New Hampshire Moves Closer to Investing 10% of Public Funds in Bitcoin

The New Hampshire Bitcoin Reserve Bill, HB 302, has successfully cleared the Senate Finance Committee with a 4-1 vote. This development brings the bill one step closer to becoming law, indicating a growing acceptance of Bitcoin within the state. The bill, introduced by state Rep. Keith Ammon, allows the state treasurer to invest up to 10 percent of public funds in Bitcoin. This legislation is distinct from federal proposals, such as the "BITCOIN Act of 2024," which mandates the purchase of 1 million Bitcoin. Ammon's bill is enabling legislation that does not require the acquisition of any assets, focusing instead on the potential for significant returns from Bitcoin investments.

The rationale behind Ammon's bill is to capitalize on Bitcoin's potential for high returns, similar to the strategy employed by El Salvador. Since President Nayib Bukele began purchasing Bitcoin in 2021, El Salvador's Bitcoin assets have seen a 122 percent increase in value, with unrealized gains in the hundreds of millions. This approach contrasts with traditional investments like U.S. treasury bonds, which may not keep pace with inflation. Proponents argue that New Hampshire, as an investor rather than a currency issuer, has a duty to make prudent investments with tax revenues. The potential benefits of purchasing Bitcoin include increased funds for community investments, positioning New Hampshire as an innovator, and attracting the technology sector.

During a House Commerce hearing, concerns were raised about Bitcoin's volatility, particularly its significant loss in value in 2022. However, supporters of the bill contend that the state's unique political climate and proximity to Boston's tech industry position it well to leverage Bitcoin investments for economic growth. The state's GDP is three times that of El Salvador, and its strategic investments could lead to significant transformations, similar to El Salvador's rise from a crime-ridden nation to an emerging first-world country. This innovative approach could reshape the political economy of New England, making New Hampshire a leader in technological and financial innovation.

Critics of federal Bitcoin reserve proposals argue that such reserves could hasten Bitcoin's appreciation, enriching the government and Bitcoin owners at the expense of the U.S. dollar's control over the economy. However, these arguments underscore the potential benefits for New Hampshire, which is not an issuer of its own currency. The state could benefit more from early Bitcoin investments and even more if federal reserves follow suit. The approval of HB 302 by the Senate Finance Committee marks a significant milestone in the state's journey towards embracing Bitcoin as a strategic asset, potentially setting a precedent for other states to follow.