Bitcoin at $116M to Erase US Debt? Math Meets Reality

The United States has entered uncharted fiscal territory with national debt crossing $38 trillion, surpassing the country’s annual GDP by nearly 31%. According to The Kobeissi Letter, this represents one of the fastest periods of debt accumulation in modern history, with Washington adding over $500 billion in new debts in a single month – equivalent to roughly $23 billion per day. The firm’s stark warning that ‘there is a 100% certainty of US bankruptcy with a long enough timeframe’ has amplified concerns about the sustainability of current fiscal policy.

This accelerating debt burden has created fertile ground for radical financial solutions. Bitcoin advocates see the situation as proof that fiat money has reached the limits of credibility, with the idea gaining surprising traction as fiscal anxiety spreads. The notion that Bitcoin could someday help erase US debt, once considered digital-age alchemy, has moved from crypto forums into mainstream policy debates.

The concept of using Bitcoin to address national debt has found influential political champions. During his campaign, President Donald J. Trump suggested the United States could clear its debts through Bitcoin, and upon taking office he approved the launch of a Strategic Bitcoin Reserve. This move has gathered significant community support, particularly from crypto advocate Senator Cynthia Lummis, who argues that building a Sovereign Bitcoin Reserve could ‘shore up the dollar with a hard, auditable asset.’

Senator Lummis envisions Bitcoin serving a similar function to gold in earlier eras: signaling credibility, hedging against inflation, and potentially helping retire a fraction of the debt decades from now. Her statement that ‘[BTC will] secure our debt with a hard asset + we can audit it to prove reserves at any time’ reflects a growing sentiment that traditional fiscal tools may be insufficient for current challenges. This rhetoric, once considered fringe, now resonates in a world where fiscal expansion appears endless.

The theoretical exercise of using Bitcoin to eliminate US debt reveals mathematically elegant but practically impossible scenarios. At first glance, dividing $38 trillion in national debt by Bitcoin’s circulating supply of 19.93 million BTC suggests a price target near $1.9 million per coin. However, this calculation assumes the US government owns the entire Bitcoin supply, which it does not.

According to Bitcoin Treasuries data, the US currently holds approximately 326,373 BTC, representing just 1.6% of Bitcoin’s total supply, primarily acquired through seizures from criminal investigations. Using only these holdings to clear the debt would require Bitcoin to reach $116.5 million per coin – approximately 1,000 times higher than current prices near $108,000. At this valuation, Bitcoin’s total market capitalization would soar to roughly $230 trillion, more than twice the world’s GDP.

The practical limitations become immediately apparent when examining market mechanics. Bitcoin trades about $60-$70 billion in daily volume according to CoinMarketCap data, representing only a fraction of the $7.5 trillion liquidity seen in global bond or FX markets. Attempting to liquidate even a small portion of US Bitcoin holdings to repay government debt would instantly crater demand and destroy price depth long before meaningful debt reduction could occur.

Further complicating the debt elimination scenario is the actual available supply of Bitcoin. A Chainalysis report suggests that about 20% of all mined coins, representing nearly 4 million BTC, are permanently lost to forgotten keys or destroyed wallets. This leaves closer to 16 million BTC in effective circulation, significantly less than the theoretical maximum supply of 21 million.

Adjusting for these lost coins, the so-called ‘debt parity’ figure rises to more than $2 million per Bitcoin even under the unrealistic assumption that the government could acquire the entire circulating supply. The combination of limited effective supply, constrained trading volume, and the massive scale of US debt creates an insurmountable gap between mathematical possibility and financial reality.

While Bitcoin cannot literally extinguish America’s debt, the exercise exposes a more profound truth about modern finance. It demonstrates that governments can create liabilities faster than markets can produce credible collateral, widening the gap between what money represents and what it measures. This asymmetry explains why Bitcoin continues to resonate in policy debates and portfolio strategies alike.

Bitcoin’s design, capped at 21 million BTC, stands in silent contrast to a financial system built on perpetual expansion. Scarcity, once treated as a relic of the gold era, has become the most valuable commodity in money. Each trillion added to the US debt reinforces Bitcoin’s narrative of finite supply versus infinite credit, helping explain why institutional interest keeps deepening through spot ETFs, corporate treasuries, and speculative talk of sovereign reserves.

For investors, Bitcoin has evolved from a technological curiosity into a macro hedge against a world where the denominator – the dollar itself – no longer feels fixed. The growing recognition of Bitcoin’s scarcity value in an era of unlimited government borrowing represents a fundamental shift in how both institutions and individuals perceive store of value assets in the 21st century.