CEO of Newmarket Capital Proposes $2 Trillion 'Bitcoin Bonds' for U.S. Purchase

Andrew Hohns, CEO of Newmarket Capital, has proposed a strategy for integrating Bitcoin into government bonds to help lower national debt and acquire Bitcoin for the U.S. strategic reserve.

During the Bitcoin for America event hosted by the Bitcoin Policy Institute on March 11, Hohns introduced the concept of "Bit Bonds," a new kind of U.S. Treasury bond that incorporates Bitcoin into the government's funding strategy. The aim is to utilize bond issuance to decrease government borrowing expenses, establish a strategic Bitcoin reserve, and provide American families with a tax-free investment opportunity.

Hohns suggested the U.S. government issue around $2 trillion in Bit Bonds, with 90% of the funds going towards government purchases and 10% of the proceeds being used to buy Bitcoin. This would mean that for every $100, about $10 would be invested in BTC.

"If it's a $2 trillion issuance right away, that would translate to $200 billion worth of Bitcoin if bought at $90,000 per BTC. That's 2.22 million Bitcoin. Of course, the price will vary, and we'll likely end up with a different amount," Hahn explained during his presentation.

According to the Newmarket Capital CEO, these bonds would allow the U.S. federal government to acquire $200 billion worth of Bitcoin while saving the government $554 billion in 10-year interest rates. This is because Bit Bonds offer a much lower annual rate of 1% compared to the 4.5% interest rate of U.S. Treasuries, which could significantly reduce interest expenses.

Furthermore, Hohns stated that Bit Bonds would be an appealing investment for foreign investors, as they can serve as eligible collateral for various swap and derivative arrangements. Investors have the potential to earn a 4.5% compound annual growth rate on a senior basis, which aligns with current Treasury yields.

After earning this fixed return, investors would receive a 50% share of the Bitcoin purchase's upside, while the U.S. government would receive the remaining 50%. Depending on Bitcoin's performance, the total returns for investors could be quite attractive, ranging from nearly 7% to as high as 17% annually on a tax-free basis.

"This creates a government entitlement of Bitcoin that is slightly greater than $50.8 trillion, which is the expected size of the funded federal debt in the year 2045. In other words, with this plan, we're in a position to eliminate the federal debt," Hahn clarified.

Additionally, Hohns also suggested making Bit Bonds available to American citizens as it is a "powerful tool to guard against inflation." As a savings instrument, Hahn said the bonds should be exempt from income tax and capital gains tax for the American people.

He claimed that a family could invest $2,900 and receive a yield of 7% to 17% over a 10-year period, depending on Bitcoin's performance during those years.