S.4912 - BITCOIN Act of 202
Sources
https://www.congress.gov/118/bills/s4912/BILLS-118s4912is.pdf
https://www.congress.gov/bill/118th-congress/senate-bill/4912/all-actions
https://www.congress.gov/bill/118th-congress/senate-bill/4912/committees
https://www.lummis.senate.gov/about-cynthia/
https://www.youtube.com/watch?v=iYVMX0zdp64
Summary
Senate Bill S.4912, also known as the BITCOIN Act of 2024, proposes the creation of a Strategic Bitcoin Reserve for the U.S. government. The bill mandates the purchase of up to 1,000,000 Bitcoins over five years, held for at least 20 years, and managed with transparent Proof of Reserve systems. It also aims to consolidate existing government Bitcoin holdings and offers a voluntary program for states to store their Bitcoin within the reserve. Finally, the bill outlines how the costs of this initiative would be offset using resources from the Federal Reserve System.
National Debt and GDP in the BITCOIN Act of 2024
The interview with Senator Lummis highlights concerns regarding the national debt, which has recently exceeded $35 trillion, although no specific date is provided for this figure. Senator Lummis emphasizes the absence of a strategic plan to manage the escalating national debt, identifying it as a significant impetus for the introduction of the BITCOIN Act.
The discussion also touches upon the debt-to-GDP ratio, a critical measure of economic health. Senator Lummis notes that the United States currently has a debt-to-GDP ratio of approximately 120%, indicating that the national debt is 120% of the nation's annual economic output. She cautions that surpassing a 130% debt-to-GDP ratio could signal potential economic instability.
The BITCOIN Act is proposed as a viable strategy to address the national debt. Senator Lummis suggests the acquisition of 1 million Bitcoin over a five-year period, to be held in a "Strategic Bitcoin Reserve" for a minimum of 20 years. The objective is to harness Bitcoin's growth potential to mitigate the debt and fortify the US dollar.
Funding the Strategic Bitcoin Reserve: A Multi-Faceted Approach
The Bitcoin Act of 2024 presents a comprehensive strategy to accumulate 1 million Bitcoin within a five-year timeframe, aiming to create a "Strategic Bitcoin Reserve." The plan emphasizes a diversified funding approach, leveraging current government assets and Federal Reserve resources, thereby avoiding the imposition of new taxes.
Here's a breakdown of the funding mechanisms proposed in the bill:
The bill proposes reallocating Federal Reserve surplus funds, tapping into Federal Reserve remittances, leveraging gold certificate revaluation, and consolidating existing government Bitcoin holdings to fund the Bitcoin Purchase Program. It aims to reduce Federal Reserve banks' surplus funds by $4.425 billion and allocate the first $6 billion of annual remittances from 2025 to 2029 to the program. The bill also suggests revaluing gold certificates to reflect current market prices, with the difference remitted to the Treasury for Bitcoin purchases. Additionally, it mandates transferring Bitcoin held by federal agencies to a Strategic Bitcoin Reserve, contributing significantly to the reserve without new purchases.
Projected Cost:
Acquiring 1 million Bitcoin is estimated to cost $50 billion over five years, assuming a hypothetical average price of $50,000 per Bitcoin. The plan involves purchasing 200,000 Bitcoin annually, with costs subject to market fluctuations.
Reasons for Choosing Bitcoin According to Senator Lummis
The United States government, through the BITCOIN Act of 2024, is considering Bitcoin as a strategic asset for several reasons. Senator Cynthia Lummis, the bill's sponsor, highlights Bitcoin's potential to diversify the US balance sheet with appreciating hard assets, contrasting it with the depreciating US dollar. Bitcoin's scarcity, durability, and immutability make it a superior asset compared to others. Its decentralized nature enhances security, and it could help address the national debt, which exceeds $35 trillion. Bitcoin's historical growth rate and potential strategic value, similar to the Strategic Oil Reserve, are also noted. Additionally, Bitcoin's neutrality and non-partisan nature make it an acceptable asset for the US government. Overall, Bitcoin is seen as a hedge against inflation, a tool to address national debt, and a secure, transparent asset aligning with decentralization and innovation.
Effects of the BITCOIN Act of 2024 Becoming Law
The BITCOIN Act of 2024 proposes significant changes in the US financial system by integrating Bitcoin as a strategic national asset. Key components include establishing a Strategic Bitcoin Reserve, a Bitcoin Purchase Program to acquire 1,000,000 Bitcoins over five years, and using Bitcoin to potentially strengthen the US dollar and reduce national debt. The act emphasizes transparency through a Proof of Reserve system and mandates independent audits. It consolidates government Bitcoin holdings and allows state participation. The act also protects private property rights, ensuring no seizure of lawfully acquired Bitcoin. Its success depends on Bitcoin's performance and public acceptance.
Potential Pushbacks to the BITCOIN Act of 2024
Concerns About Bitcoin’s VolatilitySecurity Risks and CyberattacksComplexity and Lack of UnderstandingPolitical Opposition and Ideological DifferencesImpact on Monetary Policy and the Federal ReserveEnvironmental ConcernsEthical Considerations and Potential for AbuseLong-Term Viability and Uncertainty