Should PA Invest in Bitcoin?

At the end of the PA House of Representatives' last legislative session Rep. Mike Cabell [R-114th] introduced legislation (HB 2664 0f 2024) which would allow the PA Treasurer to create a Strategic Bitcoin Reserve as a hedge against inflation. This initiative would be funded using the General Fund, the Rainy Day Fund, as well as the State Investment fund.

Over the past four years, Pennsylvania has experienced notable inflation, impacting various sectors of the economy. Between January 2021 and October 2024, the state saw a cumulative price increase of 19.4%, slightly below the national average of 20.7%. The cumulative effect has resulted in an additional monthly cost of approximately $1,010 for the average Pennsylvania household. This increase reflects higher expenses in essential categories such as transportation, shelter, food, and energy.

According to Rob Nelson at Yahoo Finance, "As states like Florida and Texas weigh the benefits of bitcoin reserves, the conversation underscores how innovative approaches to financial management could reshape public sector economics". Ohio, New Hampshire and North Dakota have also proposed similar initiatives.

Funded up to 10%, if enacted, such a measure could mean $1 billion worth of Bitcoin would be added to PA’s reserves, based on today's price. Any legislation should also allow for the Treasury's ability to diversify use of the asset, such as lending and staking protocols. Early adoption may be a very important factor as the supply of the digital asset is quite limited.

So, as Pennsylvania begins a new legislative session, will PA remain proactive in moving this conversation forward by, if necessary, reimagining, and reintroducing Rep. Cabell's legislation?