Setting Up Bitcoin National Reserves: A Competitive Race
The idea of national bitcoin reserves is gaining momentum and becoming more of a reality rather than just a theoretical concept. It was recently reported that 13 nations already hold bitcoin as a reserve currency.
Russia is considering bitcoin as a reserve asset, with a member of its parliament calling on the central bank to explore this option. There is also speculation that GCC nations are quietly looking into similar strategies, highlighting the increasing importance of bitcoin, especially during Donald Trump’s second term as US president.
According to Grant McCarty, co-executive director of the Bitcoin Policy Institute, multiple countries have already purchased bitcoin without announcing it. He credits Trump for boosting global interest in bitcoin, especially after naming crypto advocate Paul Atkins as the head of the Securities and Exchange Commission.
Bitcoin’s decentralized and borderless nature makes it an attractive option as a reserve asset, according to Matthew Pines, head of strategy at the Bitcoin Policy Institute. Governments, including those in the Middle East, are exploring opportunities in bitcoin mining to increase their holdings of the cryptocurrency.
Countries like the UAE are working to expand their mining operations, with the UAE’s mining capacity estimated to be between 800 to 1,000 megawatts. Plans are already in place to build a $1 billion solar farm in Abu Dhabi dedicated to crypto mining.
Bitcoin offers several advantages for nations diversifying their reserves, including resistance to external control and a hedge against inflation due to its fixed supply. For the GCC, bitcoin could help stabilize budgets affected by fluctuations in oil prices, which dominate the region’s economies.
Despite the potential benefits, countries like the US and Russia may still view gold and the dollar as safer options due to bitcoin’s volatility. However, Eric Trump expressed confidence that bitcoin could reach $1 million, which might encourage policy makers in the GCC to move forward with their plans for a bitcoin national reserve.
