Exploring the Idea: Crypto as a State Reserve for School Funding

April 14, 2025
Seal SD Liberty

Exploring the Idea: Crypto as a State Reserve for School Funding

What This Idea Entails

The idea of using cryptocurrency (e.g., Bitcoin) as a state reserve to fund schools involves South Dakota investing a portion of its public funds in crypto assets, holding them as a reserve, and using the proceeds (e.g., through appreciation, staking, or liquidation) to support education budgets, like the $960 million currently allocated to schools from property taxes in 2024. This could either supplement or replace existing funding mechanisms, such as Jerry Odom’s GRT plan, which generates $1.8 billion to replace the $1.6 billion from property taxes.

South Dakota’s Context and Crypto Landscape

South Dakota has shown some openness to cryptocurrency, particularly in the financial sector. The state has a favorable regulatory climate for crypto businesses, with companies like Anchorage and BitGo setting up trust subsidiaries in Sioux Falls due to the South Dakota Division of Banking’s progressive approach and the state’s trust-friendly laws [Web ID: 2] [Web ID: 4] [Web ID: 8]. South Dakota doesn’t impose a state income tax or capital gains tax, making it attractive for crypto investors [Web ID: 7] [Web ID: 20]. However, a 2025 proposal to establish a Bitcoin reserve (up to 10% of state funds) was rejected by lawmakers due to concerns over Bitcoin’s price volatility and lack of intrinsic value, though Representative Logan Manhart plans to reintroduce it in 2026 [Web ID: 1] [Web ID: 9] [Web ID: 10]. This rejection suggests caution around using crypto as a state reserve, but the idea isn’t dead, as other states like Florida, Arizona, and Utah are still pursuing similar initiatives [Web ID: 1].

Cost Analysis: Can Crypto Reserves Fund Schools?

Let’s break down the feasibility of using a crypto reserve to fund South Dakota’s $960 million school budget, using Bitcoin as an example since it’s the most prominent cryptocurrency mentioned in state-level reserve discussions [Web ID: 0] [Web ID: 1].

  • Current School Funding: Schools currently receive $960 million from property taxes, part of the $1.6 billion total property tax revenue in 2024, as outlined in Odom’s GRT plan.
  • Bitcoin Reserve Proposal: Following the model of South Dakota’s rejected bill, let’s assume the state allocates 10% of its public funds to a Bitcoin reserve. South Dakota’s state budget for FY 2025 is approximately $6.6 billion (based on historical budget data). A 10% allocation would be $660 million.
  • Bitcoin Value and Growth: As of February 2025, Bitcoin’s price was around $91,980 [Web ID: 1], though it fluctuated to $95,850 by late February [Web ID: 18]. Let’s use an average price of $92,000 for early 2025. If South Dakota invested $660 million in Bitcoin at $92,000 per coin, the state would hold about 7,174 Bitcoins ($660M ÷ $92,000). By April 14, 2025, let’s assume Bitcoin’s price rises to $100,000 per coin (a modest 8.7% increase, given its 122% growth in 2024 [Web ID: 19]). The reserve would then be worth $717.4 million (7,174 × $100,000), a $57.4 million gain.
  • Funding Schools: To fund the $960 million school budget solely from this reserve, the state would need to liquidate or generate returns on the entire reserve annually, which isn’t feasible without depleting the reserve. However, if used as a supplement, the $57.4 million gain could cover 6% of the $960 million school budget, reducing reliance on other revenue sources like the GRT. Alternatively, if Bitcoin’s price doubled to $184,000 (a 100% increase, not unrealistic given past trends), the reserve would be worth $1.32 billion, covering the entire $960 million with $360 million left over for other needs.

Why Tax Freedom (and Crypto Reserves) Equals Economic Freedom

Using a crypto reserve to fund schools aligns with the broader concept of tax freedom as economic freedom, a core tenet of Odom’s campaign:

  • Reducing Tax Burdens: By supplementing school funding with crypto reserve gains, South Dakota could reduce reliance on taxes like the GRT ($1.8 billion in Odom’s plan) or property taxes ($1.6 billion currently). This means more money in your pocket—homeowners save $3,000–$5,000 annually, and farmers save $225 million net [Odom’s GRT Plan].
  • Economic Growth Through Innovation: Crypto reserves signal innovation, attracting businesses and investors. South Dakota’s crypto-friendly climate (e.g., Anchorage, BitGo) already draws companies [Web ID: 2] [Web ID: 4]. A Bitcoin reserve could further position the state as a leader, boosting economic activity and job creation.
  • Hedge Against Inflation: Advocates like Rep. Logan Manhart argue Bitcoin hedges against inflation, preserving value in inflationary environments [Web ID: 1]. With a $200 million surplus in the GRT plan, a crypto reserve could add another layer of financial security, ensuring schools are funded without over-taxing citizens.
  • Empowering Communities: Gains from a crypto reserve (e.g., $57.4 million at 8.7% growth) directly benefit schools, reducing the tax burden on families and giving you more control over your finances—true economic freedom.

Addressing the Skeptic’s Concern: Revenue Feasibility

The skeptic’s concern—“exempting businesses, groceries, and medical services means you can’t raise enough money”—mirrors the skepticism Odom’s GRT plan already addresses. Let’s apply that logic to a crypto reserve:

  • Crypto Reserve as a Supplement: Even with exemptions in the GRT plan (businesses under $100,000, groceries, medical services), it generates $1.8 billion [Odom’s GRT Plan]. A crypto reserve doesn’t need to replace this—it can supplement it. A $660 million Bitcoin reserve gaining 8.7% ($57.4 million) covers 6% of the school budget, reducing the GRT burden.
  • Volatility Concerns: Critics like South Dakota’s State Investment Officer Matt Clark highlight Bitcoin’s volatility and lack of intrinsic value [Web ID: 1]. But a diversified approach—holding Bitcoin alongside the GRT—mitigates this. If Bitcoin dips, the GRT’s $200 million surplus ensures schools are funded. If Bitcoin rises (e.g., to $184,000), the reserve could fully fund schools, freeing up GRT funds for other needs.
  • Economic Base: South Dakota’s $70 billion GDP supports the GRT’s $69 billion taxable base [Odom’s GRT Plan]. A crypto reserve leverages this economic strength by adding a growth asset, not relying on it entirely.

Why South Dakotans Deserve This Relief

South Dakotans deserve tax freedom because you’ve carried the burden of property taxes for too long—$1.6 billion annually, risking homes and livelihoods. A crypto reserve, paired with the GRT, offers a forward-thinking solution:

  • Protecting Your Future: Schools get their $960 million, guaranteed by law, with a $200 million GRT surplus and potential crypto gains as a safety net.
  • Economic Empowerment: Tax freedom means more money for families ($3,000–$5,000 savings in Sioux Falls), farmers ($225 million net), and businesses (45% exempt under $100,000), driving growth and opportunity.
  • Innovation Leadership: South Dakota can lead the way, building on its crypto-friendly reputation [Web ID: 2] [Web ID: 8], while other states like Florida and Arizona explore similar reserves [Web ID: 1].

Join the Movement

This idea is just a start—we’re committed to exploring every avenue to give you tax freedom. Join us at the Liberty Forum on April 19, 2025, in Rapid City to learn more about ending property taxes and innovative ideas like a crypto reserve. Help us get this amendment on the November 2026 ballot—we need 35,017 signatures by May 2026!