What is Strategic Reserve?

A strategic reserve refers to the stockpiling of certain quantities of goods, currencies, energy, or human resources by a nation to ensure the normal operation of its economy and defense needs during times of war or unforeseen situations. It is planned and accumulated in peacetime and mainly includes material reserves, financial reserves, and energy reserves.
The most well-known example is the United States’ Strategic Petroleum Reserve (SPR), which is the largest known oil reserve plan in the world. It was established by the U.S. Congress in 1975 following the 1973-74 Arab oil embargo that threatened the U.S. economy. The reserve is used to stabilize the oil market during wartime or when hurricanes affect oil infrastructure in the Gulf of Mexico. Other countries, like Canada, also have unique reserves such as maple syrup, and China holds strategic reserves of metals, grains, and even pork products.

What is the U.S. Bitcoin Bill?

On July 31, 2024, U.S. Senator Cynthia Lummis introduced the Bitcoin Bill. This bill aims to integrate Bitcoin into the U.S. national financial strategy by establishing a strategic Bitcoin reserve (SBR).
According to the Bitcoin Bill, the U.S. government plans to purchase up to 1 million Bitcoins over five years, divided into four batches of 250,000 Bitcoins each. The funds for these purchases will come from seized Bitcoins, surplus funds from the Federal Reserve, and revalued gold certificates. These Bitcoins must be held for at least 20 years and can only be used to pay off federal debt, ensuring that the reserve remains a stable and long-term asset.

Why Bitcoin Can Be a Strategic Reserve

Bitcoin’s potential as a strategic reserve comes from its unique attributes and advantages in the global financial environment:

1. Decentralization: Bitcoin’s decentralized nature means it does not rely on any government or single entity, making it immune to political interference and geopolitical risks.
2. Scarcity: Unlike traditional currencies, Bitcoin’s total supply is fixed at 21 million coins. This design ensures that Bitcoin cannot be devalued due to government policies or economic fluctuations, acting as a hedge against inflation and currency devaluation.
3. Liquidity: Compared to traditional assets like gold, Bitcoin has the ability for instant global transfer. It is easily tradable worldwide and can be stored through digital wallets, reducing storage costs and management complexity.
4. Global Recognition: Bitcoin’s global recognition is steadily increasing, with more institutions and enterprises incorporating it into their asset allocations. Some countries, like El Salvador, have even made Bitcoin a legal tender. This trend demonstrates that Bitcoin is gaining traction in the global financial system.

Global Trends of Bitcoin as a Strategic Reserve

United States

On January 15, 2025, the state of Oklahoma introduced a proposal to establish a Bitcoin strategic reserve, hoping to leverage the potential of this cryptocurrency as a hedge against inflation. As of now, six states in the U.S. have proposed establishing Bitcoin strategic reserves. In November 2024, Pennsylvania introduced the Pennsylvania Bitcoin Strategic Reserve Bill, which would authorize the state’s treasury to invest 10% of its $7 billion reserve in Bitcoin. A month later, Texas introduced the Texas Bitcoin Strategic Reserve Bill, which proposes creating a special fund within the state treasury to hold Bitcoin as a financial asset for at least five years. Other states, including Ohio, North Dakota, and New Hampshire, have also proposed Bitcoin reserve bills.

El Salvador

Since 2021, the government of El Salvador has been regularly purchasing Bitcoin. To date, the government holds approximately 2,381 Bitcoins, with an investment exceeding $100 million. President Nayib Bukele has stated that these Bitcoins will be held long-term and will not be sold in the short term, with the expectation of capital appreciation over time.
Additionally, the government plans to use the proceeds from the appreciation of Bitcoin to fund various social projects, including infrastructure and healthcare. This move not only highlights Bitcoin’s potential as a reserve asset but also demonstrates Bitcoin’s relative independence from traditional monetary systems.

MicroStrategy

Among the institutions investing in Bitcoin, MicroStrategy is one of the most prominent. Since 2020, MicroStrategy has been purchasing Bitcoin on a large scale and incorporating it into its corporate balance sheet. To date, MicroStrategy has accumulated 423,650 Bitcoins, with a total investment exceeding $25.6 billion. Despite the volatility of Bitcoin’s price leading to unrealized losses, MicroStrategy remains steadfast in its commitment to holding Bitcoin, believing its long-term value far outweighs short-term price fluctuations.

Tesla

Tesla, the world-renowned electric vehicle manufacturer, has also made active attempts to incorporate Bitcoin into its strategic reserve. In 2021, Tesla announced the purchase of $1.5 billion worth of Bitcoin and added it to its balance sheet. CEO Elon Musk publicly stated that Bitcoin, with its sufficient liquidity, could serve as a substitute for cash, further enhancing the company’s liquidity. Although Tesla later sold 10% of its Bitcoin holdings to test market liquidity, its commitment to Bitcoin as a long-term strategic reserve remains unchanged.

Conclusion

Today, Bitcoin has grown from a marginalized asset to a rising candidate for global strategic reserves. From sovereign nations to mainstream institutions and traditional enterprises, an increasing number of forces are redefining Bitcoin’s role. With the possibility of Trump officially becoming the 47th U.S. President, the call for the Bitcoin Strategic Reserve Bill is gaining momentum. Whether or not Bitcoin becomes a strategic reserve asset for the U.S. or other countries in the short term, it has already proven its practical value, and the discourse of “crypto being useless” has shattered. In this context, over the next decade, Bitcoin’s potential as a global strategic reserve asset will be fully realized, and its application scenarios may continue to expand.