New Hampshire’s bitcoin-backed bond proposal involves the issuance of conduit bonds, with the state Business Finance Authority BFA serving as the facilitating “conduit” between borrowers and bondholders. The agency is headed by Executive Director James Key-Wallace. (Screenshot)
Last November, the N.H. Business Finance Authority issued a dramatic press release: Its trustees approved what it called “a groundbreaking financing structure that will make New Hampshire the first state in the world to issue a municipal bond backed by Bitcoin.”
The proposal is part of a larger effort to normalize the use of cryptocurrency in traditional finance, but now, six months after the autumn announcement, it has yet to come before Gov. Kelly Ayotte and the Executive Council for approval, and Moody’s Investors Service has assigned it a below-investment grade rating.
Under the proposal, bitcoin will be used as collateral. On March 31, rating agency Moody’s assigned a Ba2 provisional rating to the bond. Per Moody’s methodology, “obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk.” They are familiarly referred to as “junk bonds.”
Bitcoin has a history of instability. After its value hit an all-time high above $126,000 in October 2025, it fell to a little over $60,000 in February 2026 — a drop of over 50%. By mid-May, its price recovered to under $77,000..
When asked about the Moody's rating April 8 at a session of the N.H. House Commerce and Consumer Affairs Committee, BFA Executive Director James Key-Wallace said he believed it was more or less equivalent to that given to Ford Motor Co. bonds, adding, “The fact that it got rated at all is a pretty big deal — the first one actually in the world.
Ford’s bonds are rated a notch higher than the BFA proposal, at Ba1, but both ratings are in the speculative/junk category.
“The provisional rating makes sense,” said Rep. Keith Ammon, R-New Boston, a cryptocurrency proponent and vice chair of the House Commerce and Consumer Affairs Committee. “Bitcoin has short-term volatility and this is a novel product, so a cautious initial mark is expected. It’s a starting point, not a ceiling.”
The Ba2 rating is highly consequential, according to Neil Mathew — a longtime commentator on cryptocurrency. In a blog post on the Coinspeaker website, he wrote, “Ba2 paper cannot be held by most municipal bond funds, pension systems operating under fiduciary investment-grade floors, or insurance company general accounts subject to NAIC [National Association of Insurance Commissioners] capital charge rules – meaning the natural buyers here are high-yield muni investors, hedge funds, and crypto-native fixed-income allocators, a materially different compliance posture than any prior New Hampshire public authority issuance.”
Two classes of taxable revenue bonds are planned to be issued, with an initial total balance of $100 million. Bonds will be collateralized by a loan between the BFA, as lender, and the borrower, NH CleanSpark Borrower Trust. CleanSpark is a publicly traded data center developer and bitcoin miner based in Nevada. The company owns and operates multiple mining facilities across the United States and operates 19 data centers, primarily in the southern U.S.
The arrangement features frequent collateral valuation — meaning the appraised fair market value pledged by the borrower will undergo regular reassessment. Under the arrangement, $160 million will be placed in collateral by CleanSpark, and mandatory liquidation and redemption of the bonds is stipulated if the collateral value falls to 140 percent of the outstanding bond obligations.
The bond is being underwritten by New York-based investment bank Jefferies.
‘Very volatile assets’
Other governmental entities have entered the cryptocurrency arena with varied outcomes.
In 2024, the city of Quincy, Mass., was the first municipality to issue bonds using the blockchain technology that underpins crypto. Bitcoin was not involved, and the transaction was deemed successful. J.P. Morgan served as both the sole underwriter and purchaser of the entire initial issuance.
The most expansive experiment has been playing out in El Salvador, which made bitcoin legal tender in 2021 and has amassed a disproportionate amount of global bitcoin holdings. Bitcoin’s dramatic rise and fall have increased the small Central American nation’s national debt and led to a $1.4 billion bailout by the International Monetary Fund in late 2024
As for New Hampshire, its bond strategy involves conduit bonds, with the BFA serving as the facilitating “conduit” between borrowers and bondholders. Conduit bond borrowers are typically community-benefiting entities, such as hospitals, housing developments and nonprofits, that will be obligated to repay the debt.
“Most people, when they think municipal bonds, think, ‘Oh, the town’s borrowing money to build the library or the state’s borrowing money to build the highway,’ and those are typically tax-exempt, lower-interest, paid for by taxpayers,” said BFA Director James Key-Wallace. “Conduit bonds are not those things. Conduit bonds are a private loan to a private entity. The loan is not made with state monies. It’s not backed by the taxpayers. New Hampshire is not buying bitcoin with this transaction or even lending money to companies based on bitcoin. It’s a private arrangement between a lending institution and a company.”
The BFA said it assumes no investment risk, and there will be no risk to New Hampshire taxpayers. But potential risk to the state’s financial reputation is another matter.
“I think even the most hardened proponent of crypto would have to concede at this point that crypto and bitcoin are very volatile assets,” said Benjamin Shiffrin, director of securities policy for Better Markets, an independent, Washington-based nonprofit. “I’m not sure now is the right time for municipal and state governments to be getting into the game.”
However, Les Borsai of Wave Digital Assets sees it differently. His firm, based in Los Angeles, conceptualized the bitcoin bond strategy and reached out to New Hampshire because of its reputation as a crypto-friendly financial environment.
‘I don’t see any risk to taxpayers’
In 2025, New Hampshire passed House Bill 302, which allows investment of up to 5% of state funds in precious metals and digital assets. It helped elevate the Granite State in Wave’s estimation as a place to consider a new type of proposal.
“There's lots of states that wanted to do it,” said Borsai, but “New Hampshire was the first state in the country to have legislation, so I very cognizantly wanted to be in New Hampshire first for that reason — because they were very forward-thinking. The second part is, if you look at the BFA and the way they think, this isn’t about a single transaction. This is about scale and this is about being open for business from their perspective so anyone that wants to issue could come to New Hampshire.”
The BFA is a self-funding, quasi-governmental state entity created in 1992 to foster economic development and create employment in New Hampshire.
Executive Councilor Karen Liot Hill, D-Lebanon — who, along with her four colleagues will review final documents before voting on whether to approve the bond proposal — said her primary concern is that taxpayers do not stand to lose anything, even if the deal doesn’t work out as planned. “This will be the first time that bitcoin will be used as collateral for a municipal bond,” she said.
New Hampshire Treasurer Monica Mezzapelle, a member of the BFA board of directors, doesn’t see cause for concern.
“The BFA — they do conduit bonds on a regular basis, and so part of the practice is to follow their own procedures and to make sure that they have reserves, so they know what they're doing,” Mezzapelle said. “When it comes to taxpayers, the state is not involved, the state is not guaranteeing this bond, so I don’t see any risk to taxpayers at this time.”
The BFA’s Key-Wallace reports plenty of interest in the bond world among potential buyers.
“There’s competition among different financial institutions who want to provide the capital for the deal because they don’t just get a normal interest rate — they also get a percentage of the increase of the price of bitcoin if it goes up,” said Key-Wallace. “This gives them a way to have a downside-protected mechanism because of the liquidation, earn some interest and then have partial upside if bitcoin does go up. They get a much more measured risk reward profile, and that’s very attractive for a lot of conventional financial institutions who want to be active in this asset class.”
He said he’s not yet able to disclose exactly who the buyers might be because of Securities and Exchange Commission rules that prevent public comment at this point in the bond issuance process.
The BFA stands to earn a fee from the transaction, which will be paid in bitcoin and added to a new Bitcoin Economic Development Fund controlled by the BFA. The BFA’s options at that point could include selling the bitcoin and using the cash to fund economic development projects or alternatively holding the bitcoin and borrowing against it.
Encouraging cryptocurrency in N.H.
Finance experts will closely follow how this unusual strategy plays out.
“What’s worth watching is whether this structure can attract institutional buyers accustomed to stable, predictable returns,” said Tonya Evans, adjunct professor at Penn State Dickinson Law. Evans previously was associate dean and a faculty member at the UNH Franklin Pierce School of Law, where she directed the school’s Blockchain, Cryptocurrency & Law program.
“For context, New York City recently rejected a similar bitcoin bond proposal,” Evans said. “[Then-] Comptroller Brad Lander cited concerns about federal tax law prohibiting tax-exempt municipal bonds from being used to acquire cryptocurrency. New Hampshire’s conduit structure appears designed differently, but the contrast highlights ongoing questions about how digital assets fit into the public finance frameworks.”
Ravi Sarathy, a professor of international business and strategy at Northeastern University, said the proposal’s liquidation option could involve reputational risk.
“What does it do to your reputation and your ability to raise normal regular financial bonds?” Sarathy asked. “Does it compromise that or force you to pay a high interest down the road because people say, ‘Oh, New Hampshire, they play some fishy games I don’t know about’”?
Rep. Ammon acknowledged the potential for reputational damage, but said, “The vision is for the BFA to serve as a conduit for a series of these issuances, channeling bitcoin's upside into our local business economy. The downside is narrowly contained: The BFA's exposure is reputational, not financial. And the speculative rating is a feature, not a flaw. It signals sophisticated buyers to do appropriate due diligence.”
Rep. Keith Ammon, R-New Boston, has been the lead sponsor of two key bills that promote the expansion of cryptocurrency. He sees the state’s bitcoin-backed bond proposal as a ‘sweet spot’ that can benefit all involved. (Screenshot)
The bitcoin proposal is among several related developments that have positioned New Hampshire as a state to watch among cryptocurrency advocates. If approved, the proposal’s success will be measured not only in terms of economic activity but in how the wider financial world views the state’s role in this burgeoning field.
First, there was the passage of HB 302 in May 2025 — a first-in-the nation measure enabling the state treasurer to invest state funds into precious metals and digital assets. That bill helped pave the way for the current bitcoin bond proposal, according to Rep. Ammon.
Ammon was the lead sponsor of HB 302 as well as a current bill, HB 639, “The Blockchain Basic Laws,” which seeks to establish a blockchain dispute docket to oversee blockchain-related disputes. HB 639 passed the N.H. House last year, and the House and Senate recently appointed members to a conference committee to hammer out differences on the measure.
Ammon also served on the Governor’s Commission on Cryptocurrencies and Digital Assets and chairs the N.H. Blockchain Council. He sees the BFA bond proposal as a “sweet spot” that can benefit all involved because it can “minimize some of that downside risk” and can benefit the crypto industry.
“You think about a bitcoin miner — they're sitting on a lot of market risk because they need to make payroll next week and who knows what, so it helps them smooth out the bumps on their end, and then from the buyer — they get exposure to some of the upside, but they get guaranteed percentage return in dollars,” Ammon said.
At a House Commerce and Consumer Affairs Committee session April 8, Rep. Anita Burroughs, D-Glen, the committee’s ranking member, asked Key-Wallace what advantage there is for a company to do it this way rather than through traditional financing.
“Most companies that are in the digital asset space don’t have access to traditional financing at all,” responded Key-Wallace. “The fact that they may do now — that is sort of the innovation that they have. Bitcoin is still viewed as ethereal to many in the traditional asset space, especially in the municipal bond space. The fact that this can be set up to be conventional is what makes it so interesting.”
Lessons learned from the bitcoin bond proposal will undoubtedly be closely examined, and both Professors Evans and Sarathy view New Hampshire as a test case.
“If it succeeds, it could create a template for other states and municipalities,” said Evans. “If liquidation mechanisms are triggered during a market downturn, we’ll get real-world data on whether these structures adequately protect investors.”
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