Is Bitcoin Lending STILL Worth It?

Is Bitcoin Lending STILL Worth It?

By johnwege | johnwege | 29 Nov 2021

There is a famous phrase saying, "There is no free lunch," and recently that has been exactly how I have been feeling about the current state of lending your bitcoin out for interest.  While lending out your bitcoin is technically considered to be passive income, recently it hasn't been passive at all.  Around this same time last year, the lending market was going very smoothly.  Matching the absolute definition of having a passive income stream.  All of the lending services were offering great interest rates that had remained practically unchanged since their inception.  Not only that, but they had very generous lending tiers that were attractive for both people who had a smaller portfolio and also those who had larger ones. You truly could just set your coins on the service and then forget about them, all the while collecting that nice passive income.  But times have changed.

Let me first start out by saying that there is risk to lending your precious bitcoin to a third party service, and if things go wrongly, you could lose everything. Always remember to invest or deposit only what you can afford to lose.  There are a lot of people out there who don't believe a 5-6% interest rate for lending your bitcoin is even worth it.  After all, if you look back on bitcoin's history, it has appreciated at a yearly rate of around 200%.  So why take on the extra risk of lending your bitcoin, just to increase that only a few percentage points higher?  When bitcoin was much cheaper, $3k, I felt the same way.  It wasn't worth the risk just to earn a few extra dollars worth of bitcoin every month.  And that is why I sat out on lending bitcoin when it first began popping up in the market.  I wanted to wait to see what happened, and if these businesses would stick around.  Were they credible, trustworthy and so on.  I studied this market for several months and then decided to jump in slowly by depositing a very small amount of BTC.  There is no better way to learn, than to actually participate in it and have some skin in the game.  For several months after that, everything ran smoothly and so I began to deposit more and more bitcoin onto these services.  The interest rewards I received continued to grow, but the amounts in terms of dollars was nothing to be too excited about.  During this time, Bitcoin's price was still cheap and this meant it was quite easy to accumulate large amount of it.  So that is what I focused on.  But when bitcoin reached $10k in price, I had an epiphany.  It was at that moment that I began to realize that bitcoin was becoming more difficult to accumulate.  If the price would reach those astronomical predictions that some people were making of $50k, $100k, or even $500k; it would become incredibly difficult for most people to accumulate.  During that same time I looked at the interest I was earning and that original rewards received that I thought was mediocre, had now done a 3x in value.  That mediocre BTC interest had now become a sizable amount for me at the time.  It was at that moment that I decided that I needed to form ways to make passive income on my bitcoin, ethereum and all other assets.  Since that time, that BTC earned has gone up another 6x in value and now is a very significant of money.  And that is the exciting thing.  At most of these services, you will earn your interest in the same coin that you are lending out.  Because of that, when the market matures and appreciates, it means that your portfolio will jump up even further than if you had earned interest in dollars or a stable coin.

So now let's fast-forward to present day.  When people ask if it is still worth it to lend out bitcoin, even with the falling rates.  I answer with a dramatic yes!  You just need to put in a lot more work.  As I said before, in the past all you needed to do was to deposit at one place and you could earn a great 6% interest or more.  You can still find those great rates, you just need to be vigilant and split up your BTC services and be active.  Being active is the critical part here.  Some of these services change their rates on a weekly or monthly basis.  You need to keep up to date on what is happening with the service that you are using, and also keep up to date on what the other places that you aren't using are doing as well.  Always being on the lookout for better opportunities.  Even if you are happy with the place that you are currently using, the situation can change in an instant and you need to be ready.  Having knowledge of every service will boost your ability to accumulate as much BTC interest as you possibly can.


That is the exact strategy that I have been using.  I began as a huge fan of BlockFi and was solely using that service for lending.  But then the situation with BlockFi became dire, they eventually lowered rates and tiers.  I then switched to using Celsius.  Celsius would later change their tiers and so I put a large chunk on Ledn.  Ledn has also recently changed and so I put bitcoin on Nexo.  And you guessed it; Nexo would eventually change their tiers and so I moved some bitcoin to FTX and a few other places.  It has required a lot of attention and planning.  Lining up my timing to take advantage of free withdrawals.  If you are paying withdrawal fees each time, it would be an easy way to erase most of the interest you earned, if not more.  Because I put all this effort in, I have actually been earning more BTC interest than I did when the lending landscape was very stable.

While it may seem like a lot of effort required just to get a few extra percentage points of interest, think of it this way.  We have all heard those insane bitcoin price predictions and how high things could potentially go.  If prices do go anywhere near those targets, this extra percentage points of interest could equate to hundreds or thousands of dollars extra that you have gained. Compound interest is a magical thing.  While I feel bitcoin in the grand scheme of things is still cheap; there is no denying that it has become much more expensive to buy.  Because I have built up this stream of bitcoin income, I have been able to more than double the amount of BTC I would have been able to accumulate, if I had only been spot purchasing.

I am very interested to see how this lending market will grow as time passes.  There are people who believe that in the future interest rates will grow even higher.  And then there are those who think they will drop.  Time will tell, but I'm doing everything I possibly can to take advantage of them while they last.


How about you? Do you put in the extra work to maximize the interest you receive for your bitcoin? Which services have you been using?



As always, thank you for reading!

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Hello I'm John Follow me on Twitter!


Living day by day, stacking sats and trying to retire early. Check out my substack blog Follow me on Twitter

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