Bitcoin Magazine

Bitcoin Treasury Companies Are Bubbles Half a year has passed since the publishing of my initial report on the company then-named MicroStrategy, now simply Strategy. Other than a name change, the company has since then broadened the arsenal of its financial products, accumulated more bitcoin, and fueled a wide array of companies copying Michael Saylor’s playbook. There seem to be bitcoin treasury companies everywhere. Due for an update, we will now investigate whether or not these bitcoin treasury companies’ operations are in line with the predictions made in the initial report, and yet again attempt to conclude where all this is eventually going. A Cause for Alarm In December last year, the company seemed near invincible: With its bitcoin yield KPI accumulating at a mind-boggling annual rate of above 60%, optimism reigned. It was no wonder then that most of the arguments carefully laid out in the report released at that time were either ridiculed, ignored, or met with snarling challenges to sell the shares short. The share price, denominated either in dollar or bitcoin, is at time of writing flat compared to those days and so far offers little in terms of vindication. Tragically few understood or even reached the most important conclusion of my December report, which concerns the source of the bitcoin yield. We will therefore iterate what’s wrong with the company’s metric, and why this should be a cause of alarm for any serious investor. The bitcoin yield — the increase in bitcoin per share — reaching old shareholders comes from the pockets of new shareholders. The new shareholders, many of them buying shares in the hope of getting a high bitcoin yield themselves, provide the bitcoin yield either directly by buying Strategy common shares created in the company’s world-record sized ATM (“at the market”) offerings or indirectly by buying the shares borrowed (and then sold) by delta neutral hedge funds that simultaneously hold the company’s convertible bonds. This is the Ponzi part of company operations — publicly boasting a bitcoin yield far higher than any conventional yield, while obfuscating the fact that the yield stems, not from the sale of company goods or services, but from the new investors themselves. They are the yield, and the harvesting of their hard-earned money will continue as long as they willingly provide it. The size of the harvest is in proportion to the size of the confusion, here measured as the premium of common shares over company net assets. This premium is nurtured by complicated but inviting company narratives, promises, and financial products. Because the word “Ponzi” has been thrown Bitcoiners’ way for over a decade, they have become accustomed — and rightly so — to simply disregard such critiques altogether. But just because a company within the Bitcoin sector intentionally or inadvertently has constructed a Ponzi scheme, that does not obviously mean that bitcoin itself is a Ponzi. The two assets are separate. During metallic monetary standards of the past, Ponzi schemes existed, but that does not mean the precious metals themselves ever were, or are, such schemes. When I make this claim of Strategy in its current form, I mean it from the point of definition, not from tiresome hyperbole. The Accumulation Continues Before drawing any further conclusions, it is first time to pick up where we left off in the initial report, and map relevant company decisions made over the last six months. Strategy announced on December 9 that approximately 21,550 bitcoin had been acquired for about $2.1 billion (average price: approximately $98,783 per bitcoin). This purchase was conducted with proceeds from the ATM outlined in the famous 21/21 Plan initiated earlier the same year. Just a few days later, over 15,000 more bitcoin were purchased, also through the ATM offering, and a few days after that announcement, about 5,000 more were purchased. The end of 2024 saw the company requesting from its shareholders an amendment to increase the number of authorized shares of class A common stock from 330,000,000 shares to 10,330,000,000 shares — in other words, a 30x. The number of authorized shares of preferred stock was to be increased from 5,000,000 shares to 1,005,000,000 shares — a 200x. All this, though not the same as stating the full amount to actually be issued, was done to give the company more liberty in future financial operations as the 21/21 Plan quickly ran its course. By also focusing on preferred stock, another variant of funding could now be pursued. The full year ended with about 446,000 bitcoin owned by Strategy, and with a company bitcoin yield of 74.3%. Perpetual Strike Preferred Stock The new year started with an 8-K filing stating that Strategy was now ready to seek the new funding through preferred stock. The new instrument, as the name implies, was to be senior to the company’s common shares, meaning the owners of the preferred shares had a stronger claim on any future cash flows. Initially, a $2 billion raise was the stated goal. While the new instrument was being prepared, 450,000 bitcoin had been accumulated by January 12. At the end of the month, all 2027 convertible bonds were called on to be redeemed for newly issued shares, as the conversion price was now below the market price of the shares. Any Strategy convertible bond far “in the money” becomes unappealing to the largest buyers of such instruments — the gamma-trading, delta neutral hedge funds — who prefer early conversion followed by new convertible bond issuance over holding the old bonds until maturity. On January 25, 2025, the company finally filed its prospectus for Strike perpetual preferred stock ($STRK), and about a week later, 7.3 million Strike shares were issued with 8% cumulative dividends on the liquidation preference of $100 per share. In practice, this meant a $2 per share quarterly dividend in perpetuity, or until the shares are converted to Strategy shares in case the price of the latter reaches $1,000. Conversion was defined at the ratio 10:1, meaning 10 Strike shares must be converted for every new Strategy share. In other words, the instrument is akin to a dividend-paying perpetual call option on Strategy common shares. If deemed necessary, Strategy can pay the dividends in the form of its own common shares. On February 10, about 7,600 bitcoin were purchased with the proceeds from the Strike issuance as well as from conventional ATM offering of common shares. On February 21, Strategy issued $2 billion worth of convertible bonds maturing March 1, 2030, with a conversion price of about $433 per share, representing a conversion premium of about 35%. About 20,000 bitcoin could quickly be purchased with the proceeds. Shortly thereafter, a new prospectus was published, enabling the company to issue up to $21 billion worth of Strike perpetual preferred stock, meaning the already ambitious 21/21 Plan of last year now seemed to morph into something even more massive. Perpetual Strife and Stride Preferred Stock As soon as the company had publicly announced its ambitious expansion of its funding plan, yet another instrument was announced; Strife ($STRF), a perpetual preferred stock similar to Strike, was to go live with 5 million shares. It was to offer 10% annual dividends in cash — paid quarterly — instead of 8% in cash or common shares. Strife, unlike Strike, had no equity conversion feature, but was senior to both common shares and Strike. Any dividend delay was to be compensated by higher future dividends, with a maximum of 18% total annual dividend rate. At time of issuance, the initial plan of issuing 5 million shares seems to have been increased to 8.5 million shares, raising over $700 million. With ATM activity for the common shares as well as for Strike, Strategy could finally announce in March that the company held over 500,000 bitcoin. April saw mostly regular common share ATM activities, until that type of funding was all but depleted. Strike ATM activity continued as well, but due to what was likely low liquidity, the dollar amount raised was negligible. With the proceeds, Strategy’s total bitcoin position climbed above 550,000 bitcoin. On May 1, Strategy announced the intention of launching another $21 billion common share ATM offering. This announcement came very shortly after the ATM arm of the initial 21/21 Plan had been exhausted, and fully vindicated the logic outlined in the previous report as well as on X. As any premium to net assets creates an arbitrage for the company, management is bound to continue to print new shares overvalued relative to underlying bitcoin assets in order to capture it. Issuance started almost immediately, and more bitcoin could be accumulated. As the fixed income arm of the initial 21/21 Plan already had been extended with the new preferred stock in mind, investors now faced a massive 42/42 Plan, meaning a maximum of $42 billion in common share issuance and $42 billion in fixed income security issuance. May also saw the SEC filing of a new $2.1 billion ATM offering for the Strife perpetual preferred stock instrument. At the end of the month, all three ATM offerings were printing shares for the acquisition of new bitcoin. In the beginning of June, yet another instrument was announced: Stride ($STRD), a perpetual preferred stock asset similar to Strike and Strife, was soon to launch. It was to offer 10% optional, noncumulative dividends in cash, had no equity conversion feature, and was junior to every other instrument except the common shares. A little less than 12 million shares worth about $1 billion were initially issued, paving the way for about 10,000 more bitcoin for the company coffers. A Dazzling Mosaic of Bitcoin Treasury Companies With the STRK, STRD, and STRF products launched, and Strategy’s 21/21 Plan in full swing, the full picture of what has been going on in the last six months should be clearer. I pointed out in the initial report that the main rationale behind the convertible bonds was not, despite the claims of the company, to offer bitcoin exposure to a section of the market in need and want of such. The buyers of the bonds were almost all of them delta neutral hedge funds, and, being simultaneously short Strategy shares, they never had any actual bitcoin exposure. It was all a ruse. The true reason that Strategy offered these securities to lenders was that it gave retail investors an impression of financial innovation targeting a multitrillion-dollar industry, as well as facilitating further bitcoin accumulation without equity dilution. And as the investors bid on the common shares, so did the price discrepancy to net assets and the opportunity of risk-free bitcoin yield grow in proportion. The greater the economic confusion, coupled with Michael Saylor’s way with words and vivid analogies, the larger the company’s arbitrage opportunity. By issuing three different perpetual preferred stock securities over the last six months, in addition to the various convertible bonds already in place, these complicated financial products could now create an appearance of financial innovation, thus spurring further bidding on the common shares. At the time of writing, the common shares trade near double that of net assets, which is a great feat by company management, given the large size and activity of the common share ATM offerings. It means Strategy can continue to buy about two bitcoin for the price of one in a risk-free fashion. In 2024, the company could enjoy tailwinds originating from the popular “reflexivity flywheel” theory, where it was argued that the more bitcoin the company purchased, the more its shares would increase in value, resulting in the opportunity to buy even more bitcoin. In 2025, this self-referential stupidity morphed slightly to a “torque” narrative, manifesting itself as official company depictions of fixed income cogwheels rotating the core that is the common shares, with bitcoin yield produced from the machinery as a result. Exactly from where, or how, the yield was created, few investors seemed to be asking themselves, and instead the made-up dynamic was mindlessly celebrated.

Preferred shares are financial assets, and not subject to the laws of physics. Being an engineer, it is not surprising that Saylor should come up with all these fallacious analogies so that bitcoin yield would appear to stem from what can only be viewed as financial alchemy. But since there are no actual company revenues to speak of, no actual banking (the company borrows, but does not lend), the bitcoin yield must in the end stem from the earlier outlined Ponzi element of the company’s business model; retail investors are dazzled by carefully curated narratives, causing them to bid up the price of common shares enough for the bitcoin yield opportunity to materialize. Whatever bitcoin yield originating from the various debt instruments cannot yet be considered settled as debt must eventually be paid off. Only the bitcoin yield stemming from common share ATM offerings is immediate and final — a true profit. A Bubble of Bitcoin Treasury Companies Oblivious or not to the fact that narratives can’t influence reality forever, the massively successful bitcoin yield concept of Strategy has spread like a wildfire among management teams of smaller companies all over the world. CEOs have seen how Strategy insiders, by continuously dumping shares on the retail investors currently chasing the shares, have become immensely rich, and so have started copying the playbook. The constant Strategy insider selling can be verified by looking at the numerous Form 144 filings. Many of these companies have successfully pulled this off, already enriching management and old shareholders at the expense of new ones. But it must all end at one point, and many of these companies, grasping in desperation at the bold, new strategy of becoming bitcoin treasury companies (due to the conventional main business struggling or even failing) will be the first that are compelled to sell their bitcoin assets to pay creditors when things take a turn for the worse. Michael Saylor himself once admitted that he was desperate before stumbling over bitcoin.

• Metaplanet was once known as Red Planet Japan and struggled mightily to be profitable in Japan’s budget hotel sector.
• Before Méliuz SA desperately adopted a bitcoin acquisition strategy, it had undergone a 100:1 reverse split.
• Vanadi Coffee SA drifted ever closer to bankruptcy, managing five cafes and a bakery in Spain’s Alicante region, but its pivot to a bitcoin strategy now seems to have performed miracles for its share price.
• The notorious meme stock company Trump Media & Technology, with no revenue to speak of, is now pursuing billions of dollars in funding for the purpose of creating a bitcoin treasury company in order to rescue a share price trading at all-time lows.
• Bluebird Mining Ventures Ltd, also in desperation, I would imagine — at least if the share price is any indicator — just recently decided to sell any gold it managed to mine in order to fund bitcoin purchases for its treasury; the shares are at time of writing up almost 500% in a month.
• H100 Group, a small and until recently struggling Swedish biotech company, has, at the time of writing returned, to its investors about 1,500% in a month on news that Adam Back, CEO of Blockstream, is funding the company through some type of convertible bonds, for the pursuit of a bitcoin treasury strategy.

The list could go on and on, but I think the point is made; it is not Microsoft, Apple, or Nvidia that are becoming bitcoin treasury companies, but failing companies with nothing to lose. Jesse Myers, a Strategy supporter and a direct influence on Michael Saylor’s bitcoin valuation modeling, admitted that,  “[…] with MicroStrategy, Metaplanet and Gamestop, they are all zombie companies. They all had […] a reason to take a serious look in the mirror and say, we can’t keep doing the strategy that we’ve… the path we’ve been on. We have to radically reinvent our approach to delivering shareholder value.”  All these desperate companies have looked at Michael Saylor and Strategy and believe they have found a clear path to riches. By copying the financial alchemy themselves, they are now all involved in a great transfer of wealth as the bitcoin treasury company bubble runs its course. When the Mosaic Breaks Though part of the impressive company mosaic, Strike, Strife, and Stride are all senior to equity. The same is true for the convertible bonds, not all of them are currently “in the money.” Future free cash flow will always have to reach holders of these instruments before whatever is left can go to owners of the common shares. In good times, this is obviously not a problem due to the rather low debt ratio of the company; in bad times, the value of all company assets decline considerably while debt obligations remain — like tall, looming threats to any new creditor. Due to a phenomenon sometimes referred to as debt overhang, any new creditor will be hesitant to lend for the purpose of paying off other debt obligations. What started as an enchanting collection of narratives and exaggerations morphs into something turning on its creator. This is all exacerbated by the fact that a prolonged bitcoin bear market will cause further sell pressure on the asset by the many bitcoin treasury companies then in distress. The more popular Strategy’s playbook becomes, in other words, the deeper the future bitcoin crash, likely wiping out much of the equity of most companies having pursued such a strategy to the bitter end. In summary: Michael Saylor likes bitcoin. He, like all of us, prefers more bitcoin to less bitcoin. It is then extremely naive to think that he will let company management pass on what is by definition an arbitrage. When common shares trade at a premium to net assets, the company can create risk-free profits for its old shareholders by transferring wealth from the buyers of newly issued shares. This will continue in the form of ever-larger common share ATM offerings alongside new, obfuscating ”innovative products”, despite protests and mutterings about equity dilution. Evidence of this claim is my prediction made in March, coming true in the form of a new $21 billion ATM offering barely one and a half months later. If Strategy does not act on this arbitrage, all the copy-cats will capture it instead as they attempt to increase their bitcoin treasury in an equally risk-free manner. In the frantic scramble to create and expand all these arbitrage opportunities, companies will take on debt in various forms, and danger abounds. During the next bitcoin bear market, the Strategy share price will reach — and then break below — net assets per share, inflicting large bitcoin-denominated losses on anyone buying at today’s premium. The best action a Strategy investor can take today is doing exactly what the company and its insiders are all doing: Sell the shares!  Bitcoin is no longer the main strategy of this company, nor of any of the now multiplying bitcoin treasury companies; you are. This is an edited version of the article posted on the author’s Medium page. A fuller assessment is featured in the next Bitcoin Magazine Print issue — be sure to get your subscription now. BM Big Reads are weekly, in-depth articles on some current topic relevant to Bitcoin and Bitcoiners. If you have a submission you think fits the model, feel free to reach out at editor[at]bitcoinmagazine.com. This post Bitcoin Treasury Companies Are Bubbles first appeared on Bitcoin Magazine and is written by Emil Sandstedt.

Bitcoin Magazine

How The IMF Prevents Global Bitcoin Adoption (And Why They Do It) The Global Pattern In recent years the IMF has:

• Successfully pressured El Salvador to (de facto) drop Bitcoin as legal tender, and rollback other Bitcoin policies
• Successfully pressured CAR’s 2023 Bitcoin repeal through regional banking bodies
• Been responsible for the lack of follow through from Bitcoin campaign rhetoric to action from Milei in Argentina.
• Cited “serious concerns” with Pakistan’s Bitcoin plans
• Consistently framed crypto as a “risk” in loan negotiations

Here’s a summary CountryGDP ($ Billion)IMF Loan ($ Billion)IMF Loan as % of GDPIMF response ResultArgentina67054.88.18%strongBitcoin policy abandonedCentral African Republic2.560.2722.31%strongBitcoin policy abandonedEl Salvador 2.0 (post-2025)34.871.44.01%strong5 Bitcoin laws abandonedPakistan346.799.352.70%strongTBDEl Salvador 1.0 (2021-2024)34.8700%strongBitcoin maintainedBhutan2.9 00%mildBitcoin maintained As we can see, the only nations that were able to resist IMF pressure were El Salvador, prior to gaining an IMF loan, and Bhutan which does not have an IMF loan.  Each country with an IMF loan who has adopted, or attempted to adopt Bitcoin at a nation-state level has been successfully thwarted, or largely thwarted by the IMF.  How is it that the IMF has been so successful in preventing global nation state adoption, with the exception of Bhutan, and why do they aggressively move to prevent it? In this detailed report we do a deep-dive into each of the three nations where the IMF has successfully pushed back against Bitcoin adoption, and the signs that it is likely to be successful achieving the same result with Pakistan.  In the last section of this report, we look at the IMFs five reasons to fear Bitcoin, and how Bitcoin is still thriving from a grassroots level despite top-down Bitcoin abandonment, or partial abandonment, by various nation states. 1. Central African Republic: When Colonial Money Met Digital Hope The Central African Republic (CAR) uses the CFA franc. The CFA isn’t just currency—it’s a geopolitical chain, backed by France and governed by the Bank of Central African States (BEAC). Of its 14 member nations, the 6 Central African nations (including CAR) must still deposit 50% of foreign reserves in Paris. This control over reserves fosters economic dependency, while establishing export markets for French goods at favorable terms. In 1994 for example, the CFA was devalued by half, a policy that was influenced by Western pressure, particularly from the IMF. This caused the cost of imports to leap, leading to exporters (mainly EU based) being able to procure resources from CFA nations at half the cost. Locally the impact was devastating, leading to wage freezes, layoffs, and widespread social unrest across CFA countries. When the Central African Republic (CAR) announced in 2022 it was adopting Bitcoin as legal tender, BEAC and its regulatory arm COBAC immediately voided the law, citing violations of the CEMAC Treaty; The treaty which established the economic and monetary community of Central Africa. This wasn’t bureaucracy—it was a warning shot from the monetary guardians of la Françafrique. Why it mattered: To this day, CAR’s economy relies heavily on IMF bailouts. With $1.7Billion in external debt (61% of GDP), defying BEAC meant risking financial isolation. The IMF’s Silent Campaign The IMF moved fast. Within two weeks (May 4, 2022), it publicly condemned CAR’s “risky experiment,” citing legal contradictions with CEMAC’s crypto ban. The move raised “major legal, transparency, and economic policy challenges,” the IMF said, that were similar to the concerns the IMF raised about El Salvador’s Bitcoin adoption: risks to financial stability, consumer protection, and fiscal liabilities. (For context, none of those risks materialized in El Salvador). But their real weapon was leverage. As CAR’s largest creditor, the IMF tied its new Extended Credit Facility (ECF)—a $191M lifeline—to policy compliance. The Timeline That Tells All This table traces the IMF’s shadow campaign: Key to scuttling CAR’s Bitcoin ambitions was ensuring that the Sango project — a blockchain-hub initiative from the CAR government to sell “e-residency” and citizenship for $60K in Bitcoin — did not proceed. The Sango Project – coincidence or collusion? In July 2022, CAR launched the Sango Project. It aimed to raise $2.5B (100% of GDP). It failed catastrophically. By January 2023, only $2M (0.2% of target) was raised. While IMF reports cite “Technical obstacles with 10% internet penetration” as the reason for the failure, our analysis shows a different picture. Two factors scuttled the project.

1. Investor flight
2. A CAR Supreme Court ruling formally blocked the Sango project

However, on closer examination, both of these factors hint at IMF involvement. Let’s take a closer look at the evidence. Investor Flight The IMF’s role in this investor flight is circumstantial but compelling. On May 4, 2022, the IMF expressed concerns about CAR’s bitcoin adoption, stating it raised major legal, transparency, and economic policy challenges. This statement, made before the Sango Project launch, highlighted risks to financial stability and regional economic integration, potentially deterring investors. Further, in July 2022, during a staff visit for the Staff-Monitored Program (SMP) review, the IMF noted “economic downturns due to rising food and fuel prices”, which could have compounded investor caution. Reports also mention that the IMF and COBAC warned of inherent risks in CAR’s crypto move, adding to the skepticism. The timing of these IMF statements aligns with the observed investor flight, suggesting that their cautionary stance may have influenced perceptions. While circumstantial, the sequence of events suggests IMF influence as a respected financial institution in the investor community likely played a role in investor flight. Supreme Court Ruling On the surface, the Supreme Court ruling looks like an independent event, until we dig beneath the surface and find big question-marks over the independence of CAR’s judiciary, a country that itself ranks 149/180 on its Corruption Perception Index (extremely low). As mentioned, one week after CAR announced its Bitcoin strategy, the IMF reported “concerns”, including risks to financial stability, transparency, anti-money laundering efforts, and challenges in managing macroeconomic policies due to the volatility. (Bloomberg, 4 May, 2022) On 29 Aug 2022, 117 days later, the Supreme Court of CAR ruled that the Sango project was illegal. For context, the Supreme Court which forms part of CAR’s judiciary is described by international transparency bodies such as Gan Integrity as one of the most corrupt institutions in the country, with evidence pointing to inefficiency, political interference, and likely influence from bribes or political pressure. The Sango project’s collapse became the IMF’s Exhibit A: “Proof Bitcoin can’t work in fragile economies.” But the reality was, the IMF’s consistent expression of “concerns” created the environment where the project was structurally undermined in advance, so that this conclusion became possible. 5,200 miles away, in the small nation of Bhutan we see the stark contrast of the successful Bitcoin rollout that was possible without IMF’s “involvement”. The Unspoken Conclusion: Bitcoin’s Resilience Beyond Borders CAR’s reversal wasn’t about Bitcoin’s viability. It was about raw power. The IMF weaponized regional banking unions (CEMAC), starved CAR of capital, and leveraged a $191M loan to extinguish the threat of financial sovereignty. When the Sango Project struggled—the trap snapped shut. Yet this defeat reveals Bitcoin’s enduring power. Notice what the IMF didn’t destroy:

• Nigeria’s Bitcoin remittances still bypass dollar corridors, saving millions in fees.
• Kenya’s BTC-powered trade flourishes without IMF approval.
• El Salvador keeps stacking BTC despite 221 mentions of Bitcoin in loan conditions

The pattern is clear: Where grassroots adoption takes root—Bitcoin survives. But for countries announcing top-down Bitcoin manifestos who have large IMF loans, all 4 have met with crushing levels of resistance: El Salvador, CAR, Argentina and now Pakistan. CAR’s outstanding $115.1 million IMF loan balance made it vulnerable to heavy IMF pressure. In nations without IMF loans such as Bhutan, Bitcoin slips through the IMF’s grip. Every peer-to-peer payment, every Lightning transaction, erodes the old system’s foundations. The IMF won the CAR round. But the global fight for financial sovereignty is just beginning. 2. Argentina’s $45 Billion Bitcoin Adoption Roadblock If CAR was thwarted in its Bitcoin plans, Argentina never made it to the start line. Precampaign rhetoric from President Milei suggested big things were in store for Bitcoin. Yet nothing materialized. Was this just a politician’s rhetoric fizzling out post-election, or was something else at play? This section pulls back the lid on what really happened to Argentina’s aborted Bitcoin aspirations. Understanding how Bitcoin adoption is going, is like assessing whether a rocket is going to reach escape velocity: we must look at both the thrust and drag factors. I’m an optimist: I believe Bitcoin will win: it is so clearly a better solution to the broken money legacy system we currently have. But I’m also a realist: I think most people underestimate the strength of entrenched forces which oppose Bitcoin. When I was running my tech company, we encountered the same thing. Our technology was 10x better, faster and more cost effective than the legacy system we eventually replaced. But they didn’t relinquish their incumbent monopoly easily! What happened in Argentina?
When libertarian Javier Milei was elected Argentina’s president in November 2023, many Bitcoin advocates cheered. Here was a leader who called central bankers “scammers,” vowed to abolish Argentina’s central bank (BCRA), and praised Bitcoin as “the natural reaction against Central Bank scammers.” The case became a litmus test for whether Bitcoin could gain mainstream acceptance through government adoption rather than grassroots growth. Source: Coinsprout. 14 Aug 2023 Yet eighteen months into his presidency, Milei’s Bitcoin vision remains unfulfilled. The reason? A $45 billion leash held by the International Monetary Fund. The IMF’s Bitcoin Veto in Argentina The constraints had already been put in place by the time of Milei’s election. On 3 March, 2022, Argentina’s previous government signed a $45 billion IMF bailout agreement. In the weeks following, details emerged that the agreement had contained an unusual clause: a requirement to “discourage cryptocurrency use.” This wasn’t a suggestion—it was a loan condition documented in the IMF’s Letter of Intent, citing concerns about “financial disintermediation.” The immediate effect:

• Argentina’s central bank banned financial institutions from crypto transactions (BCRA Communication A 7506, May 2022)
• The policy remains enforced under Milei, despite his pro-Bitcoin rhetoric

Milei’s Pivot After taking office, Milei:
Slashed inflation from 25% monthly to under 5% (May 2024)
Lifted currency controls (April 2025)
Secured a new $20 billion IMF deal (April 2025) But his manifesto’s flagship proposals—Bitcoin adoption and abolition of BCRA (Argentina’s Central Bank) — are conspicuously absent. The math explains why: Argentina owes the IMF more than any other nation, giving the Fund unparalleled leverage. Yet there’s irony in Argentina’s case: while the IMF blocks official Bitcoin adoption, Argentinians are embracing Bitcoin anyway. Cryptocurrency ownership grew by 116.5% between 2023-2024 in South America. Across the region, Argentina has the highest ownership rates, at 18.9%, a figure almost 3 times the global average, and which has surged as citizens hedge against high annual inflation of 47.3% (April 2025) — a quiet rebellion the IMF can’t control. . What Comes Next? All eyes are on the October 2025 mid-term elections. If Milei gains legislative support, he may test the IMF’s red lines. But for now, the lesson is clear: when nations borrow from the IMF, their monetary sovereignty comes with strings attached. Key Takeaways

• The IMF’s 2022 loan explicitly tied Argentina’s bailout to anti-crypto policies
• Milei has prioritized economic stabilization over Bitcoin advocacy, to maintain IMF support
• Parallels exist in El Salvador, CAR and now Pakistan revealing a consistent IMF playbook
• Argentinians are circumventing restrictions through grassroots Bitcoin adoption

3. El Salvador: A partial IMF-victory When El Salvador made Bitcoin legal tender in 2021, it wasn’t just adopting a cryptocurrency—it was declaring financial independence. President Nayib Bukele framed it as a rebellion against dollar dominance and a lifeline for the unbanked. Three years later, that rebellion hit a $1.4 billion roadblock: the IMF. The Price of the Bailout To secure its 2024 loan, El Salvador agreed to dismantle key pillars of its Bitcoin policy. The conditions reveal a systematic unwinding:

1. Voluntary Acceptance Only
   Businesses are no longer required to accept Bitcoin (2021 mandate repealed). source
2. Public Sector Ban
   Government entities prohibited from Bitcoin transactions or debt issuance. This includes bans on tokenized instruments tied to Bitcoin. source
3. Bitcoin Accumulation Freeze
   All government purchases halted (6,000+ BTC reserve now frozen)
   Full audit of holdings (Chivo wallet, Bitcoin Office) by March 2025. source
4. Trust Fund Liquidation
   Fidebitcoin (conversion fund) to be dissolved with audited transparency. source
5. Chivo Wallet Phaseout
   The $30 incentive program winds down after surveys showed most users traded BTC for USD. source
6. Tax Payment Rollback
   USD becomes the sole option for taxes, eliminating Bitcoin’s utility as sovereign payment. source

Bukele’s Calculated Retreat El Salvador’s compliance makes fiscal sense:

• The loan stabilizes debt (84% of GDP) as bond payments loom
• Dollarization remains intact (USD still primary currency)

Yet the backtrack is striking given Bukele’s 2021 rhetoric. The Chivo wallet’s low uptake  likely made concessions easier. What’s Left of the Experiment? The IMF hasn’t killed Bitcoin in El Salvador—just official adoption. Grassroots use persists:

• Bitcoin Beach (local circular economy) still operates, in fact thrives
• Tourism draws increasing numbers of Bitcoin enthusiasts

But without state support, Bitcoin’s role potentially shrinks to a niche tool rather than a monetary revolution, at least in the short term. The Road Ahead Two scenarios emerge:

1. Slow Fade: Bitcoin becomes a tourist curiosity as IMF conditions take full effect
2. Shadow Revival: Private sector keeps it alive despite government retreat

One thing’s clear: when the IMF writes the checks, it also writes the rules. Key Takeaways

• IMF loan forced El Salvador to reverse 6 key Bitcoin policies
• Precedent set for other nations seeking IMF support
• Grassroots Bitcoin use may outlast government involvement

El Salvador made a lot of Bitcoin concessions. While arguably this doesn’t hurt El Salvador much, it sends a strong message to other LATAM nations such as Ecuador and Guatemala who were watching El Salvador and thinking of copying their playbook (until they checked the size of the IMF loan they had). So on net balance it was a partial IMF win, a partial El Salvador win.  4. Bhutan: the IMF-free success story We are now 2 years into Bhutan’s Bitcoin experiment.  That means we now have some good data on how it has affected the economy.  The IMF warned that nations embracing Bitcoin would destabilize their economy, be less effective at attracting foreign direct investment, and endanger their decarbonizing and environmental initiatives. It specifically voiced concerns over Bhutan’s “lack of transparency” with crypto-adoption. What does the data say? 1. The bitcoin reserves have directly addressed pressing fiscal needs. “In June 2023, Bhutan allocated $72 million from its holdings to finance a 50% salary increase for civil servants” 2. Bhutan was able to “use Bitcoin reserves to avert a crisis as foreign currency reserves dwindled to $689 million” 3. Prime Minister Tshering Tobgay in an interview said that bitcoin also “supports free healthcare and environmental projects” 4. Tobgay also said their Bitcoin reserves helped in “stabilizing [the nation’s] $3.5 billion economy” 5. Independent analysts have now said that “this model could attract foreign investment, particularly for nations with untapped renewable resources” Considering how the IMF analysis was not just wrong, but roughly 180° off target, it begs the question, were the IMF’s predictions ever based on data?  5. Five reasons the IMF may fear Bitcoin “Get all your friends, libertarians, democrats, republicans, get everyone to buy Bitcoin – and then it becomes democratized.” encouraged John Perkins ~ Bitcoin 2025 What if the IMF’s greatest fear isn’t inflation… but Bitcoin, and can Bitcoin Break the IMF/World Bank Debt Grip? During my recent conversation with John Perkins (Confessions of an Economic Hit Man), something clicked. Alex Gladstein previously and brutally exposed how IMF “structural adjustments” did not eliminate poverty, but in fact enriched creditor nations. Perkins layered this with his own first-hand accounts.  Perkins laid bare to me how the Global South is trapped in a cycle of debt—one designed to keep wealth flowing West. But here’s the twist: Bitcoin is already dismantling the playbook in five key ways. 1. Reducing Remittance Costs to Loosen the Debt Noose Chris Collins’ Sculpture symbolically captures the debt noose Remittances—money sent home by migrant workers—often make up a significant part of developing nations’ GDP. Traditional intermediaries such as Western Union charge fees as high as 5–10%. This acts as a hidden tax that drains foreign reserves. For countries like El Salvador or Nigeria, every remittance dollar that doesn’t flow into the country is a dollar their central bank must store to stabilize their currencies. Often this store of US dollars is provided by the IMF. Bitcoin Changes the Game With Lightning, fees drop to almost zero, and transactions settle in seconds. In 2021, El Salvador’s president Bukele optimistically predicted that bitcoin could save $400 Million in remittance payments. The reality has been there’s little evidence remittance payments using bitcoin have reached anywhere near that threshold. However the potential is clear: more remittances in bitcoin leads to higher dollar reserves, which leads to less need for IMF loans. Little wonder the IMF mentioned Bitcoin 221 times in their 2025 loan conditions for El Salvador. They’d like to remain a relevant lender. Bitcoin isn’t just cheaper for remittances—it bypasses the dollar system entirely. In Nigeria, where the naira struggles, families now hold BTC as a harder asset than local currency. No need for central banks to burn through dollar reserves. No desperate IMF bailouts. The numbers speak for themselves:
• Pakistan loses $1.8 billion yearly on remittance fees—Bitcoin could save most of that
• El Salvador already saves $4M+ annually with just 1.1% Bitcoin remittance adoption Adoption isn’t universal yet—only 12% of Salvadorans use Bitcoin regularly, while over 5% of Nigeria’s remittances flow through crypto. But the trend is clear: every Bitcoin transfer weakens the debt dependency cycle. The IMF sees the threat. The question is: how fast will this silent revolution spread?” Remittances totaled almost $21 billion in 2024, representing over 4% of Nigeria’s GDP 2. Evading Sanctions and Trade Barriers Oil-rich Iran, Venezuela and Russia have had restricted USD access due to US sanctions in 1979, 2017 and 2022 respectively, resulting in the export of vastly fewer barrels per day of oil in each case. Whether we agree with the ideologies of these nations or not, Bitcoin breaks this cycle. Iran already evades sanctions by using Bitcoin as a way to effectively “export oil”, whereas Venezuela has used Bitcoin to pay for imports, evading sanctions. Iran is also able to bypass sanctions by monetizing its energy exports through mining. This avoids the IMF’s “reform-for-cash” ultimatums while keeping economies running. The petrodollar’s grip weakens as Russia and Iran pioneer Bitcoin oil deals. Another nation that has used Bitcoin to avoid the economic hardship caused by sanctions is Afghanistan, where humanitarian aid flows through using Bitcoin. NGOs like Code to Inspire bypassed Taliban banking freezes, and Digital Citizen Fund have used Bitcoin to deliver aid post-Taliban takeover, preventing families from starving. Afghanistan’s “Code to Inspire” NGO uses Bitcoin donations, which cannot be intercepted by the Taliban, to train women to write software. Though Bitcoin’s share of sanctioned trade is small—under 2% for Iran and Venezuela’s oil exports—the trend is growing. Sanctions are a critical tool for geopolitical leverage, often supported by the IMF and World Bank through their alignment with major economies like the U.S. Sanctioned nations using Bitcoin reduces IMF control over financial flows while simultaneously threatening U.S. dollar dominance. 3. Using Bitcoin as a Nation State Inflation Shield When nations like Argentina face hyperinflation, they borrow USD from the IMF to bolster currency reserves and stabilize their currency, only to face austerity or the enforced sale of strategic assets at a low price when repayments falter. Bitcoin offers a way out by acting as a global, non-inflatable currency that operates independently of government oversight, and which appreciates in value. El Salvador’s experiment shows how Bitcoin can reduce dollar dependency. By holding BTC, nations can hedge against currency collapse without IMF loans. If Argentina had allocated just 1% of its reserves to Bitcoin in 2018, it could’ve offset the peso’s 90%+ devaluation that year, sidestepping an IMF bailout. Bitcoin’s neutrality also means no single entity can impose conditions, unlike IMF loans that demand privatization or unpopular reforms. Bitcoin doesn’t have debt-leverage or a long history of the IMF to draw on when encouraging adoption. However, due to the Lindy Effect (see chart below), each passing year Bitcoin becomes a more viable alternative. Lindy Effect: The longer something has been successful, the more likely it is to continue being successful. Bitcoin’s longevity strengthens its potential to disrupt 4. Bitcoin Mining: Turning Energy into Debt-Free Wealth Many developing nations are energy-rich but debt-poor, trapped by IMF loans for infrastructure like dams or power plants. These loans demand cheap energy exports or resource concessions when defaults hit. Bitcoin mining flips this script by turning stranded energy—like flared gas or overflow hydro—into liquid wealth without middlemen or transport costs. Paraguay’s earning $50 million yearly from hydro-powered mining, covering 5% of its trade deficit. Ethiopia made $55 million in 10 months. Bhutan’s the standout: with 1.1 billion in Bitcoin (36% of its $3.02 billion GDP), its hydro-powered mining could produce $1.25 billion annually by mid-2025, servicing its $403 million World Bank and $527 million ADB debts without austerity or privatization. Unlike IMF loans, mined Bitcoin appreciates in value and can be used as collateral for non-IMF borrowing. This model—monetizing energy without surrendering assets—scares the IMF, as it cuts their leverage over the energy sector. Bhutan’s Prime Minister, Tshering Tobgay, calls Bitcoin a “strategic choice to prevent brain drain” 5. Grassroots Bitcoin Economies: Power from the Ground Up Bitcoin is not just for nations—it’s for communities. In places like El Salvador’s Bitcoin Beach or South Africa’s Bitcoin Ekasi, locals already use BTC for daily transactions, savings, and community projects like schools or clinics. These circular economies, often sparked by philanthropy, aim for self-sufficiency. In Argentina, where inflation often tops 100%, 21% of people used crypto by 2021 to protect wealth. If scaled up, these models could reduce reliance on national debt-funded programs, which is of course the last thing the IMF want. Hermann Vivier, founder of Bitcoin Ekasi, says his community was inspired by El Salvador’s Bitcoin Beach to replicate their Bitcoin circular economy in S.Africa Conclusion  By fostering local resilience, Bitcoin undermines the IMF’s “crisis leverage”. Thriving communities don’t need bailouts, so the IMF can’t demand privatization in exchange for loans. In Africa, projects like Gridless Energy’s – which has already brought 28,000 rural Africans out of energy poverty using renewable microgrids tied to Bitcoin mining – cut the need for IMF-backed mega-projects. If thousands of towns adopt this, dollar shortages would matter less, and trade could bypass USD systems.  While the IMF occasionally engages in spreading misinformation about Bitcoin energy consumption and environmental impact as a way to obstruct adoption, its preferred and much more powerful tool is simply to use the financial leverage it has over IMF-indebted nations to “strongly encourage” compliance with its Bitcoinless vision of the future.  The IMF fought Bitcoin adoption in El Salvador, CAR, and Argentina. Now they are fighting Pakistan’s intention to mine Bitcoin as a Nation State. Scaling these grassroots efforts is likely to force the IMF’s hand to crack down more and more transparently. Above: Children from South Africa’s poorest villages learn to surf via the Bitcoin Ekasi township project Grassroots Bitcoin economies empower communities to thrive without IMF bailouts. And people-power is needed to find new innovative ways to overcome the IMF’s counterpunch.  This is a guest post by Daniel Batten. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine. This post How The IMF Prevents Global Bitcoin Adoption (And Why They Do It) first appeared on Bitcoin Magazine and is written by Daniel Batten.