New Hampshire issues $100 million in bitcoin-backed municipal bonds, rated Ba2 by Moody's

The New Hampshire Business Finance Authority (BFA) plans to issue two tranches of tax-exempt bitcoin-supported municipal bonds with a total issuance amount of $100 million. The bonds received a Ba2 rating from Moody’s Investors Service on April 1, officially moving into the commercialization preparation phase. This is widely recognized in the industry as the world’s first financial instrument that combines highly volatile crypto assets such as bitcoin with traditional municipal bonds. The timely payment of principal and interest on the bonds depends entirely on the yield generated by the bitcoin collateral.

Bond Structure Design: How Bitcoin Collateral Drives Municipal Bond Payments

The core mechanism of this financial instrument uses bitcoin collateral as the only source of repayment. Interest and principal payments on the bonds come from the yield generated by the bitcoin collateral. If the price of bitcoin rises, bondholders may also qualify for additional over-collateralization-related surplus payments.

At the same time, the bonds include clear downside protection provisions: if the bitcoin market price falls below a specified threshold, the contract will automatically trigger a trust liquidation to ensure that bondholders receive full repayment. In its rating report, Moody’s confirmed: “Public funds of New Hampshire or any of its political subdivisions may not be used to pay amounts under the rated bonds, and the issuer has no taxing power to cover any payment shortfalls.”

This structure not only protects taxpayers, but also ties the bonds’ credit quality entirely to bitcoin’s market performance.

Three-Party Operational Structure and the Market Significance of Moody’s Ba2 Rating

Day-to-day operations of the bonds are jointly handled by the following three entities:

Wave Digital Assets LLC: Responsible for daily transaction management, executing strategic operations related to the bitcoin collateral

BitGo Bank & Trust: Acts as the asset custodian, ensuring the secure custody of the bitcoin collateral

CleanSpark: A bitcoin mining and data center company; it borrows funds from the trust and provides the bitcoin collateral, serving as the core borrowing party in this bond structure

Earning the Moody’s Ba2 rating indicates that this innovative product has passed the initial review by a mainstream rating agency. With Ba2 being two notches below the lowest investment grade (Baa3), it is typically classified as a “high-yield” or “speculative-grade” bond. However, its appearance in the municipal bond market is unprecedented in itself.

Risk Reality: Structural Tests as Bitcoin Drops Nearly 50%

New Hampshire Governor Kelly Ayotte said this is an “innovative approach that can bring more investment opportunities to the entire state without putting state government funds or taxpayers’ money at risk.” However, bitcoin’s high volatility is the biggest uncertainty factor for this structure.

Since its historical peak in October 2025 of about $126,000, bitcoin has fallen nearly 50% in total, currently at roughly $67,000. In the same period, according to data from Bloomberg, the high-yield municipal bond index generated a positive return of 1.54% for investors—forming a stark contrast between the two. This means that the upside potential and risk exposure of bitcoin-supported municipal bonds are both far beyond those of traditional municipal bonds, and its Ba2 speculative-grade rating precisely reflects this unconventional risk profile. As of now, the official bond issuance date has not been determined.

Frequently Asked Questions

What is the fundamental difference between a bitcoin-supported municipal bond and a traditional municipal bond?

Traditional municipal bonds are backed by government tax revenues or specific revenue streams and are usually viewed as low-risk assets. The New Hampshire bond, however, relies entirely on the yield from bitcoin collateral as the sole source of repayment; the government provides no credit protection. This makes it a municipal bond in legal form, but in terms of credit characteristics, it is more akin to a high-yield crypto-collateralized instrument—a previously unseen form of asset combination.

What does the Moody’s Ba2 rating mean for potential investors?

Ba2 is a “speculative-grade” rating, which is two notches lower than investment grade. This suggests that Moody’s believes the bond’s credit risk is significantly higher than that of most municipal bonds. This rating typically attracts institutional investors that can tolerate higher default risk and seek higher yield potential, rather than conservative capital looking for safe havens.

If bitcoin continues to fall, will the protection mechanism for bondholders still work?

The bond agreement includes a liquidation trigger clause: if bitcoin falls below a set threshold, the trust will be forcibly liquidated, and the proceeds will be used to repay the holders in full. This design provides downside protection at the bottom line, but liquidation efficiency and the depth of liquidity in the bitcoin market under extreme conditions will determine whether the protection mechanism can be fully executed in the worst-case market environment.