Bitcoin and the nation state
MICHAEL Saylor’s latest pronouncement at CPAC - urging the United States to buy up 20% of Bitcoin’s supply as a strategic reserve - was classic Saylor: bold, controversial, and impossible to ignore.
He painted a stark picture of a global Bitcoin arms race, with China, Russia, Saudi Arabia, and Europe already positioning themselves while the US risks being left behind.
On one level, he’s right. Bitcoin is no longer a niche experiment; it has evolved into a geopolitical asset. Governments ignoring it altogether are making a strategic mistake, and those moving to integrate it into financial reserves are playing the long game.
The idea of sovereign wealth funds, central banks, or even government treasuries holding Bitcoin alongside gold and foreign currencies is no longer outlandish - it’s inevitable.
But Saylor’s call raises a deeper, more complicated issue. If a government embracing Bitcoin as a reserve asset is prudent, where is the line between responsible adoption and outright control? And what happens if a major power doesn’t just accumulate Bitcoin - but seeks dominance over its very infrastructure?
Bitcoin’s strength isn’t just in its scarcity; it’s in its decentralization. The network’s security comes from a globally distributed base of miners - independent actors verifying transactions and ensuring no single entity has undue control.
No government, no corporation, and no individual should ever control more than half of Bitcoin’s mining power.
A nation state accumulating Bitcoin as part of its reserves is not the problem. A nation state controlling Bitcoin’s mining infrastructure is.
History has shown that financial assets with strategic importance tend to be absorbed into state control.
Gold is the obvious example: from Roosevelt’s 1933 Executive Order 6102, which forced Americans to sell their gold to the government, to modern central bank hoarding, governments have a long history of seizing control over money-like commodities.
If Bitcoin becomes systemically important, it could follow a similar trajectory.
A government wouldn’t even have to formally take over Bitcoin mining to tilt the balance in its favour. Subsidizing mining operations would be one way to ensure that state-controlled entities become dominant, making it impossible for independent miners to compete. Regulation could be another weapon - one that appears neutral on the surface but ultimately reshapes the industry to favour centralized, government-friendly players.
Even without direct intervention, mining pools - the backbone of Bitcoin’s transaction processing - could be pressured to comply with censorship requests, blacklist wallets, or process only politically approved transactions.
China has already demonstrated the power of controlling Bitcoin mining. Before banning it in 2021, Chinese miners controlled over 65% of Bitcoin’s hashrate, not because the government owned the industry outright, but because cheap energy and pro-mining policies made it the global hub.
Beijing eventually forced miners out, but had it chosen a different path - one of quiet consolidation rather than prohibition - it could have gained unprecedented leverage over Bitcoin’s infrastructure.
Since China’s exit, mining has become more decentralized, with the US now home to 35% of global Bitcoin hashrate.
But that concentration presents its own risks. If Washington, rather than Beijing, decided to exert control, it wouldn’t need a ban or direct ownership - it would just need to shift the economic incentives enough to push mining into government-approved hands.
This is where the real danger lies. If a government controlled enough mining power, it could start censoring transactions, blocking certain addresses, reversing payments, or forcing the network to comply with state financial policies. Bitcoin would still exist, but its neutrality - its very reason for being - would be compromised.
That said, the idea of governments engaging with Bitcoin isn’t inherently bad. In fact, some level of government involvement is not just inevitable but necessary for long-term legitimacy.
Sensible regulation that integrates Bitcoin into the financial system without strangling it is beneficial. Clear legal frameworks provide stability, protect consumers, and make institutional adoption easier.
Governments holding Bitcoin in sovereign reserves could even act as a stabilizing force, ensuring that the asset class is treated seriously rather than as a speculative afterthought.
Even state-backed Bitcoin mining could, in theory, exist without threatening the network’s independence.
If multiple governments participated in mining as open competitors, rather than as a single dominant force, the overall decentralization of the network could remain intact. A multipolar mining ecosystem, where no one country or entity has overwhelming control, might actually strengthen Bitcoin’s resilience against external threats.
But when state involvement tips into heavy-handed control, covert infrastructure dominance, or financial censorship, the very ethos of Bitcoin is at risk. A government-controlled mining network could censor transactions, blacklist wallets, and weaponize Bitcoin’s infrastructure for political means.
At that point, it ceases to be the neutral, permissionless financial system that makes it valuable in the first place.
Bitcoin was designed to withstand coercion. Its decentralized nature is supposed to act as a safeguard against exactly this type of power play. But safeguards are only effective when actively defended.
Strategic state adoption of Bitcoin? Sensible. Governments accumulating Bitcoin? Expected. Government-controlled mining and transaction censorship? That’s where the line must be drawn.
The future of Bitcoin won’t just be shaped by markets and technology. It will be shaped by how governments engage with it - and whether that engagement is one of partnership or control.
Nigel Green, deVere Group CEO and founder
