The Key Argument In Favor Of Bitcoin

Why has debt become uncontrollable and how will Bitcoin benefit from it? This article draws a parallel between energy, debt, geopolitics, and Bitcoin.

Energy and Financial Crisis: An Inevitable Spiral?

Most of us remember the great crisis of 2007 to 2009. Often presented as a “financial” crisis, it was primarily the result of peak conventional oil.

Rising from $20 to $140 per barrel, the explosion in the price of naphtha caused the bankruptcy of thousands of companies, massive layoffs, and millions of mortgage defaults.

Certainly, the United States managed to revive oil production growth, but this oil is more expensive to extract. And this shale oil seems to have already reached its peak, raising fears of another major crisis.

The number of mortgage defaults in the United States already exceeds that of 2008:

In the face of this threat, Donald Trump is putting increasing pressure on Canada, which accounts for 60% of U.S. oil imports (4 million barrels per day). The goal? To revive the Keystone XL pipeline project to transport an additional million barrels. Not to mention Greenland, where the United States hopes to discover new deposits.

It is China’s colossal coal consumption that is the main driver of global growth. But if we set this coal aside, energy availability per capita has been declining since 2013. In France, oil consumption has dropped by 26% since 2005.

However, energy is the engine of any economy, especially oil, without which hundreds of millions of trucks could not deliver global food supplies, cement bags, bottles of water, clothing, etc., to every corner of the world.

There can be no growth in living standards without growth in energy production. Many countries believed they could compensate for this energy constraint by going into debt, but there are limits.

Debt: Engine or Illusion?

Debt stimulates demand, but its effectiveness depends on abundant and cheap energy. When energy becomes scarce, debt generates mostly inflation rather than real growth.

Without an increase in the production of goods, any increase in GDP is just an inflationary illusion. Raising purchasing power requires wages to grow faster than inflation, which can only be achieved through productivity gains that directly depend on our ability to extract low-cost energy:

Wages = productivity (quantity of goods produced per person) = machines = energy.

Every economy needs to grow to repay both the debt AND the interest. But in the absence of an energy miracle, tough choices must be made. Especially since countries are “rolling their debt,” triggering a spiral of compound interest.

Hence the exponential trajectory of public debts. In other words, without an exponential increase in energy production, inflation is inevitable. This inflation, in turn, forces an increase in rates, which will sooner or later lead to a default.

Reducing Expenses: An Unpopular Political Necessity

Defaulting on debt or printing money comes down to the same thing: a decrease in purchasing power. The alternative is to reduce spending, but that also means a decrease in purchasing power. There is no miracle. In France, this essentially means reducing the burden of pensions.

Productivity gains from AI and robotics may perhaps lead to an increase in wages; we shall see. But one thing is certain, AI will not replace oil.

In the meantime, debts are accumulating dangerously. The United States will need to refinance about $28 trillion in debt over the next four years.

Donald Trump is looking to lower rates to ease this burden. That is why the Fed recently slowed the selling of Treasury bonds acquired since 2008 through Quantitative Easing.

It even feels like Mr. Trump is doing everything he can to encourage investors to take refuge in US debt (tariffs, bombings in Iran, threats of annexing Greenland, etc.).

Except that this old recipe no longer works. Russia has shown the whole world on one hand that it can stand up to NATO, and on the other hand, that placing reserves in Western debts is very, very risky. The BRICS have taken note of the “freezing” of the 300 billion euros that Russia had invested in the public debts of the Western camp.

This Brings Us to Bitcoin

Larry Fink made shocking statements this Monday. The CEO of BlackRock stated in his annual letter to investors:

The United States has benefited from the dollar being the international reserve currency for decades. But this may not last forever. Public debt is increasing three times faster than GDP since 1989. This year, interest payments on public debt will exceed $952 billion, more than defense spending. By 2030, mandatory public spending [pensions, health insurance, etc.] and interest will absorb all federal tax revenues, creating a permanent deficit. If the United States fails to control its debt, the dollar risks losing this position in favor of Bitcoin.

Larry Fink’s 2025 Annual Letter to Investors

In the face of this threat, Donald Trump has tasked Elon Musk with reducing the budget deficit by $1 trillion. Meanwhile, Senator Cynthia Lummis is pushing the “Bitcoin Act”.

The United States is well positioned to know that Bitcoin will inevitably become the international reserve currency. Accumulating it massively before everyone else would help erase the approximately $10 trillion that Washington owes to the rest of the world.

Purchases will begin in the coming months, especially if Senator Cynthia Lummis achieves her goals. The government could, however, act without Congress’s approval if the purchases are “budget-neutral.”

In this scenario, it is likely that Bitcoin will soar above $200,000 before the end of the year.

Bitcoin, the Miracle Currency?

No, Bitcoin will not conjure oil, lithium, or plutonium from its blockchain. Freezing the amount of currency in circulation will not magically grow the economy, regardless of what a certain school of Austrian economic thought believes.

The tool of debt is indispensable. Otherwise, how to finance a nuclear power plant, a tunnel, a semiconductor manufacturing plant, etc.? Creating money ex nihilo and destroying it upon repayment (aka fiat system) is the cornerstone of any advanced civilization.

Abusing the print press comes with its risks. Too bad for the government that would prefer to build a palace rather than a nuclear power plant. Ultimately, everyone is in the same boat.

If Bitcoin will not replace the fiat system, it is nonetheless a major technological singularity. For the first time in history, we have a liquid asset existing in absolutely finite quantity.

The attractiveness of Bitcoin as a reserve currency will continue to grow in a contracting world where nations will increasingly refuse IOUs (“I own you”) as payment.

It is also a revolution on an individual scale. Anyone can now protect themselves from inflation, no matter how small their savings. Previously, this privilege was reserved for those rich enough to afford prestigious real estate, stock market experts, or works of art.

Bitcoin will not stop inflation, but we are now all equal in the face of it. And as with any technological breakthrough, those who first grasp its potential will naturally benefit the most.

Don’t miss our article: The United States Will Erase Debt with Bitcoin.