Sen. Cynthia Lummis (R-Wyo.) says that the Trump administration is considering a radical plan to convert a portion of the nation's gold reserves into Bitcoin (CRYPTO: BTC) to build a strategic digital reserve.
U.S. Debt Triggers Unconventional Fiscal Debate
The United States national debt has climbed to $38 trillion, prompting calls for new approaches to restore fiscal stability.
Interest payments are projected to reach $14 trillion over the next decade, raising concerns about long-term solvency.
Lummis said selling or revaluing U.S. gold certificates to fund Bitcoin purchases could "cut the national debt in half over 20 years."
From Gold To Bitcoin: The Lummis Blueprint
Studies by Strategy Inc. (NASDAQ:MSTR) founder Michael Saylor and economist Arthur Laffer underpin the concept.
Both argue that acquiring roughly 5% of global Bitcoin supply, or one million coins, could deliver exponential long-term returns compared with stagnant gold holdings.
Data shows that a 5% capital rotation from gold into Bitcoin could lift BTC's price to roughly $242,000 per coin.
"The U.S. could take undervalued gold on its books, reprice it, and convert into Bitcoin," Lummis said.
"This would allow us to build a strategic reserve without new borrowing, leveraging Bitcoin's asymmetric upside as a store of value," she added.
Analysts estimate the U.S. Treasury's 261.5 million troy ounces of gold could raise about $1.3 trillion at $5,000 per ounce.
The value would grow substantially if Bitcoin appreciated into six-figure territory as modeled.
Debt Pressure Reaches Record Levels
The Treasury Department confirmed the debt crossed $38 trillion after adding $1 trillion in two months.
White House spokesman Kush Desai said Trump has trimmed deficits by $350 billion this year but acknowledged deeper reforms are needed.
"Structural change is necessary," Desai said, emphasizing long-term debt management remains a top priority.
Conventional options like spending cuts and tax hikes have so far failed to slow borrowing.
The gold-to-Bitcoin concept, while unconventional, has captured attention amid growing skepticism about the sustainability of fiat-based reserves.
Risks Of A Bitcoin Reserve
Critics warn that selling more than 8,000 tonnes of U.S. gold could depress global prices and undermine reserve credibility.
Large-scale Bitcoin purchases might also trigger extreme volatility, pushing prices higher during accumulation and risking sharp reversals later.
Treasury market analysts say the move could rattle global creditors.
Replacing a proven reserve asset with a volatile one might increase borrowing costs and erode confidence in U.S. debt markets.
Outlook: Can Bitcoin Really Halve The Debt?
Observers caution that even a $1.3 trillion conversion would not erase the national debt unless Bitcoin appreciates 700% from current prices.
Lummis argues that inaction is riskier.
"We can't borrow our way out of this," she said. "But we can invest in an asset with exponential upside and let time work in America's favor."
For now, Trump's proposal remains speculative, straddling the line between fiscal innovation and financial gamble.
Whether it becomes policy or political theater will depend on market reaction and Washington's appetite for risk.
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