Donald Trump assumes office with plans to make the United States the world’s bitcoin mining capital. Many are celebrating the idea of bitcoin as a Strategic Reserve Asset. Supporters like Michael Saylor, Tether, and other large institutional players argue this is a landmark achievement, reinforcing bitcoin’s status as a legitimate store of value. However, this growing institutionalization risks compromising bitcoin’s original ethos as “freedom money,” with its decentralization and censorship resistance eroding under the weight of regulatory and economic control.
Centralizing Bitcoin Mining
Trump’s administration has made bitcoin mining a national priority, framing it as an opportunity to dominate the “block space”. Rachel Silverstein, U.S. General Counsel for Bitfarms, commented on the day of the election that, “Sanctions in my mind are a way to avoid war,” and continued to say leaving sanctions as a tool for states to use is important.
Bitcoin blocks have a finite capacity, limiting the number of transactions that can be included in each block. Fred Thiel, CEO of Marathon Digital, commented in an X post: “Block space ensures the ability to transact. Let’s keep the US as the most dominant Bitcoin mining country in the world.” This dominance could empower the U.S. to enforce transaction censorship via compliance with Office of Foreign Assets Control sanctions or other regulatory tools.
The precedent for such control already exists. In 2021, Marathon attempted to mine “OFAC-compliant” blocks, filtering transactions from sanctioned entities. More recently, mining pools like F2Pool have been flagged for possibly excluding sanctioned transactions. Trump’s push for mining dominance presents a clear path to institutionalizing these practices, leveraging tools like the Bank Secrecy Act and FATF recommendations that promote widespread KYC and classify wallet software as Crypto Asset Service Providers.
The Global Adoption Of U.S. Standards
U.S. regulations often set the tone for the international community, particularly in financial systems. For example, the FATF’s global anti-money laundering standards reflect U.S. priorities, and its recommendations have influenced crypto regulations worldwide. Trump’s administration could use bitcoin mining dominance to propagate a framework that aligns with U.S. geopolitical goals. Former White House cybersecurity advisor Carol House suggested in a 2023 talk that network-level censorship could serve national interests, demonstrating the potential to regulate bitcoin under the guise of national security.
The United States has a history of extending its financial jurisdiction beyond its borders to combat illicit activities. For instance, in January 2023, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network identified Bitzlato Limited, a Hong Kong-registered cryptocurrency exchange, as a “primary money laundering concern” due to its connections with Russian illicit finance. This designation led to prohibitions on certain fund transmittals involving Bitzlato by any covered financial institution, effectively restricting its operations on a global scale.
In March 2023, U.S. and German authorities shut down ChipMixer, a cryptocurrency service that allegedly laundered over $3 billion in crypto assets since 2017. ChipMixer was reportedly used by ransomware groups, suspected North Korean hackers, and darknet market users to conceal the origins of illicit funds. These actions demonstrate how the U.S.extends its regulatory reach to enforce financial laws internationally.
Bitcoin’s Strategic Reserve Asset
Advocates like Senator Cynthia Lummis tout the SBR as a solution to U.S. economic challenges, claiming it could “address a meaningful portion of our debt” and strengthen global positioning. Michael Saylor, CEO of MicroStrategy, proposals go further, suggesting the U.S. government should acquire 20-25% of bitcoin to “control the world reserve capital network.”
Saylors Digital Assets Framework highlights the role of criminal liability in enforcing compliance and transparency, ensuring participants adhere to legal and ethical standards while minimizing fraud and misconduct. Frameworks like this could be leveraged to strengthen centralization, potentially solidifying the U.S.’s grip on bitcoin and transforming it from an open, neutral network into a tool of statecraft.
This narrative hides the dangers of institutionalizing bitcoin. Saylor has acknowledged the risks associated with non-compliance to regulatory standards, stating: “I think that when bitcoin is held by a bunch of crypto-anarchists who aren’t regulated entities, who don’t acknowledge government or don’t acknowledge taxes or don’t acknowledge reporting requirements, that increases the risk of seizure.” This perspective aligns with moves like Lummis’s 2023 amendment to the National Defense Authorization Act, targeting anonymous transactions and asset mixers, and shows how the SRA framework could enforce stringent oversight, reducing bitcoin’s utility as a censorship-resistant currency.
Tether: A Trojan Horse?
While bitcoin’s role as an SBR gets attention, stablecoin giant Tether operates in parallel, profiting immensely from global instability. Reports indicate that Tether’s Q3 2024 earnings surpassed those of BlackRock, with Tether reporting a net profit of $2.5 billion compared to BlackRock’s $1.63 billion net income for the same quarter.
Tether’s substantial earnings were primarily due to its investments in U.S. Treasury securities, which yielded significant returns during the quarter. By backing its reserves with U.S. Treasuries, Tether inadvertently supports U.S. monetary policy while providing a stopgap for regions burdened by imported inflation. This maintains the U.S. hegemony at the cost of worsening global financial inequalities, turning Tether into a lifeline, a control mechanism and a top buyer for US debt.
Regulation And Influence
Bitcoin is hailed as “freedom money”, a tool for financial sovereignty, free from state control. However, as institutional players co-opt its narrative, its fundamental properties are threatened. The Strategic Bitcoin Reserve, praised for accelerating bitcoin adoption through global game theory and increased legitimacy, also opens the door to regulatory overreach that threatens to compromise the network’s decentralization.
At a technical level, the realities of regulatory overreach could manifest in the mechanics of bitcoin mining. Miners facing regulatory compliance may increasingly prioritize compliant transactions, leaving less block space for non-compliant ones. Over time, this could drive up fees for non-compliant transactions, effectively pricing them out of the market. This creates a system where financial sovereignty remains theoretically intact but becomes practically inaccessible for those unwilling or unable to meet regulatory demands.
Figures like Donald Trump profit from the systems they claim to empower. Just days before his inauguration, President-elect Trump launched a meme coin called $TRUMP. Announced on his Truth Social and X accounts, the coin’s value surged over 300% within hours, reaching a market capitalization of $8 billion.
Critics argue that such ventures prioritize hype and profit over meaningful contributions. By focusing on short-term financial gains, these efforts risk trivializing any potential and distracting from its role in advancing financial freedoms and resisting institutional control.
According to an article by the Associated Press, the Trump Organization, through CIC Digital, controls 80% of the tokens, with plans to release up to 1 billion over three years.
Reclaiming Bitcoin’s Values
The international community must scrutinize the implications of bitcoin’s institutionalization. While the SRA narrative dazzles with promises of economic stability, it risks undermining bitcoin’s core mission. Systemic reforms are needed to preserve its role as a tool for human freedom.
This may require repealing or reforming laws such as the International Emergency Economic Powers Act, which grants the President authority to regulate commerce during national emergencies, and the Bank Secrecy Act, which enforces stringent anti-money laundering and financial surveillance measures.
Senator Mike Lee introduced the Saving Privacy Act in September 2024, aiming to scale back the Bank Secrecy Act’s reporting requirements and strengthen protections for Americans’ financial data, demonstrating growing congressional support for privacy-focused reforms.
Having a legislative framework is one thing, it provides clarity, sets expectations, and establishes a legal environment where people and companies can innovate. However, the framework should not be restrictive to the point of undermining bitcoin’s core principles.
As Fred Thiel’s comments remind us, “It’s all about block space.” If the U.S. controls this resource, the ideals of financial sovereignty and permissionless innovation could be irreversibly compromised. The world faces a choice: preserve Bitcoin as a decentralized network for everyone or let it become a tool of state control.
