Bulgaria Could Have Paid Public Debt if it Kept its Bitcoin

The Balkan country of Bulgaria seized over 213,500 Bitcoin back in 2017 and sold them the following year; now, that would be more than enough to cover the country’s public debt.

When Bulgaria seized 213,519 Bitcoin (BTC) in late 2017, it was enough to cover one-fifth of the country’s national debt. The Bitcoin holdings were worth roughly $3.5 billion at the time, and were sold soon thereafter.

Now, the same amount of Bitcoin would be worth about $25.24 billion. This exceeds the country’s public debt of $24 billion, according to World Economics data.

This data might lead readers to believe Bulgaria played its cards incorrectly, but hindsight is 20/20. Founder of Obchakevich Research, Alex Obchakevich, told Cointelegraph that “Bitcoin's volatility makes it difficult to use it as a stable reserve.”

Bulgaria’s Bitcoin holdings chart. Source: BitcoinTreasuries.NET

Long-term holding of Bitcoin is a reasonable strategy

Obchakevich said the potential benefits of holding on to Bitcoin would be “overshadowed by the risks of a sharp drop in value.” Instead of holding it as a reserve, he suggests that the country should have diversified its holdings.

“Limiting the share of Bitcoin to about 10-15%, phased liquidation, hedging through derivatives, and a clear legal framework to avoid macroeconomic instability are necessary,” he explained. Valentin Mihov, co-CEO at Web3 market maker Enflux and a Bulgarian, is not as convinced that his government made the right call.

According to Mihov, the story “reflects how most governments still misunderstand what crypto can be: not just a speculative asset, but a strategic reserve opportunity.” He said that at the time, “most institutions still saw Bitcoin as radioactive, if they even knew about it,” so that played a significant role in the decision to sell, but was far from the only reason:

“Custody was immature. Regulation was uncertain. The EU was tightening fiscal discipline, and there was less appetite for risk. From a conservative government’s point of view, liquidating the seized BTC was the cleanest path forward.“

Mihov said that, if he were advised the Bulgarian government at the time, he would likely have recommended partial liquidation. Still, he “would’ve argued for a long-term reserve structure.”

“Even a 10 or 20% strategic hold would’ve positioned Bulgaria ahead of the curve,” he highlighted.

Major nations continue to hold Bitcoin

According to a recent review, governments collectively hold about 463,000 BTC — or about 2.3% of Bitcoin’s total supply. The two top holders are the United States and China, with Bitcoin Treasurys data showing that they hold over 198,000 BTC and exactly 190,000 BTC, respectively.

The United Kingdom is third, holding 61,245 BTC, followed by Ukraine, which includes public officials’ holdings, at 46,351 BTC. The fifth top holder is North Korea, which largely acquired Bitcoin through the activities of state-sponsored hacking groups — currently holding 13,562 BTC.

Bhutan is the sixth-largest holder of Bitcoin among countries, with its 10,486 BTC. The government often makes headlines with its Bitcoin transactions, with a July 14 report noting that it transferred $74 million in Bitcoin to Binance over two weeks.

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