia Lummis and Senator Bill Hagerty, at the Bitcoin Conference suggests that lawmakers are aligned with the initiative.
However, current activity in both houses suggests otherwise. Senators Jeff Merkley, Richard Blumenthal, Chris Van Hollen, Elizabeth Warren, and Sheldon Whitehouse, as well as Representatives Eleanor Holmes Norton, Jamie Raskin, and John Sarbanes, wrote to the Commodity Futures Trading Commission asking the regulator to finalize a rule that would ban election gambling.
The letter cited the example of Polymarket, a prediction market on the Ethereum blockchain.
“Voters need action, as proposed by the CFTC in this rule, to restore trust,” the lawmakers wrote. “Elections are not a for-profit enterprise. Without this rule, voters will wonder if their vote mattered, and whether the outcome of the election was influenced by big money bets.”
Should he win the November election, Trump will likely not have it easy. He will face resistance from lawmakers and entrenched regulatory bodies who have yet to embrace cryptocurrency. His plan to fire SEC chairperson Gensler might be a legal nightmare.
“In terms of firing Gensler, [this] won’t happen because he is a presidential appointee approved by Congress,” Kimber, the crypto consultant, told Cryptonews. “But he [Trump] could simply appoint someone else when Gensler’s term ends in 2026, which would make him a hero in the eyes of many in the crypto community,” she added.
Can Bitcoin Be a Reserve Currency?
Some in the crypto community are not convinced that a BTC reserve would be the right move for the benchmark cryptocurrency. In a recent interview on YouTube, Jim Bianco, president of Bianco Research and former Wall Street analyst, explained that a national Bitcoin reserve could be problematic for the U.S. economy.
He said the legislation needed to create the reserve would put Bitcoin under government control and give the U.S. Federal Reserve influence on the price of the asset. This would go against the foundational principles of Bitcoin as a decentralized, alternative financial system outside the control of the establishment.
“Every time a government steps in and does something like this, they put rules on it,” Bianco said. “They’re going to decide what is the appropriate price for Bitcoin, and they’re going to sell it when it’s too high, they’re going to buy it when it’s too low, they’re gonna decide who owns it.”
Courage Kimber believes that using Bitcoin to prop up, or back the dollar is possible. For example, the state can have 100 satoshis (a satoshi is the smallest unit of BTC) in reserve for each dollar in circulation, like a “digital gold standard,” she says.
“However, it is not feasible to have Bitcoin as a reserve currency because of the 21 million supply cap and the inability to mint new Bitcoins,” Kimber explained. “You need to have a large supply to be a reserve currency and for it to be a medium of exchange. Bitcoin is good as a store of value but not so much as a medium of exchange…”
She suggested that Trump should instead consider adding Bitcoin to the Federal Reserve’s balance sheet. “This will show that the U.S. is progressive and looking toward the future of finance and help to secure dominance globally,” Kimber said.
However, Trump’s plans for a Bitcoin reserve are gaining traction with Senator Lummis, a known advocate for the crypto industry. On July 31, she formally introduced the Bitcoin Reserve Bill to the U.S. Senate. This bill proposes the creation of a national Bitcoin reserve and includes plans to purchase one million BTC—about 5% of the total Bitcoin supply—using U.S. Treasury funds. This would be similar to the government’s strategy on gold.
Kamala Harris’ Counter-Attack
As it turns out, Harris is not ready to cede Bitcoin to Trump. The Democratic presidential candidate recently appointed David Plouffe, who sat on the advisory board of Binance, and Gene Sperling, who was a Ripple board member, to her campaign team. This gesture coincided with calls for the Vice President to go toe-to-toe with Trump on the crypto battleground.
On Aug. 8, Harris’ campaign announced a “Crypto for Harris” initiative, which will likely take off with the support of Democrats already involved in cryptocurrency. The initiative reportedly boasts 50 members already and has been backed by prominent business people such as Dallas Mavericks co-owner and billionaire Mark Cuban and SkyBridge Capital founder Anthony Scaramucci.
On Polymarket, Harris is closing in on Trump with 48% odds, while Trump has dropped from his all-time high of 72% to 51%. Trump’s purported racist attack on Harris, which he doubled down on at the Bitcoin Conference, was attributed to this slump.
At least for now, Trump seems in a hurry to ignore the humane side of crypto for zero-sum geopolitics. His Nashville speech does not significantly depart from separatist, racist, and ecologically insensitive rhetoric. “Crypto for Harris” not only needs to voice the vice president’s support for Bitcoin but also beat Trump in articulating the potential for crypto as a tool for free speech and decentralization.
