On November 20, Texas marked a significant milestone by becoming the first U.S. state to purchase Bitcoin for its Strategic Reserve. The state acquired $5 million worth of Bitcoin, at an approximate price of $87,000 per BTC, a move publicly disclosed by Lee Bratcher, President of the Texas Blockchain Council. This initial allocation was facilitated through BlackRock’s iShares Bitcoin Trust (IBIT), as the state is in the process of finalizing plans for self-custody of its digital assets.

This pioneering step by Texas signals a growing interest among state-level entities in integrating Bitcoin as a strategic reserve asset. The groundwork for this initiative was laid last year when Texas explored legislation aimed at establishing a Bitcoin reserve without utilizing taxpayer funds. In June of the current year, the Texas governor signed this crucial legislation into law, officially creating the state’s Strategic Bitcoin Reserve.

Lee Bratcher, who also founded the Texas Blockchain Council—an industry association comprising over 100 member companies and hundreds of individuals dedicated to promoting Texas as a hub for Bitcoin and blockchain innovation—played a pivotal role in championing the state’s Bitcoin reserve legislation. He actively worked to guide the bill through the state Senate, advocating for the state's eventual self-custody of Bitcoin. Texas State Representative Giovanni Capriglione had filed the bill last year, proposing that the state acquire and hold Bitcoin as a strategic asset, store it in cold storage for a minimum of five years, allow for resident donations, and enable state agencies to accept and convert cryptocurrencies into Bitcoin. The legislation also emphasized transparency through mandatory yearly audits and reports, mirroring a federal proposal previously put forth by President Donald Trump and Senator Lummis.

The trend of adopting Bitcoin as a strategic asset extends beyond state governments to institutional investors. Harvard University’s endowment, for instance, recently tripled its holdings in IBIT, reaching an impressive $442.8 million and making it the university’s largest publicly disclosed investment. Other prominent institutions such as Emory University and Abu Dhabi’s Al Warda Investments have also substantially increased their exposure to Bitcoin exchange-traded funds (ETFs). Bitcoin’s price is currently trading near $87,500, approximately 30% below its all-time high.

Texas is not alone in its pursuit of Bitcoin integration. Earlier this month, New Hampshire distinguished itself by becoming the first government worldwide to approve a $100 million Bitcoin-backed municipal bond. The state’s Business Finance Authority (BFA) authorized this conduit bond, which enables private companies to borrow against over-collateralized Bitcoin held in custody. The repayment risk for these bonds rests solely on the collateral, requiring borrowers to post approximately 160% of the bond’s value in Bitcoin. An automated liquidation mechanism is in place to protect bondholders if Bitcoin values experience a significant decline. Fees generated from this initiative and any appreciation in Bitcoin’s value will be directed to fund the state’s Bitcoin Economic Development Fund. This innovative move by New Hampshire builds upon the earlier establishment of a Strategic Bitcoin Reserve by both New Hampshire and Arizona, highlighting a broader governmental movement towards embracing digital assets.