I am very well aware that the main use case for Bitcoin is as a store of value: accumulate as much as possible and HODL. And since 2015 that is what I have done. I considered myself quite an educated bitcoiner as I had taken my coins off an exchange and spread them across a couple of online wallets and a hardware wallet. As they say – not your keys, not your wallet.
But during my COVID quarantine I played around online and decided to put some of my bitcoin to work. And I’ve done so in three ways:
- open a betting account on Stake.com
- open a “savings” account with Ledn
- (technically not with BTC) – convert ETH into BTC 2X FLI with Indexcoop
And there’s another way I’m looking into:
- mining BTC via Compass Mining
I was forced to look for a bitcoin betting site to liven up my COVID quarantine when I found my William Hill UK account inactive after 8 years without use, and I was unable to open a different account in the UK. A quick google search led me to www.stake.com. I had to find the right country to let me access the site with my VPN, but after that it was super straightforward – create an account with email/password, and deposit crypto. No KYC involved. Took me 5 minutes.
I withdrew my winnings (thank you for drawing, Argentina/Chile & Spain/Sweden) just as easily as I deposited – I input my withdrawal address and withdrew the BTC, with Stake withholding 0.0002 btc to cover mining fees (at ~$8, a little exorbitant but fair enough).
The odds are great, with modern features such as bet-in play and cash-out in play, with a solid array of markets and events. Very happy with this find.
Earning Bitcoin Interest with LEDN
I first heard about BlockFi in March 2019 and really wish I had gotten comfortable with the concept of being paid 10%+ APR interest on my deposited Bitcoin earlier. BlockFi and Ledn are the two most prominent companies to have started in the past couple of years that offer Bitcoin “Savings Accounts”, allowing the user to deposit bitcoin and earn solid rates of interest in Bitcoin. They do so by also facilitating BTC & USD loans with the deposited bitcoin, allowing traders to easily leverage their position. The interest rates were juicy for a long time because arbitragers would borrow BTC from BlockFi/Ledn and supply the BTC to GBTC, the biggest publicly traded trust related to Bitcoin, and earn a free premium price in the process. The GBTC premium no longer exists, and the rates have come down on both BlockFi and Ledn, but I finally decided that I trusted them enough to deposit some bitcoin on the Ledn platform at a 6% interest rate.
6% might not sound like a crazy return (although much better than any fiat savings account), but the important thing is that it is paid out in BTC. If I have 1 BTC in LEDN today then I’m depositing ~$40k, and if the price remained flat then I’d earn around $2,400 per year in Bitcoin. But I am a Bitcoin bull, and believe that BTC will end the year higher than it is today, increasing the value of both my principal AND my interest.
I like to say that Bitcoin is a game of accumulation, and LEDN/Blockfi offer ways to accumulate BTC passively, with the biggest risk being the fact that both companies are just that: companies. I’d like to see a Defi alternative for Bitcoin. I’ll be keeping an eye out for that.
Leveraging Long BTC via the BTC 2X FLI token on Indexcoop
So to take advantage of what I think will be a short term (at least) pump in the price of BTC, I swapped some ETH for the relatively new BTC 2X FLI token on Indexcoop. Defipulse is my main go-to to learn about new Defi tokens and projects, and I had previously bought their DPI token set which represents a basket of Defi tokens, similar to an ETF. I was excited to learn about their new Flexible Leverage Index tokens, which offer the equivalent of a 2X long ETH ETF and a 2X long BTC ETF – the end user just buys the token and experiences the 2X percentage gains or losses of the underlying token. No putting up collateral, no margin calls etc… The tokens have taken out a leveraged long position via borrowing USDC through Compound, and using the proceeds to buy WBTC.
In my experience to date, both FLI tokens haven’t quite achieved the 2X leverage position as stated in their title, but it still represents an opportunity for me to capture more upside if BTC breaks upwards in the near term. I think it is important that these new tokens become available on wallets such as Dharma, because right now I had to go directly to Indexcoop and link my Metamask to be able to buy the tokens, which likely explains why BTC 2X FLI only has an $8.7mm marketcap vs. DPI which is more widely available and has a $142mm marketcap.
Mining Bitcoin via Compass Mining
The idea of mining Bitcoin has always been hugely appealing to me, not only as a way of stacking more sats but also to support the decentralized monetary system and work towards more monetary sovereignty without needing fiat onramps from Centralized exchanges. But I’ve never seriously considered spending thousands or tens of thousands of dollars on equipment that risks obsolescence and consumes absurd amounts of electricity… until now.
1/ time for my monthly #Bitcoin mining update 🚀— Meltem Demir◎rs (@Melt_Dem) May 5, 2021
i'm 90 days into my experiment, and i've mined 0.05 bitcoin.
let's run the numbers, fam 👋🏾
(i use @compass_mining to source hardware + manage ops, but make this report myself) pic.twitter.com/CMPNe1qypG
I first heard about Compass Mining via a trusted Bitcoin source on Twitter, Meltem Demoirs. It’s quite brilliant – they sell you the hardware (new & used) and then host it at one of the 20+ facilities across the world that they have verified, primarily located in the US. You choose a facility based on the cost of mining and pay a hosting fee, and Compass takes care of the rest, paying out your mined bitcoin monthly. One of the cool things about Compass is that it serves as a marketplace for the resale of Bitcoin Mining Hardware, and so the risk of the upfront investment is materially lower as your equipment has a natural resale venue, in the same place you bought it.
I haven’t quite worked up the courage to spend $7-10k on a miner, but I am sure that if I don’t do it I will ultimately regret it. Something to ponder in the coming days.
What other uses have you found for your Bitcoin?