Local Advocacy Group Says Indonesia Weighing Creation of Bitcoin Reserve
Key Takeaways:
- Indonesia is now exploring the creation of a national Bitcoin reserve using geothermal-powered mining to build a sovereign portfolio.
- Regulatory hurdles emerge as crypto payment bans and higher taxes complicate adoption plans.
- Despite cautious backtracking, Indonesia’s Bitcoin talks signal shifting views on national wealth.
Indonesia is finally considering the inclusion of Bitcoin in its national reserve assets, which is a significant step in the adoption of crypto assets by sovereign states. With a population surpassing 270 million, the country joins a growing number of nations reevaluating traditional reserve holdings such as gold and foreign currencies.
Can Green Energy Power a National Crypto Reserve?
The viability of such a strategy hinges on whether Bitcoin can effectively scale alongside Indonesia’s $1.4 trillion economy.
On August 5, this question was the subject matter when Bitcoin Indonesia, a leading crypto advocacy group, met with senior government officials. Also, in the meeting were advisors to the country's Vice President Gibran Rakabuming Raka.
The roundtable discussion considered multiple avenues for adoption, with a particular focus on utilizing Indonesia’s natural resources.
One of such proposals discussed at the meeting involved using the country’s abundant geothermal and hydroelectric energy to power a new Bitcoin mining operation. This would give the Asian country the ability to earn Bitcoin via mining, a gradual process but considered more cost-effective than buying Bitcoin on the open market.
Given Indonesia’s position as a major economy in Asia, the country's leaders believe this approach could be successful. For them, this model also mirrors successful models from other nations, where sustainable mining has simultaneously driven economic growth and technological advancement.
The conversation with the crypto advocacy group also looked into the crypto market, but more importantly, the long-term price projection of Bitcoin and what role the premier cryptocurrency could play in the future of digital finance.
For instance, Michael Saylor of Strategy (the world's largest Bitcoin holder) has predicted that Bitcoin could reach $13 million within two decades, assuming it captures just 7% of global capital. While such analyses might be speculative at best, they at the very least indicate the belief from institutions and prominent figures in the world of finance who view Bitcoin as a durable store of value.
Although predictions like this remain highly speculative, they reflect rising global interest in Bitcoin as a long-term store of value. That interest was reignited when Bitcoin surged past $122,000 mid-last month. At press time, it currently hovers around $114,000.
This kind of price action has already pushed some countries, like the United States, to view Bitcoin as a strategic reserve asset. For them, it’s a potential hedge against inflation and a way to manage soaring debt-to-GDP ratios.
Rising Taxes and Anti-Crypto Payment Policy Spout Concerns
Following growing public interest, Bitcoin Indonesia has stepped in to manage expectations around the possible creation of a Bitcoin reserve. The group explained that its recent sit-down with state officials was purely exploratory, an open discussion, not a policy negotiation.
Still, some close observers see the group’s latest statement as a step back. What began as a promising push for crypto adoption now appears more cautious. But there may be a good reason. Other developments in Indonesia are already creating roadblocks that make early implementation of a Bitcoin reserve unlikely.
One major obstacle is Indonesia’s longstanding ban on using cryptocurrencies for payments, in place since 2017.
While crypto trading remains legal, this restriction limits broader adoption by preventing digital assets from functioning as a medium of exchange. Without practical utility beyond speculative holdings, integrating Bitcoin into national reserves becomes a more complex proposition.
Further complicating matters, Indonesia recently implemented significant tax increases on crypto-related activities, almost doubling multiple crypto income taxes and VAT on Bitcoin mining.
Jimmy Aki
Drawing from his background in economics, Jimmy has monitored blockchain development for years, firmly believing in its power to democratise finance. Beyond offering commentary on the latest crypto developments, he also spends his time analysing open-source codes of promising projects on GitHub. Jimmy holds Bitcoin and Ethereum.
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