Pennsylvania Joining the United States in Proposing a Bitcoin Strategic Reserve: Implications for the Energy Industry

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On November 19, Pennsylvania Representative Mike Cabell (R-117) introduced legislation to form the Pennsylvania Bitcoin Strategic Reserve, aiming to diversify the state’s financial holdings by allocating up to 10% of its treasury reserves into Bitcoin. (See HB 2664.) This state-level initiative parallels recent action taken on the federal level, where Senator Cynthia Lummis (R-WY) introduced legislation on July 31 to create a national Bitcoin strategic reserve through the purchase of one million Bitcoins over five years. (See Bitcoin Act of 2024.) Further, President-elect Donald Trump is taking steps to form the first crypto advisory council to guide policymaking related to digital assets. As Bitcoin’s total supply will never exceed 21 million, these recent steps taken by elected officials underscore Bitcoin’s emerging role as a scarce strategic asset in public financial systems.

These developments may be particularly relevant for the energy industry. Bitcoin mining is inherently linked with the energy sector and energy consumption. Mining operations require substantial electricity, increasing demand for both traditional energy sources, like natural gas and coal, and renewables, such as wind and solar. The Cambridge Bitcoin Electricity Consumption Index reported that global energy use associated with Bitcoin mining in 2023 ranged from 67 terawatt hours (TWh) to 240 TWh, with a point estimate of 120 TWh. (See EIA Bitcoin Facts.) In the United States, Bitcoin mining in 2023 consumed between 25 and 91 TWh — equivalent on the low end to the annual electricity consumption of states like West Virginia or Utah. Id.

Moreover, as the federal government and potentially more states establish Bitcoin reserves, the demand for innovative energy solutions in mining operations may increase. This could align with ongoing efforts to decarbonize the energy sector. For instance, the White House Office of Science and Technology Policy issued a report noting that “crypto-asset mining operations that capture vented methane to produce electricity can yield positive results for the climate, by converting the potent methane to CO2 during combustion . . .; could potentially be more reliable and more efficient at converting methane to CO2 [than flaring] . . . and . . . is more likely to help rather than hinder U.S. climate objectives.”

The potential strategic reserves also highlight Bitcoin’s potential role as a hedge against inflation. Pennsylvania’s HB 2664 states that “[i]nflation has eroded the purchasing power of the assets held in State funds managed by the State Treasurer as well as State retirement funds. . . . Bitcoin is a digital asset that can serve as a hedge against inflation by a sovereign nation or an investment advisor.” The Bitcoin Act of 2024 notes in its findings that “[t]he acquisition and long-term storage of substantial quantities of Bitcoin by the United States can strengthen the financial condition of the United States, providing a hedge against economic uncertainty and monetary instability.” By holding Bitcoin, energy firms and governments alike may find a financial tool to mitigate risks associated with economic volatility.

MicroStrategy, a prominent business intelligence firm whose stock has risen over 500% in 2024, has pioneered this approach by making substantial investments in Bitcoin. By holding a substantial Bitcoin reserve of 331,220 Bitcoins with an estimated value of nearly $30 billion as of November and a highly publicized strategy to purchase an additional $42 billion in Bitcoin over the next three years, the company aims to preserve value.

As the energy future takes shape, Bitcoin’s dual role as a financial asset and a driver of energy innovation will likely continue to influence discussions within the energy industry. Further, Pennsylvania’s proposal, along with similar federal initiatives, could position the United States as a leader in both financial and energy innovation.

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