US rising war costs further boosts Bitcoin’s financial refuge status

The United States spent in the first six days of its war with Iran an amount equal to nearly half the current market value of the Bitcoin held by the federal government.

The administration told lawmakers this week that the war cost at least $11.3 billion through its first six days, 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, the US officials also told lawmakers that $5.6 billion in munitions was used in the first two days of strikes. Several congressional members reportedly said they expect the White House to seek additional money from Congress.

Estimating the US’s Iran war spending in Bitcoin

Data from BitcoinTreasuries, which tracks sovereign and corporate Bitcoin holdings, shows US government entities with 328,372 Bitcoin. At the current market price of about $70,430, that holding 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. As of press time, that $11.3 billion also converts to about 160,443 Bitcoin.

The math also shows the pace of spending. At $11.3 billion over six days, the average cost works out to about $1.88 billion per day. At that rate, the full 328,372 Bitcoin holding would equate to about 12.3 days of war spending.

Meanwhile, a supplemental request of $50 billion, a figure 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 position.

Notably, these numbers are about the scale of the US 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, Bitcoin deposited into the reserve “shall not be sold” and is to be maintained as a reserve asset of the United States.

The order also says agencies may not sell or otherwise dispose of government digital assets except in limited cases, including court orders, victim restitution, law enforcement operations, revenue-sharing with state and local partners, and releases required by law.

That leaves the federal Bitcoin holding outside the normal cash machinery of wartime operations.

According to the White House order, the reserve is to be capitalized with Bitcoin already held by the Treasury through criminal or civil asset-forfeiture proceedings, or received in satisfaction of civil money penalties.

War spending, inflation, and Bitcoin’s role

Arthur Hayes, co-founder of BitMEX, has for several years argued that rising US war spending can strengthen Bitcoin’s long-term case by adding to borrowing, inflation pressure, and demand for assets outside the traditional financial system.

In 2023, Hayes tied that view to Washington’s open-ended support for Israel’s war against Hamas. He argued that, alongside US spending tied to Ukraine, the fiscal burden of military commitments would continue to grow.

According to him:

His argument was that larger war budgets eventually force investors to reassess the role of government debt in portfolios.

At the time, Hayes said some institutional investors had already begun reducing exposure to bonds and Treasury bills in anticipation of heavier US military expenditure and would increasingly look to alternative assets for returns.

He said:

Notably, he returned to the same theme a year later, arguing that military spending in the United States was likely to keep rising and that domestic savers would ultimately bear part of that burden.

This thesis rests on how modern states finance large and prolonged spending campaigns.

Hayes argued that governments can steer banks toward lending to priority industries or push them to buy government bonds at below-market rates, while inflation gradually erodes the real value of savings.

War spending is typically debt-funded, and larger borrowing needs can increase the stock of dollars moving through the financial system. That process can weigh on the purchasing power of existing money over time and support demand for scarce assets such as Bitcoin.

In that framework, Bitcoin occupies a different position because it is not issued by the state and its supply does not expand in response to fiscal strain.

He wrote:

Notably, Bitcoin’s current market performance during this Iran war has shown why investors would want exposure to the emerging industry

Data from CryptoSlate showed that Bitcoin has gained nearly 4% since the first US strike on Iran in late February.

Andre Dragosch, Bitwise Europe Head of Research, attributed that performance to the fact that “Bitcoin has turned into a serious institutional asset with deep liquidity and frequent participation of large sophisticated investors.”