CEO Suggests US Fund Bitcoin Buys With $2 Trillion Bit Bonds 🤑

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At the Bitcoin For America event, where the air was thick with the scent of innovation and the promise of digital freedom, Andrew Hohns, CEO of Newmarket Capital, dropped a bombshell of an idea. He proposed a new type of treasury instrument, which he affectionately calls “Bit Bonds.” 🤑

Imagine this: a $2 trillion bond issuance that could lower borrowing costs, create a massive national Bitcoin reserve, and potentially pay off future debt. It’s like a financial magic trick, but instead of pulling a rabbit out of a hat, we’re pulling Bitcoin out of a Treasury. 🎩✨

And just when you thought things couldn’t get any more exciting, this proposal comes hot on the heels of President Donald Trump’s executive order to create a strategic Bitcoin reserve. The order, which reads like a page from a sci-fi novel, instructs the Secretary of the Treasury and Commerce to find “budget-neutral” ways to buy BTC. 📜✨

Hohns’ plan is simple, yet audacious. He suggests dedicating 10% of the bond proceeds—$200 billion out of a $2 trillion issue—to purchase Bitcoin. The remaining 90% would fund regular government spending. The bonds would carry a lower interest rate of 1% for the first 10 years, with a final payout that includes a guaranteed annualized return of 4.5% and a share of any Bitcoin price appreciation. 📈💰

“$2 trillion bond issuance, 10% of the bonds go for the purchase of Bitcoin, 90% go for other government purchases,” Hohns explained, with the enthusiasm of a kid who just discovered a new flavor of ice cream. “The government itself would retain half of any gains from Bitcoin’s price increase.” 🍦💼

The plan hinges on Bitcoin’s historical growth rates. Hohns believes that if Bitcoin continues to grow at even the more modest rates observed in its past, the upside could be transformative for both investors and the US Treasury. It’s like betting on a sure thing, but with a digital twist. 🎲💻

One of the immediate benefits, according to Hohns, is the reduction of the federal government’s interest expense. “The current US 10-year rate is roughly 4.5%. The proposed rate for the BitBond is 1%, which is a 3.5% annual savings, or $70 billion on $2 trillion of total issuance. Over 10 years, that’s $700 billion.” 📉💸

Even after accounting for the $200 billion spent on Bitcoin, Hohns calculated a net present value (NPV) saving of $354 billion. He contends that this structure is “revenue-neutral,” meaning the overall cost to taxpayers would be offset by the lower interest burden. It’s like getting a free lunch, but with a side of fiscal responsibility. 🍔📊

Hohns also stressed the potential for significant gains if Bitcoin’s price appreciates as it has in past market cycles. “If Bitcoin’s performance meets or exceeds long-term bullish projections, the US government’s portion of Bitcoin gains could defease the federal debt.” It’s like hitting the financial jackpot, but with a digital twist. 🎰💰

But Hohns’ vision doesn’t stop at government savings. He argues that reducing the 10-year rate to 1% for this tranche of issuance could “ripple through the rest of the Treasury market” and help bring down borrowing costs for mortgages, auto loans, and small business financing. He also framed Bit Bonds as a possible tool for everyday Americans to build wealth. 🏡🚗💰

“For American families, I would like to propose that the Bit Bonds be free of income tax and free of capital gains tax in order to put a tremendous tool for savings in the hands of everyday Americans.” It’s like a financial gift from the government, but with a digital bow. 🎁💻

Hohns gave an example in which 20% of the $2 trillion issuance is taken up by American households. Each family’s share (approximately $2,900) would appreciate on a tax-exempt basis, delivering compound growth if BTC’s performance meets historical levels. It’s like a digital piggy bank that grows on its own. 🐷🚀

While Hohns’ proposal is still a “thought experiment,” its breadth and ambition caught the attention of attendees at the Bitcoin For America event. He concluded by emphasizing the triple benefits that could be achieved—lower government interest costs, a sizable SBR, and the possibility of enhanced savings for citizens. 🎉🇺🇸💰

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2025-03-14 04:44