Article author:Thejaswini M A
Article compilation:Block unicorn
Foreword
Pakistan's Minister of Blockchain and Cryptocurrency announced the establishment of a strategic Bitcoin reserve at the Bitcoin 2025 conference in Las Vegas on May 28.
This country, which declared a few years ago that "cryptocurrency will never be legal", suddenly made a 180-degree turn and promised never to sell their Bitcoin holdings. Minister Bilal Bin Saqib declared: "The Bitcoin wallets in this country are not for speculation or hype, we will hold these Bitcoins and will never sell them."
It's not just Pakistan, Ukraine is also looking to include cryptocurrencies in its national reserves.
Brazil is also considering allocating 5% of its foreign exchange reserves to Bitcoin.
We are witnessing the rise of a strategic Bitcoin economy, and countries are actively adopting Bitcoin as a modern treasury tool.
So is this financial innovation driven by opportunity or necessity?
This pattern has become impossible to ignore. Ever since the Trump administration expressed support for a US strategic Bitcoin reserve in March 2025.
Ukraine, which is still at war, submitted Bill No. 13356 to Parliament on June 11, allowing its central bank to include cryptocurrencies in its national reserves.
Brazil followed with the “RESBit” proposal, which could allocate up to 5% of its foreign reserves to Bitcoin. Even the mayor of Panama City mysteriously hinted at “Bitcoin reserves” after meeting with Bitcoin advocates in El Salvador in May.
Then there’s El Salvador, also a poster child for this movement. Despite signing a $1.4 billion loan agreement with the International Monetary Fund (IMF) in December 2024 that explicitly discourages further accumulation of Bitcoin, they are quietly continuing to buy Bitcoin on a daily basis. They’ve added 240 BTC since the agreement, with President Bukele’s government somehow maintaining “technical compliance” through what the IMF calls a “flexible interpretation.”
They’re finding creative ways to continue buying Bitcoin while keeping the IMF money flowing.

An All-or-Nothing Strategy
These countries are following what I call an “all-or-nothing strategy”—strategically betting on emerging financial technologies that show promise when traditional economic policies are stagnant.
Pakistan has allocated 2,000 megawatts of power for Bitcoin mining and AI data centers, turning its grid into a cryptocurrency casino. “We welcome all miners to Pakistan,” the minister announced, as if foreign miners coming to use the power would solve the economy’s problems.
The reasons sound compelling: Bitcoin’s limited supply protects against inflation, decentralization provides independence from traditional finance, and recent performance looks like a magic economic bullet.
When Pakistan talks about “100 million unbanked people” and cryptocurrencies helping them “break the economic strata,” it represents a real policy response to financial inclusion that traditional banking has yet to address.
These countries are making Bitcoin central to their economic strategies.
Economic Innovation Index
Why are struggling economies turning to Bitcoin? The answer lies in their fundamental monetary challenges. Traditional currencies in developing countries face three existential threats that Bitcoin could theoretically solve:
Between 2020 and 2024, U.S. inflation rose by 20%, while Bitcoin grew by more than 1,000%.
For countries with higher inflation, the math is fascinating.
Look at the countries leading the charge and you’ll notice a pattern. They are countries facing severe structural challenges.
Pakistan’s Reality Check: Pakistan’s economy is in a fragile stabilization phase after narrowly avoiding a crisis. GDP growth is only 2.6-2.8% in fiscal 2025, well below the government’s initial target of 3.6%. The country faces huge structural problems, with more than 100 million citizens without bank accounts, widespread financial exclusion, and an economy that was contracting before its recent modest recovery. Per capita income is just $1,824.
Ukraine’s War Economy: Despite managed stability through massive foreign aid, Ukraine’s economy remains deeply battered. The country’s GDP shrank by nearly 30% in 2022, and growth forecasts for 2025 are just 2-3%. The ongoing conflict has destroyed 70% of energy infrastructure, damaged 13% of the housing stock, displaced millions of workers and created a severe labor shortage. With poverty affecting 9 million Ukrainians and reconstruction needs estimated at $524 billion over the next decade, lawmakers are exploring Bitcoin reserves as an asset that is not subject to interference from the traditional financial system to help "strengthen macroeconomic stability" in an economy that is completely dependent on foreign support.
El Salvador's Big Gamble: The economy relies heavily on remittances, which account for more than 20% of GDP, making it vulnerable to external shocks. With an average annual growth rate of only 2-3%, and a slowdown to 2.2-2.5% in 2025, the country faces ongoing challenges, including fiscal deficits, a high peak public debt of 88.9% of GDP, and low productivity.
Bhutan’s Bitcoin Lifeline: Bhutan’s economy faces a devastating “brain drain,” with more than 10% of skilled workers leaving in 2022 alone, youth unemployment at 19%, and tourism struggling to recover after the pandemic. The landlocked kingdom’s response? Using excess hydropower to mine Bitcoin and using the proceeds to double civil servants’ salaries. With Bitcoin holdings worth more than $600 million, or 30% of the country’s GDP, according to Arkham Intelligence, Bhutan has essentially shifted from measuring development in terms of “gross national happiness” to betting its economic future on cryptocurrency mining.
Brazil’s Safe Haven: Brazil’s economic situation is more mixed, with growth slowing but not yet in crisis. After a strong 3.4% in 2024, GDP growth is expected to slow significantly to 2.1-2.3% in 2025 due to tighter monetary policy and reduced fiscal stimulus. The central bank’s benchmark rate remains elevated at 14.75% to combat inflation that remains above its 3% target, while fiscal risks persist due to rising social spending and structural issues. Brazil’s consideration of allocating 5% of its foreign reserves to Bitcoin via PL 4501/2023 reflects concerns about fiat currency dependence and a desire to diversify its portfolio.
You call it desperation? Here’s how I see it: these countries recognize Bitcoin’s potential as a strategic asset class and are using it as an innovative component of monetary policy.
When you’re faced with prolonged inflation, currency debasement, and limited access to traditional safe-haven assets, Bitcoin starts to look less like speculation and more like a pragmatic hedge.
Academic research supports this view. As James Butterfill’s analysis shows, Bitcoin’s annualized inflation rate has fallen to just 0.83% after the 2024 halving, and will fall further after each halving, while the average annual inflation rate of global fiat currencies is 2-5%. For countries that watch their purchasing power decline year by year, this mathematical certainty is very attractive.
What about the corporate story? We see 240 public companies have included Bitcoin on their balance sheets, up from 124 just a few weeks ago. This is institutional recognition of the changing monetary landscape.

Developing Countries Already Know
While Pakistan and Ukraine’s Bitcoin reserve announcements may seem sudden, they actually follow a strategy that has been quietly proven in developing countries for years. The motivations are rooted in the economic realities these countries face every day.
When the purchasing power of a national currency continues to decline, Bitcoin’s fixed supply becomes more than just a technical feature, it becomes a lifeline. Countries that have long experienced inflation have seen that as their currencies fail to maintain their value over the long term, citizens naturally gravitate toward Bitcoin as a store of value. Because the traditional monetary system cannot provide the stability they need.
People in Nigeria, Kenya, Vietnam, and other developing countries have embraced Bitcoin. When governments can print local currencies without limit, an asset capped at 21 million units starts to look like sound monetary policy.
Traditional banking systems in developing countries often exclude large swathes of the population due to documentation requirements, minimum balance thresholds, or lack of infrastructure. Bitcoin doesn’t require you to have a credit score or maintain a minimum balance. All you need is an internet connection and a cell phone.
People shut out of traditional financial services are finding that they can participate in global commerce, receive remittances, and build savings through cryptocurrency platforms. Bitcoin provides financial services to people underserved by traditional banks.
Many developing countries impose strict capital controls that limit citizens’ ability to access foreign currency or transfer funds internationally. Bitcoin operates outside these restrictions, providing a way to access global financial markets that traditional systems cannot.
El Salvador remittance case: Assuming El Salvador receives about $10 billion in remittances per year, and traditional services charge an average of 10% in fees, that means $1 billion per year goes to intermediaries like Western Union, MoneyGram, etc. instead of reaching families in El Salvador.
If using Bitcoin and stablecoin transfers to reduce fees to 2-3%, the same remittances would only cost $200 million to $300 million in fees—potentially saving $700 million to $800 million per year, which can go directly into the local economy. For a country with a GDP of about $32 billion, this is equivalent to more than 2% of total economic output being retained rather than lost to transaction costs.
Bitcoin-based transfers can significantly reduce these costs, meaning more funds can actually reach families in need.
The corporate balance sheet trends we are seeing now are really institutional recognition of what individual users in developing countries discovered years ago: Bitcoin is a useful financial infrastructure, not a “speculation”, when traditional financial options are limited or expensive.
Our View
Risks are worth watching.
Of course, this strategy is not without risks, and it is worth keeping an eye on what could go wrong.
As James Butterfill points out, Bitcoin’s 165% annualized return since 2009 makes it attractive. But this performance has occurred during an unprecedented period of monetary expansion and risk appetite. What happens if this environment changes?
If Bitcoin’s correlation with traditional markets increases during major recessions, as it has in the past, these reserves may not provide the diversification benefits that countries expect. An asset that is supposed to serve as a hedge against systemic risk may instead amplify it.
There is also the element of concentration risk. If every struggling economy follows the same strategy, we may see a situation where the countries that need stability most are also the most vulnerable to cryptocurrency volatility.
However, the first countries to adopt Bitcoin reserves are positioning themselves at the forefront of a monetary transformation that could define the next decade. If this trend continues and Bitcoin proves its resilience in economic stress tests, early adopters like El Salvador, Pakistan, and Ukraine will establish a strategic advantage in digital asset holdings and blockchain infrastructure.
The regulatory environment appears increasingly supportive of this trend, with the United States committing to its strategic Bitcoin reserve and other major economies exploring similar frameworks. Rather than creating systemic risk, widespread institutional adoption will validate Bitcoin’s status as a legitimate reserve asset and create network effects that make these early strategic decisions appear forward-looking.