Earn interest on your Bitcoin

Cryptocurrencies are exponentially increasing in popularity. Since the epic rise of Bitcoin in 2017, cryptocurrencies caught the public eye. Serious investors began adding cryptocurrencies to their portfolios and exploring how to capitalise on their crypto investments.

From an insignificant start, crypto growth has been outstanding. There are now over 5,000 listed cryptocurrencies. In 2020, the combined cryptocurrencies had a market capitalisation of 193 billion US dollars. But, by the end of January 2021, the market capitalisation for cryptocurrencies was over 1 trillion US dollars.

Over the past few years, there’s been a growing number of online crypto lending providers where you can make the most of your cryptocurrencies. Ledn is one example of a digital financial platform allowing you to maximise your Bitcoin holdings by expanding how you can use Bitcoin for profits.

If you are holding Bitcoin, you may want to know how to get the most out of it. In the past, the only way to profit from Bitcoin was to sell it at a higher price than you bought it.

With Ledn, you can now earn interest on your Bitcoin and even access a loan against your holdings. You can also create a passive income stream with your Bitcoin. And you can increase your portfolio by buying more crypto assets.

Adam Reeds and Mauricio Di Bartolomeo founded Ledn in August 2018. They set out to build a world-class financial product platform with industry-leading rates to help people save on digital assets.

Their headquarters are in Toronto, Canada. They provide a global service through Bitcoin and digital assets.

In this review, I provide an in-depth analysis of the financial products available with Ledn. I will discuss the process of setting up an account with the Ledn platform so that you can start making passive income from your Bitcoin holdings or borrowing against the Bitcoin you currently own.

Remember that I also interviewed Ledn’s co-founder Mauricio on my podcast Mastermind.fm, so do check out that episode if you want to learn more about Ledn.

Ledn Products

Ledn has three flagship products –

1. Bitcoin-backed dollar loans
2. Bitcoin and USDC savings accounts
3. Bitcoin balance doubling service (B2X)

I want to guide you through each of these carefully as it is very important to understand what each product consists of and where it can be most useful. We need to keep in mind that these are relatively new products in the finance space, and therefore utmost diligence is required before you use them.

I am personally very bullish on such services, but as with anything crypto, the first investment you should do is in your own education. That will prevent you from making bad decisions.

Without further ado, let’s dive in.

Bitcoin-Backed Dollar Loans

Bitcoin-backed loans facilitate liquidity for investors who are hodling (buy and hold) their assets. It’s an efficient and fast service to use your Bitcoin as collateral and receive dollars without selling your Bitcoin.

Loan terms are twelve months, but you can apply for an extension of the loan when the original loan term ends. The maximum LTV (maximum loan-to-value) ratio is 50%. So if you had $10,000 of Bitcoin as collateral for the loan, you could borrow up to $5,000.

On the Ledn website, you can access a Bitcoin-backed loan calculator. The minimum loan is $500.

You cannot pay off your Bitcoin-backed loan by installments. When you pay the loan, you are required to pay the total amount owing. There are no penalties for early repayment.

There are multiple benefits to Bitcoin backed loans –

1. Your Bitcoin still belongs to you, and, as there is no sale, there are no taxable transactions. Most Bitcoin investors wish to hold long-term but want to access cash and build up their Bitcoin holdings. Once you pay the loan, your Bitcoin returns to you.
2. Your Bitcoin is safe. Ledn uses BitGo, the world’s first qualified, purpose-built custodian for storing digital assets. BitGo has one of the most comprehensive industry insurance policies and has recently been acquired by Galaxy Digital in the industry’s first $1bn+ acquisition.
3. Approval for Bitcoin-backed loans is fast, with funds available within 24 hours of approval from Ledn. There is no mandate for payment and no necessity for monthly installments. You can pay off your loan any time – with dollars or Bitcoin – without penalties.

How to Apply for a Bitcoin Backed Loan

It’s surprisingly simple to apply for a Bitcoin-backed loan. As you’d expect, you have to share your personal information to prove your identity. Ledn request the following four documents –

1. A copy of a government-issued document such as a driving licence or passport
2. An image of you holding the above
3. Proof of address, such as a recent utility bill
4. Your bank details

Subject to your documents being in order, the approval process is a matter of a few minutes.

What Happens if the Price of Bitcoin Drops?

Like all cryptocurrencies, Bitcoin is volatile. For instance, the Bitcoin price was $64k in May 2021 but promptly dropped to below $30k in less than a week.

Bitcoin is sensitive to media coverage by large investors.

Recently, the price of Bitcoin dropped 10% overnight, following a tweet by Elon Musk (owner of Tesla and a prominent investor of Bitcoin) regarding the energy-intensive resources of Bitcoin mining. He is concerned about the damage to the environment and consequently has removed Bitcoin payment options for vehicles until Bitcoin becomes less energy-dependant.

If a significant price drop like this occurs, Ledn asks you to add more collateral to your wallet or make an appropriate payment on the principal loan. If you fail to fulfill these requirements, Ledn has the right to sell part of your Bitcoin to meet the loan to value ratio levels. It’s similar to a margin call.

Therefore, before you consider a Bitcoin-backed loan, you must assess the risk for this potential scenario and have backup funds available if necessary.

If Bitcoin prices rise, you get to keep the gain in value, and the amount you owe for the loan does not change.

Bitcoin and USDC Savings Accounts

Interest with traditional banks for fiat currency is hardly worth considering. But, if you have Bitcoin holdings, Ledn offers high-interest savings accounts, which they can do through their collaboration with Genesis.

Genesis Capital offers high-level service to elite groups of institutions, offering the ability to buy large quantities of digital currencies such as Bitcoin and USDC.

In 2019, Genesis processed over $3.1 billion in digital asset loans and has the best processing standards for lending and reporting. Ledn savings accounts have such high interest because they lend Bitcoin to Genesis.

Interest on Bitcoin and USDC saving accounts is paid monthly by Ledn with compound interest.

The potential interest on a Ledn Bitcoin savings account could be as high as 6.10% APY (annual percentage yield) paid in Bitcoin.

For USDC savings accounts, the potential interest is 11% APY and paid in USDC.

Note that these rates can change at any point due to market conditions.

Ledn complies with high standards of consumer protection and privacy and, as such, is incorporated under Canadian Federal Laws. Ledn provides a purpose-built, highly-qualified platform for digital assets storage and has undoubtedly one of the most comprehensive insurance policies for the crypto industry.

Note: the Canadian Deposit Insurance Corporation doesn’t cover USDC savings accounts. Nor are USDC savings accounts covered by any other deposit protection policies.

The Benefits of Bitcoin and USDC Savings Accounts

1. There is no minimum balance requirement, and your investment is not locked in, meaning you can withdraw your funds at any time. The beauty of this is the availability to all investors, not just those with significant capital investment.
2. Your savings aren’t affected by the traditional money market issues, such as market crashes etc.
3. You earn compound interest, meaning your savings account grows exponentially. Your compound interest payout is monthly.

Should you wish to send Bitcoin or USDC to another Ledn account, the transaction is free.

For the USDC savings account, there is a $10 USDC fee for withdrawals. There are no fees to use the Bitcoin savings account. When you withdraw, the transaction fee on the Bitcoin blockchain deducts automatically, and this is equivalent to the mining fee. Ledn does not charge any extra fees on withdrawals apart from the mining fee that applies to any BTC transaction.

B2X: Bitcoin Balance Doubling Service

If you want to make the most from your Bitcoin, B2X is a Ledn service that allows you to increase your Bitcoin holdings through a Ledn Bitcoin-backed loan purchase and an equal purchase of Bitcoin.

The concept is simple. You apply for a dollar loan and then purchase Bitcoin equal to the value of your current holdings. The result is, you have twice as much Bitcoin and a Bitcoin-backed loan.

Who would Benefit from B2X?

If you believe in the value of Bitcoin increasing over the coming years, B2X doubles your exposure, potentially doubling your Bitcoin gains. If you already have a Ledn Bitcoin savings account, you can use funds from that. The process takes less than a minute.

You can check the B2X calculator on Ledn’s website. There doesn’t appear to be a minimum requirement for transfer, although a Bitcoin-backed loan requires a minimum of $500 of Bitcoin.

What are the Risks of B2X?

As you know, Bitcoin is volatile. If the price rises, your gains increase, doubling your Bitcoin. But, if the price of Bitcoin falls, you’re exposed to double the risk.

Should the latter happen, the procedure is the same as a regular Bitcoin-backed loan. You are required to add funds or pay off some of the principal of the loan. And, Ledn has the right to sell some of your Bitcoin holdings if you fail to take either of the above actions.

B2X is for the investor who is not risk-averse and has the capital to back up a shortfall in the price of Bitcoin if needed.

A few countries have B2X service-related restrictions. These details may be subject to change, but the current (June 2021) list is below.

• Iran
• Libya
• North Korea
• Syria
• United States
• Africa
• Uruguay

The product is thus not available in those countries at the moment.

How to Register for B2X and Repayment Process

It’s easy to access B2X by simply opening an account with Ledn and verifying your user profile.

You can deposit any amount you wish into your Bitcoin savings account to use for your B2X loan. After making your deposit, go to the B2X products page to make your selections

Repayment of your B2X loan is hassle-free because you can repay the loan at any time you wish without penalties, but Ledn payment requirements are to pay the loan in full with one payment. In addition, interest accrues daily, so the quicker you pay off the B2X loan, the less interest you pay.

Proof-of-Reserves Standards

Before investing your Bitcoin in platforms like Ledn, the first question you should ask is if your investment will be safe. Ledn is the first to launch the Proof-of-Reserves standards initiated at the beginning of 2021.

Proof-of-Reserves allows Ledn to prove how much Bitcoin they could spend without exposing themselves to the risks of moving funds and without the need to generate a live transaction.

In short, Proof of Reserves means that Ledn is financially viable, with enough Bitcoin to support their platform.

Ledn assures their clients of Proof of Reserves Standards with their statement, “Ledn is the only digital asset lending company to have performed a Proof-of-Reserves attestation by an independent top-25 public accountant, Armanino LLP. As such, Ledn clients can take comfort that their bitcoin and USDC are being properly and accurately accounted for – to the satoshi, and to the cent, at all times.”

To check your Bitcoin assets are in the Proof of Reserves, log in to your Ledn account and look for the report’s details at the bottom of the page, where you will find a hashed ID and a link to Armanino LLP’s TrustExplorer website.

Enter your hashed ID to confirm your balance at the time of the Proof of Reserves attestation.

If you had assets on Ledn on 31^st January 2021, you were automatically included in the Proof of Reserves attestation.

Ledn plans to conduct independent Proof of Reserves attestations every six months. Ledn clients will receive timely notifications.

Ledn Customer Service

Customer service feedback and support is essential as a measurement of what you might expect as a client of Ledn.

I’m a happy user myself, and all my support interactions were pleasant and timely. To be fair, I haven’t needed much help as I’m used to such products. So let’s take a look at the next best thing to gauge customer service levels – TrustPilot.

Ledn opened a TrustPilot account in October 2020, so it’s early days for feedback, in fact there were only 13 reviews at time of publishing.

Overall, the reviews for Ledn’s service and support is good. They have a TrustPilot score of four-star. Happy customers are delighted with their service and customer response. Notably, if a difficulty occurs, Ledn is quick to solve it, even if it’s a user error.

For instance, Ledn quickly resolved an account holder issue when a client couldn’t access his account. The client reported the efficiency and helpfulness of Ledn support staff.

Ledn’s TrustPilot score could be higher, but, reading the reviews, the customers who posted one-star reviews failed to grasp how Ledn works, such as thinking they were borrowing Bitcoin with a Bitcoin-backed loan.  As a result, they were upset when they received dollars but admitted they hadn’t clarified the details before requesting the loan.

This information is fully transparent to readers on the Ledn website. The negative reviews are unfair as they are due to user ineptitude rather than Ledn’s service.

I would recommend that Ledn’s customer service team keep tabs on their TrustPilot and respond to reviewers, especially those who had a perceived negative experience. This would enable other visitors to understand better what went wrong and be able to judge for themselves whether there is any valid concern with Ledn’s offering or not.

Is Ledn Secure?

Ledn is a security-centric platform, and they take the privacy of their clients seriously. They have two-factor login authentication and for specific actions on the platform when logged in.

The website has AES-256 website encryption. Ledn addresses all the layers that could possibly fall prey to security threats.

Ledn does not want to monetize client data. They offer a high level of client protection, so your data is not stored on Ledn local servers. Instead, your data is stored in private networks with strong security protocols.

What index does Ledn Use for Bitcoin Prices?

Ledn uses the  Coindesk Bitcoin price index to determine loan-to-value ratios for Ledn loans. Therefore, before investing your Bitcoin with Ledn, you can check the current Bitcoin price with Coindesk.

How do I Open a Ledn Account?

Opening an account with Ledn is easy.

To register for a Ledn account, click on join at the top of the page and enter your first and last name, email address and phone number. You then have immediate access to your account.

From that point, once you choose the desired service, you will need to provide proof of identity with the documents detailed on how to apply for a Bitcoin-backed loan earlier in the article. In addition, you may also have to provide your date of birth.

Ledn Alternatives

Ledn is one of the best options for a Bitcoin-specific loan or savings account. They are committed to Bitcoin and do not offer other crypto offerings. While this can be a negative point to some, I appreciate the fact that they are not going after the shiny (but less secure) crypto flavors of the day and focusing on Bitcoin. This allows them to focus all their energies on securing one cryptocurrency, which makes sense to me.

For other cryptocurrencies, my favourite crypto lending platforms are YouHodler and BlockFi.

Similarly to Ledn, you can earn interest on your crypto holdings with a savings account with YouHodler or BlockFi, or use your crypto as collateral for a loan. Thus, if you are HODLing other cryptocurrencies, YouHodler and BlockFi are also excellent platforms for making the most of your crypto holdings and generating a passive income.

BlockFi is a more conservative platform than YouHodler when it comes to cryptos and services offered, and so I believe they are more of a direct competitor with Ledn. I will therefore be doing a head-to-head review of the two services in order to determine which one is best for what.

I believe that all top platforms end up specialising in certain products or services, and therefore it’s important to understand that it’s not a winner-takes-all situation but rather a case of choosing the right platform for your needs. I personally use both BlockFi and Ledn, for example. One straightforward reason for using Ledn over BlockFi that I could mention is that rates on Ledn for Bitcoin deposits are significantly higher than BlockFi’s if you are depositing bigger sums of BTC. So if you only hold Bitcoin and have significant sums, it pays to use Ledn instead of BlockFi.

Of course, you could also play the hedging game and decide to split your holdings between 2 or 3 platforms to protect against the unlikely case of one of these platforms having problems in the future.

Ledn Review – The Verdict?

Ledn is a robust and secure platform where you can maximise your Bitcoin holdings, earn more Bitcoin or secure a loan against your Bitcoin without selling it.

With crypto industry experts predicting that Bitcoin could one day hit $500,000 or more, a platform such as Ledn is a superb way to build your Bitcoin holdings from earning interest or doubling up your Bitcoin with the B2X.

Ledn’s fees are low, but their security is high, and they have insured custody from industry leader BitGo and the backing of Genesis Capital.

Ledn is one of the leading Bitcoin lending services available today. Regardless, when investing your assets with any third-party services, you should always perform due diligence and proceed with caution.

You can access Ledn services via the website or by downloading the Ledn app from the Google Play store or Apple’s App Store.

Whilst I have described every aspect of Ledn in this guide, always check the current details on the Ledn website.

Open a Ledn account

Please note that the above information is not providing advice on tax, investment, or financial services. I offer the above information without consideration for risk tolerance and a specific investor’s financial circumstances.

Trading or investing in Bitcoin may not be suitable for all investors. It does involve risk and the possibility of a loss of capital.

As part of my deep dive into NFTs, I also started to look into NFTs that are specifically used for gaming, as well as crypto-powered games in general.

Here are a few links to get you started. I’ll be fleshing out the article as I progress with my research and investing.

Games

This is just a list of games I came across, there are many others that may be better or have more profit potential as investments.

• Star Atlas
• NEO Tokyo
• Big Time
• Kart Racing League
• Eva Verse
• Sipher
• CryoWars
• Phantom Galaxy
• MonkeyBall
• Syndicate
• Mines of Dalarnia

Crypto Gaming Launchpads

Launchpads are where you can participate in the seed rounds as an investor in upcoming games.

• Seedify Fund
• EnjinStarter
• Vulcan Forged

People to Follow

These are the people to follow in order to learn more about this space and where things are going.

• Elliotrades
• Alex Becker

Have you invested in crypto games? Let me know what you’re up to below! I’ll continue diving deep into this topic over the coming weeks and updating this post.

Buy Solana & Ethereum

Solana was one of the big movers in the crypto space this year, and has been dubbed the Ethereum killer. I don’t necessarily think the Solana founding team think of it in those terms, but it’s certainly a competitor.

Before we begin, I think it’s a good idea to buy Ethereum as well as buy Solana, as they are both top 5 players in crypto. Both have a lot of backing and I don’t see them fading away anytime soon.

Let’s take an unbiased view of how they compare.

Throughput – Solana Wins

Solana can process 50,000 transactions per second versus Ethereum’s 15 TPS. Traditional finance player VISA can do 24,000 TPS.

However, ETH 2.o is on the horizon, promising up to 100,000 TPS, not to mention that there are various layer 2 solutions already in operation, so we will probably see the scenario change in the near future.

Solana uses its own innovative solution to the consensus mechanism – Proof of History. The idea for Proof of History was what drove Solana founder Anatoly Yakovenko to actually create Solana. Compared to Proof of Stake and Proof of Work it requires less computational power, contributing to the increased throughput capabilities of Solana.

Read more: Should you invest in Solana?

Scalability – Solana Wins

Solana was built with scalabity as a high priority, so it’s no wonder that right now Solana wins this contest. In fact, Solana was built with the idea that it would be able to replace the traditional financial services industry. Right now, it is the only chain that has the theoretical capability of doing so.

The caveat is that Ethereum should also become much more scalable once ETH 2.0 comes along, so it’s not a definite win for Solana yet.

Network Effects – Ethereum Wins

No other project except Bitcoin can count on Ethereum’s network effects, and there are far more developers actively building things on Ethereum than there are on Bitcoin.

Thanks to DeFi and NFTs, Ethereum is now very well positioned with retail investors as well. And the fact that so many other projects have ERC-20 tokens lends even more clout to Ethereum. These facts make me very confident that Ethereum will be around for many years to come.

On the other hand, Solana is the new kid on the block, and while things like NFTs and associated platforms are rapidly being built on Solana, it remains to be seen whether it will make sense to have a fragmented NFT scene across different blockchains, or whether Ethereum will be the one that dominates the space. As an NFT buyer, although ETH fees are insane at the moment, I still want all my NFTs sitting on Ethereum and will not touch others that launch on Solana or other chains, as I want my NFTs to be available to me far into the future, and only Ethereum can guarantee that as of today.

Solana might have the development language aspect going for it, since it is more accessible to programmers who are familiar with programming languages that have been in use for many years, and thus there is a bigger pool of developers who can switch to building on Solana with minimal friction, compared to Ethereum.

Read more: Should you invest in Ethereum?

Transaction Fees – Tie

On the surface of it, Solana should win this contest hands down, since it is infinitely cheaper to transact on Solana compared to Ethereum.

Ethereum is already taking a hit due to the high fees, as projects launch on other chains out of necessity, as they know they wouldn’t thrive within a high-fee ecosystem. However, Ethereum is backing on the idea that this is just a temporary bottleneck that will be solved once ETH 2.o rolls around.

On the other hand, fees contribute to the longevity of a blockchain and its security, so from that aspect, I’m happy to pay higher fees because I trust that Ethereum is here to stay and the right economic incentives for miners are in place.

Decentralization – Ethereum Wins

The flipside of Solana’s high throughput and speed is that it is fairly centralized. On the other hand, the defense to this argument is that Solana is still very new and will become more decentralized over time.

In my opinion, neither Ethereum nor Solana have quite nailed the blockchain trilemma yet, but both are gunning for that sweet spot between decentralization, security and scalability.

Conclusion

From my analysis, it is quite evident that it is too early to make definite predictions on how Solana and Ethereum will do in comparison to each other. I’m pretty sure about Ethereum being a top player for years to come, while I also have a lot of conviction on Solana, and my hope is that they end up finding different use cases and not actually competing with each other.

I am invested in both Ethereum and Solana. I think that if you’re looking for lowering your risk, you should definitely have more money invested in Ethereum than Solana, whereas if you’re looking for more potential upside, you could do 50/50 or give SOL a higher weighting in your portfolio compared to ETH.

Buy SOL & ETH on Coinbase

Bitcoin mining is a great way to approach investing in Bitcoin from a different angle. There are several ways that you can get involved with Bitcoin mining for profit.

In this post, I’ll take a look at how you can get exposure to Bitcoin mining in various ways, and some considerations to keep in mind.

Let’s start with the considerations, and then I’ll give you a summary of the Bitcoin mining options available.

Should you invest in Bitcoin Mining? – Questions to ask yourself

There are many ways to get exposure to crypto or even Bitcoin specifically, without ever touching mining. It is by no means essential to be involved with mining, and I still consider it to be a niche thing within the Bitcoin community at large. Some other things you could do and that I’ve written about on this blog are:

• buying and holding Bitcoin
• buying a Bitcoin ETF
• trading Bitcoin
• Buying Bitcoin futures
• lending Bitcoin for interest

However, if you are drawn to mining, I would think about the following questions next:

• How much time and money do I need to invest to make this worthwhile?
  Setting up your own mining rig requires deep technical expertise, many hours and a big upfront expense. Buying mining stocks, on the other hand, is hands-off and requires a much smaller monetary investment.
• How does the Bitcoin price, hashrate, miner price and electricity price affect my mining profitability?
  It’s best to draw up hypothetical scenarios on a spreadsheet that take into consideration all these variables. This exercise is especially important if you’re thinking about option 1 described below.
• Will I rely on third-party providers? How reliable are they?
  The Bitcoin mining space has a shady reputation, thanks to many quasi-scams that happened in the past. In general, most Bitcoin mining pool websites have tended to oversell the benefits of mining, leading to many investors being burned.
• Do I know any other people in the space that can help out if needed?
  I always like to sound out my ideas with expert friends who can help me avoid any unaccounted for pitfalls, or join me on the journey. It takes time to build such networks but they are invaluable especially if you’re putting in a lot of money.
• What are the legal aspects of mining?
  There are countries that have outright banned Bitcoin mining, China being one of them. You obviously don’t want to set up a mining rig in those countries.
• How would my mining rewards be taxed?
  Depending on how you enter the mining space, your revenue might be taxed differently. For example, in many countries, profits from mining at home are taxed at a higher rate than dividends or sales proceed from a mining stock.

If you get positive answers to those questions, then you should go ahead and consider Bitcoin mining. Here are some options that I’ve researched.

Option 1 – Investing in Mining Companies

Difficulty level: easy

This has been my favorite way to get exposure to Bitcoin mining so far. There are several public companies that specialize in Bitcoin mining, and you can buy their stock from stockbrokers like eToro and DEGIRO if you’re European or eToro USA if you’re from the states.

I’m invested in some of the following Bitcoin mining companies, and they’ve all performed incredibly well for me. I’ll probably diversify across all the major Bitcoin mining companies over time.

• Marathon Digital Holdings ($MARA)
• Bitfarms ($BITF)
• Hut 8 Mining ($HUT)
• Riot Blockchain ($RIOT)
• Canaan ($CAN)
• Bit Digital ($BTBT)
• BIT Mining ($BTCM)
• Galaxy Digital ($GLXY)

Marathon Digital Holdings

Marathon Digital Holdings is a digital asset technology company engaged in the mining of cryptocurrencies. Its primary focus is on the blockchain and the generation of digital assets and is one of the largest bitcoin miners in North America.

Riot Blockchain

Riot Blockchain, Inc. is a Bitcoin mining company, supporting the Bitcoin blockchain through rapidly expanding large-scale mining in the United States. They are focused on expanding operations by increasing their Bitcoin mining hash rate and infrastructure capacity. Riot believes the future of Bitcoin mining will benefit from American operations and endeavors to be the driver of that future.

Hut 8 Mining

Hut 8 Mining is a Canada-based bitcoin mining company. The company uses specialized equipment in order to solve computational problems to validate transactions on the bitcoin blockchain. They are the number one holder of self-mined bitcoin in North America.

Bitfarms

Bitfarms is a Canada-based cryptocurrency mining company. In addition to mining operations, it offers onsite technical repair, data analytics, and electrical engineering and installation services. It operates one of the largest crypto mining operations in North America.

HIVE

HIVE Blockchain Technologies is the first publicly traded crypto miner, listing on the Toronto Venture Exchange in 2017, under the ticker symbol HIVE. The company uses 100% green energy to mine both Bitcoin and Ethereum, with a committed ESG strategy since day one. HIVE strives to create long-term shareholder value with its unique HODL strategy, bridging the blockchain and cryptocurrencies to traditional capital markets.

Canaan

Canaan is a China-based provider of high-performance computing solutions. The company is focused on application-specific integrated circuit (ASIC) high-performance computing chip design, chip research and development, computing equipment production, and software services. It also expanded into mining operations apart from the manufacturing of machines.

Bit Digital

Bit Digital is a bitcoin mining company. The company’s mining facilities and mining platform are used to generate and accumulate bitcoins, which are then sold for fiat currency at certain times depending on market conditions. This company has a strong focus on going green and they are working towards 100% sustainable power. They are also the largest bitcoin miner on the NASDAQ based on miner fleet.

Bit Mining

BIT Mining is a Hong Kong-based cryptocurrency mining company. Its business operations span cryptocurrency mining, data center, and a mining pool. The company also owns the blockchain browser BTC.com.

Galaxy Digital

While Galaxy Digital has many business lines, mining is one of their main ones, so if you want a more diversified investment in crypto that goes beyond mining, this is a good option. Founder and CEO Mike Novogratz is a very well-known person in the crypto space and has loads of experience in finance.

Buy Bitcoin mining stocks on eToro

Option 2 – Blockstream Mining Note STO

Difficulty level: intermediate

STOs are tokens issued on a blockchain that represent your stake in an underlying company or venture. The Blockstream Mining Note on STOKR is very well structured to provide good returns on your investment via mining, and is a perfect way to obtain returns on your Bitcoin instead of just holding. I classify them as more difficult than buying stocks of mining companies, simply because STOs are pretty new as a concept, and most investors are much more familiar with the stock market and buying and trading via their favorite stock broker.

What is STOKR?

STOKR is the EU’s pioneering digital investment marketplace for alternative assets, where smart investors connect with and fund innovative businesses. STOKR liberates access to high-profile investment opportunities from the inner circle of traditional venture capital.

Through EU-compliant security token offerings (STOs), STOKR empowers professional and retail investors alike to directly engage with young and growing ventures in a simplified and risk-reduced environment, without the need for middlemen such as custodians or brokers. Operating out of Luxembourg (read about the legal basics of tokenization here), STOKR fosters a community of educated investors who participate in the future success of a diverse range of ventures through profit- or revenue-sharing rights.

I’ve interviewed the founder of STOKR, Arnab Naskar, on my podcast Mastermind.fm and found him to be very knowledgeable. I think that investing in STOKR projects is a very interesting alternative to the typical P2P lending and crowdfunding platforms available to European investors.

Blockstream is one of the top companies in the Bitcoin space, founded by the legendary Adam Back, the creator of Hashcash, the algorithm that is used by Bitcoin for mining. He is quoted in the whitepaper and has been a significant player since Bitcoin’s early days. I can’t imagine anyone better than him to trust my money with if I were investing in Bitcoin mining.

When you buy the STO, you will get the tokens that represent your investment in the mining setup. At the end of a three year period, you will be eligible to redeem your invested Bitcoin in exchange for your STOs, and you will also get any accrued profits in the form of Bitcoin.

Note that this investment is only available to Europeans at the moment. The minimum investment is €200,000.

Invest with Blockstream via STOKR

Option 3 – Mining Bitcoin Yourself

Difficulty level: Hard

The first way is to directly mine Bitcoin and set up your own mining rigs. This is not something I would recommend to the majority of people, because it has high barriers of entry and requires deep technical knowledge. It is most profitable when done from locations with low electricity costs (and favorable legislation), so if you’re not based in one of those locations you’re out of luck.

Here’s a video of a significant setup in Iceland to give you an idea of how things look when you mine Bitcoin professionally.

Compass Mining offers you a guide to at-home mining which is a great way to learn more about how you can start mining at home. This would entail joining their pool, else it will be next to impossible to earn any rewards as you’ll be competing against huge players.

If you’re interested in doing this but don’t want to litter your home with miners, however, this company also offers some interesting intermediate options.

Compass Mining also allows you to buy Bitcoin mining hardware and then leave the rest in their hands to handle the technical stuff, while you reap the rewards. There is a significant upfront cost as you purchase the hardware and hope for good conditions in the next couple of years to be able to recoup the cost and start making profits. However, the technical difficulty and other associated risks are taken care of by Compass.

Read more: Should you run a Bitcoin node?

Compass has also introduced a marketplace facility where you can sell your hardware to others, offering a new and convenient way to get liquidity on your hardware. During 2021, they’ve been very active in promoting their services, and apart from sponsoring the What Bitcoin Did podcast (check out this episode about Compass and also the Bitcoin Mining 101 episode), I’ve seen some big names get started with Bitcoin mining through them. Lyn Alden is one of them, and I highly recommend her Risk and Reward Analysis article.

Alternatives to Bitcoin Mining

If you’re looking for alternatives to Bitcoin mining, you might be interested in staking, which is the mining mechanism used by Ethereum and other proof-of-stake blockchains like Solana and Polkadot. The returns vary but I would argue that it’s an easier way to get started with mining for profits than Bitcoin Mining. Read my guide about staking Ethereum for more information.

Are you into Bitcoin mining? What are your favorite strategies?