- BitBonds combine 90% U.S. Treasuries and 10% Bitcoin to offer inflation protection.
- The model could save the U.S. $13B in borrowing costs over 10 years
- If Bitcoin grows steadily, BitBonds could cut $50T of debt by 2045.
Matthew Siegel, the Head of VanEck Digital Asset Research, has developed BitBonds to assist the United States government in solving its upcoming $14 trillion debt refinancing crisis. Sigel made the announcement at the Strategic Bitcoin Reserve Summit, articulating the possibilities of hybrid debt securities linked to the US Treasury and BTC.
BitBonds are 10-year securities comprising 90% traditional US Treasury bonds and 10% bitcoins. The fund for buying bitcoins is obtained from bond sales. At that time, the bondholders can get $90 in the United States treasury and any subsequent value in the 10% Bitcoin fraction. This design aims to attract investors who crave inflation protection and provide the Treasury with broader methods of financing its mechanisms.
Mechanics of BitBond Structure and Yield Sharing Model
With BitBonds, investors can track Bitcoin’s average performance but with a basic government earning as part of their investment return. Investors will gain the total value of the gains of Bitcoin returns up to the yield-to-maturity rates of 4.5% annually. Any returns beyond this threshold must be split in half between the government and the investors. This yield-sharing model, therefore, aims to achieve the interests of the issuer and the bondholders throughout the instrument’s cycle.
As proposed by VanEck, the structure creates a risk exposure profile in which the investor absorbs the risk of BTC. However, investors can receive high income when Bitcoin rises in value. VanEck has internally modeled the breakeven CAGR for Bitcoin to be between 8% and 17% back to par, based on the coupon offered on the bond.
Fiscal Benefits and Strategic Rationale for the U.S. Government
Sigel stressed that by holding no value in BTC, the BitBond structure can still yield cheaper borrowing for the Treasury than through bond sales. For instance, using $100 billion to fund BitBonds with a one percent coupon rate will be more affordable for the government by about 13 billion US dollars throughout the bond’s 10 years. This is on the assumption that the cost of capital will remain below the breakeven rate related to bitcoins’ performance.
This financing model is based on policy recommendations made by the Bitcoin Policy Institute (BPI), which earlier proposed using Bitcoin-backed bonds to address the national debt. Self and Matthew Pines, in a white paper, also suspected that $2 trillion at an effectiveness rate of 1% could fund 2025 Treasury’s refinancing needs per coupon, facilitating nominal savings of $700 billion and a present value of $554.4 billion over a decade.
Broader Implications and Policy Backing
The idea of BitBonds is proposed at a time when there has been rising anxiety towards the debtor countries, especially the United States of America, whose debt figures have recently surged to up to $36.2 trillion after the increase of the congressional ceiling. It came after US President Donald J. Trump signed an Executive Order in March 2025 to establish a Strategic Bitcoin Reserve, creating a suitable platform for government endorsement of BTC integration.
Additional calculations made by the BPI indicate that if BM can achieve a CAGR of 36.6%, the gains are likely to wipe out as much as $50.8 trillion of federal debt by 2045. VanEck’s analysis also projects a $21 trillion debt cut by 2049 by holding Bitcoin as an operational asset.
