Bitcoin as a Strategic Tool: How the U.S. Military Views 'Power Projection' in Cyberspace

In April 2026, a U.S. military leader publicly linked Bitcoin to national security, sparking debate about the cryptocurrency’s role in defense strategy. During a Senate Armed Services Committee hearing on April 21–22, Admiral Samuel Paparo, head of U.S. Indo-Pacific Command (INDOPACOM), described Bitcoin as a “valuable computer science tool as power projection.” He also revealed that INDOPACOM has been running a Bitcoin node as part of ongoing experimental efforts.

Bitcoin and Military Cybersecurity: A New Frontier

The admiral’s remarks came just days after Iran reportedly demanded payment in Bitcoin for safe passage through the Strait of Hormuz—a strategic chokepoint for global oil shipments. This convergence of events highlights how digital currencies are intersecting with real-world military and geopolitical operations. For the Pentagon, Bitcoin is no longer just a financial asset; it is being evaluated as a tool for securing communications, enforcing deterrence, and projecting power in cyberspace.

The Hormuz Incident and Its Strategic Implications

Iran’s demand for Bitcoin to guarantee safe transit through the Strait of Hormuz underscored the growing acceptance of cryptocurrency as a medium of exchange—even among state actors. This move aligns with broader trends where nations use digital assets to bypass traditional financial systems, particularly under sanctions. For the U.S. military, it raises questions about how to respond when adversaries leverage decentralized currencies for strategic advantage.

Jason Lowery’s Controversial Theory of Power Projection

The term “power projection” in the context of Bitcoin is largely credited to Jason Lowery, a MIT fellow and special assistant to the commander of INDOPACOM. In his 2023 book Softwar: A Novel Theory on Power Projection—which began as an MIT thesis—Lowery argued that Bitcoin’s proof-of-work mechanism offers a unique form of deterrence in cyberspace. He posited that just as physical power projection (e.g., missiles, naval fleets) influences adversary behavior, Bitcoin mining can impose costs on malicious actors, creating a credible threat of retaliation in the digital domain.

The book gained a following within the Bitcoin community and sparked intense debate, but it was later removed from distribution at Lowery’s superiors’ request. This removal fueled speculation that the work might contain insights the military prefers to keep confidential.

What Is Power Projection? A Military Definition

To understand Lowery’s argument, it helps to first define power projection. According to the U.S. Department of Defense’s 2002 Dictionary of Military and Associated Terms, power projection is:

“The ability of a nation to apply all or some of its elements of national power—political, economic, informational, or military—to rapidly and effectively deploy and sustain forces in and from multiple dispersed locations to respond to crises, to contribute to deterrence, and to enhance regional stability.”

In essence, it’s the capacity to influence other nations or entities beyond one’s own borders through a mix of diplomatic, economic, and military tools. Traditional examples include long-range bombers, aircraft carriers, and economic sanctions.

The Role of Deterrence

The concept of deterrence is central to power projection. The DoD defines it as “the prevention from action by fear of the consequences. Deterrence is a state of mind brought about by the existence of a credible threat of unacceptable counteraction.” In the physical world, nuclear arsenals and fortified bases provide such deterrence. But in cyberspace, where attribution is difficult and retaliation risks escalation, traditional deterrence models break down. Lowery’s theory suggests that Bitcoin’s proof-of-work can fill that gap by making cyberattacks economically costly for attackers.

The Macrochip Concept: Bitcoin as a Global Deterrent

Lowery extends an intriguing analogy: just as microchips inside a computer route electrical signals though encoded logic, the entire global electric grid can be seen as a kind of “macrochip.” Bitcoin mining, which consumes huge amounts of electricity, effectively turns that grid into a physical mechanism for enforcing rules—rules written into the Bitcoin protocol. By requiring miners to expend real-world energy to validate transactions, the system creates a verifiable cost for any attempt to alter the blockchain. This, Lowery argues, mirrors the way military power projection creates a cost for aggression.

If adopted by the military, Bitcoin nodes could serve as a decentralized backbone for secure communications, tamper-proof record-keeping, and even a deterrent against cyberattacks. The fact that INDOPACOM is already running a node suggests the U.S. military is actively exploring these possibilities.

Strategic Implications for U.S. Defense

Admiral Paparo’s endorsement of Bitcoin as a “power projection” tool indicates that the military sees value beyond mere finance. Key applications may include:

• Secure communication channels resistant to jamming or interception
• Immutable ledgers for supply chain tracking and logistics
• Economic deterrence by making adversarial cyber operations prohibitively expensive
• Operational resilience through a distributed network that is hard to disable

At the same time, the use of Bitcoin by adversary states like Iran highlights the double-edged nature of decentralized technologies. The military must also plan for scenarios where Bitcoin is used to circumvent sanctions or fund hostile activities.

Conclusion: A New Dimension of National Security

The intersection of Bitcoin and military strategy is still evolving, but events like the Hormuz incident and the INDOPACOM node experiment signal a shift. By embracing Bitcoin’s underlying technology—not just as a currency but as a tool for power projection—the U.S. military is attempting to adapt deterrence concepts to the digital age. Whether Lowery’s theories prove prescient or controversial, the conversation has moved from the fringes of the Bitcoin community to the highest levels of defense planning.

This article was adapted from original reporting by Bitcoin Magazine.