In the first six days of the war with Iran, the United States spent an amount equivalent to nearly half the current market value of the federal government’s holdings of Bitcoin.
The administration told lawmakers this week that the cost of the war was at least $11.3 billion in the first six days, Reuters reported on March 11.
The $11.3 billion estimate was made in a closed session for senators on Tuesday and does not include the full cost of the dispute, according to the report.
Meanwhile, U.S. officials also told lawmakers that $5.6 billion in ammunition was used in the first two days of the airstrike. Several members of Congress have reportedly said they expect the White House to ask Congress for additional funding.
Estimating US war spending on Iran in Bitcoin
Data from Bitcoin Treasuries, which tracks sovereign and corporate bitcoin holdings, shows that U.S. government agencies hold 328,372 bitcoins. At the current market price of approximately $70,430, the holding is worth approximately $23.13 billion.
This makes the six-day war bill equivalent to approximately 48.9% of the current market value of tracked federal holdings. At the time of writing, that $11.3 billion also translates to approximately 160,443 Bitcoins.
This calculation also shows the pace of spending. $11.3 billion over six days, making the average cost approximately $1.88 billion per day. At this rate, holding 328,372 Bitcoins is equivalent to approximately 12.3 days worth of war expenses.
Meanwhile, a request for an additional $50 billion, a congressional aide told Reuters, could be considered, representing about 2.16 times the current market value of the bitcoin position tracked by the government.
Notably, these numbers refer to the size of the US government’s war spending and do not explain how the government finances the war.
According to the White House’s order creating the Strategic Bitcoin Reserve, Bitcoins deposited in the reserve “may not be sold” and are to be maintained as U.S. reserve assets.
The order also states that government agencies may not sell or 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.
This puts federal Bitcoin holdings outside the scope of normal wartime cash transportation mechanisms.
According to the White House order, this reserve is to be capitalized with Bitcoins already held by the Treasury through criminal or civil asset forfeiture proceedings, or received to satisfy civil monetary penalties.
War spending, inflation, and the role of Bitcoin
BitMEX co-founder Arthur Hayes has argued for years that increased U.S. war spending could increase borrowing, inflationary pressures, and demand for assets outside the traditional financial system, strengthening Bitcoin’s long-term position.
In 2023, Hayes combined that view with Washington’s unrestricted support for Israel’s war against Hamas. He argued that the fiscal burden of military involvement will continue to grow, along with U.S. spending related to Ukraine.
According to him:
“On top of the Ukraine threat, America’s military budget is going to really explode. This will increase future government borrowing, and there are no limits to the amount of capital that can be wasted on war.”
His argument was that expanding the war budget would ultimately force investors to reevaluate the role of government debt in their portfolios.
Hayes said at the time that some institutional investors had already begun reducing their exposure to bonds and Treasury bills in anticipation of increased U.S. military spending and would increasingly look to alternative assets for returns.
he said:
“If long-term U.S. Treasuries do not provide security for investors, their funds will look for alternatives. Gold, and most importantly Bitcoin, will begin to rise due to real concerns about wartime global inflation.”
Notably, he returned to the same theme a year later, arguing that U.S. military spending will likely continue to rise and that domestic savers will eventually shoulder some of the burden.
This paper is based on how modern states finance large-scale and long-term spending campaigns.
Hayes argued that while inflation would erode the real value of savings, governments could encourage banks to lend to priority industries or buy government bonds at below-market rates.
War costs are typically financed by debt, and increased borrowing needs can increase the stock of dollars flowing through the financial system. Over time, this process can strain the purchasing power of existing money, supporting demand for scarce assets such as Bitcoin.
In that framework, Bitcoin occupies a different position because it is not issued by a state and its supply does not expand in response to fiscal strain.
He wrote:
“Assuming no capital controls are in place, the only way out is to buy an out-of-system store of value like Bitcoin.”
In particular, Bitcoin’s current market performance during this Iran war shows why investors are seeking exposure to emerging industries.
data from crypto slate It showed Bitcoin has gained nearly 4% since the first U.S. attack on Iran in late February.
Andre Dragosch, head of research at Bitwise Europe, said the performance was due to the fact that “Bitcoin has transformed into an important institutional asset with deep liquidity and frequent participation from large and sophisticated investors.”