The United States spent an amount equal to nearly half the current market value of Bitcoin held by the federal government in the first six days of its war with Iran.
The government told lawmakers this week that the war had cost at least $11.3 billion during its first six days, according to Reuters. reported on March 11.
According to the report, the $11.3 billion estimate came from a closed-door briefing for senators on Tuesday and did not include the full cost of the conflict.
Meanwhile, US officials also told lawmakers that $5.6 billion in ammunition had been used during the first two days of the strikes. Several members of Congress reportedly said they expect the White House to request additional money from Congress.
An estimate of US war spending in Iran in Bitcoin
Data from BitcoinTreasuries, which tracks Bitcoin holdings by governments and corporations, shows that US government agencies own 328,372 Bitcoin. At the current market price of about $70,430, that asset was worth about $23.13 billion.
That puts the six-day war bill at about 48.9% of the current market value of the tracked federal holding company. At the time of writing, that $11.3 billion has also been converted into approximately 160,443 Bitcoin.
The math also shows the pace of spending. At $11.3 billion over six days, the average cost is about $1.88 billion per day. At that rate, owning 328,372 Bitcoins in full would equate to about 12.3 days of war spending.
Meanwhile, an additional request of $50 billion, an amount that congressional aides told Reuters could be on the table, would equal about 2.16 times the current market value of the government’s tracked Bitcoin holding.
These figures are primarily about the size of the U.S. government’s war spending and do not describe how the government is financing the war.
According to the White House order that created the Strategic Bitcoin Reserve, the Bitcoin deposited in the reserve “shall not be sold” and must be maintained as a reserve of the United States.
The order also specifies that agencies may not sell or otherwise dispose of government digital assets except in limited circumstances, including court orders, victim restitution, law enforcement operations, revenue sharing with state and local partners, and disclosures required by law.
That leaves the federal Bitcoin holding company outside the normal money machines of war operations.
Under the White House order, the reserve must be capitalized with Bitcoin already held by the Treasury through criminal or civil asset forfeiture, or received in satisfaction of civil penalties.
War Spending, Inflation, and the Role of Bitcoin
Arthur Hayes, co-founder of BitMEX, has argued for several years that rising US war spending could strengthen Bitcoin’s long-term position by increasing borrowing, inflationary pressures and demand for assets outside the traditional financial system.
In 2023, Hayes tied this view of Washington’s open support for Israel’s war against Hamas. He argued that, in addition to U.S. spending related to Ukraine, the budget burden of military obligations would continue to grow.
According to him:
“Adding to Ukraine’s bill will truly explode the U.S. military budget. This will increase future government borrowing, and the sky is the limit when it comes to the amounts of capital a war can waste.”
His argument was that larger war budgets ultimately force investors to reassess the role of government debt in portfolios.
At the time, Hayes said some institutional investors had already begun reducing their exposure to bonds and Treasuries in anticipation of heavier U.S. military spending and would increasingly look to alternative assets for returns.
He said:
“If US Treasuries do not provide long-term security for investors, their money will look for alternatives. Gold, and especially Bitcoin, will start to rise on the real fear of global war inflation.”
Interestingly, he returned to the same theme a year later, arguing that military spending in the United States would likely continue to rise and that domestic savers would ultimately bear some of that burden.
This thesis rests on the way modern states finance large and long-term spending campaigns.
Hayes argued that governments can steer banks toward lending to priority sectors or push them to buy government bonds at below-market rates as inflation gradually erodes the real value of savings.
War spending is typically financed with debt, and greater financing needs can increase the amount of dollars flowing through the financial system. That process could, over time, weigh on the purchasing power of existing money and support demand for scarce assets like Bitcoin.
In that context, Bitcoin occupies a different position because it is not issued by the state and its supply does not grow in response to budgetary pressures.
He wrote:
“The only way out, assuming no capital controls are imposed, is to buy a store of value outside the system, like Bitcoin.”
In particular, Bitcoin’s current market performance during this war in Iran has shown why investors want exposure to the emerging industry
Data from CryptoSlate showed that Bitcoin has risen almost 4% since the first US attack on Iran in late February.
Andre Dragosch, head of research at Bitwise Europe, attributed This achievement is due to the fact that “Bitcoin has turned into a serious institutional asset with great liquidity and frequent participation from large, sophisticated investors.”