Invest With Nexo

When faced with the volatile nature of cryptocurrencies, investors have an ongoing dilemma – exit the position or ‘HODL’. Those investors in it for the long run, will simply look to hold on to their cryptocurrencies with the hope that in the not-too-distant future they will appreciate and be worth significantly more.

Until then, the coins would typically remain idle in a private wallet – resulting in opportunity costs along the way. After all – and much like gold, Bitcoin and many other cryptos do not yield any income.

With this in mind, Nexo has created an online platform that allows you to earn interest by depositing your digital currencies. In turn, this will then be loaned out to those that wish to engage with crypto-loans.  Today, the company presents itself as a crypto-fiat finance service that offers a variety of distinct features to meet the needs of both investors and borrowers.

In my Nexo review, I explore the ins and outs of how the platform works. This will include a breakdown of the interest-yielding service and an analysis of a number of other key features found on the platform.

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Automize your crypto tax report with Cointelli

Over the past years, the cryptocurrency sphere has evolved into a vast and complex reality where enthusiasts and investors alike can access a multitude of financial products that come in all sorts. And if (like me) you are one of them, you will likely be actively using multiple digital wallets across different crypto platforms and exchanges.

As your crypto portfolio grows and your transaction volume begins to accumulate, sooner or later you will want to take stock of your holdings, firstly to determine your profit and/or losses but also to make sure your ducks are in a row when the inevitable tax reporting deadline looms.

Up until recently, I’ve done my best (not without a struggle) to achieve this by manually recording each crypto transaction using excel. In the process, the first crypto tax platforms started to surface. While their utility was valuable and potentially time-saving, the available platforms didn’t cater for all the exchanges and blockchains I traded on, which meant they weren’t good enough for me to shift my manual tracking thereon.

Manually keeping track of transactions became even more complex with the larger-than-life boom of NFTs in 2021.

Sure enough, this struggle became too much of a common experience in the crypto space for it to remain under the radar. As such, more comprehensive crypto tax platforms started to enter the scene.

Cointelli is one of them. Cointelli is a crypto tax reporting company founded by Mark Kang, a certified tax professional whose long experience serving his community as a CPA motivated him to develop user-friendly tax software. In one of Cointell’s recent blog posts, Mr Kang remarked that:

“Life is complex and stressful enough. Preparing and filing your cryptocurrency taxes shouldn’t be. That’s why I created Cointelli, to make it easy and hassle-free for anyone to produce accurate crypto tax documents to file themselves or share with their accountant or tax preparer.

I came up with the idea for Cointelli last year when a client named Julie came to my CPA firm with her cryptocurrency transactions and asked for help with her crypto filings. We didn’t offer that service at the time, but as a professional tax preparer I decided to tackle her crypto taxes myself. I quickly realized that the calculations were too complex, time consuming, and labor intensive for any individual taxpayer to do on their own.

Cointelli is your intelligent, all-in-one crypto tax solution to help you take care of the tax preparation process in one place, from start to finish.”

In this review, I explore what Cointelli is, its different benefits, and how you can utilize this platform to simplify your crypto tax submissions.

However, before I continue I would like to draw your attention to the fact that currently, Cointelli is only available to US-based crypto investors and only generates US-tax reports. If on the other hand you are a non-US investor, I invite you to check out my review of other alternative crypto tax platforms.

Crypto Tax in the US – A Brief Background

One of the main selling points of cryptocurrency has been the above-average market returns available to investors. However, as with every other tradable asset, higher earnings will almost inevitably lead to higher amounts of tax payable. Unless you decide to move to a crypto-friendly nation, that is.

Crypto tax filings can be quite a pandora’s box, even to someone with a sound financial background. This is particularly true in today’s context when the rules and regulations concerning cryptocurrencies are ever so dynamic.

These days, US investors are being called to be more cautious when it comes to reporting taxes on cryptocurrency. With approximately 16% of US adults investing in cryptos (a figure which is expected to continue rising sharply), the US government has been mounting its effort to get its share of the pie. Further to the IRS (Internal Revenue Service) first drafting its cryptocurrency tax rules back in 2014, Washington has recently beefed up the arsenal of its IRS with another $80 billion to track down tax evaders.

For taxation purposes, the IRS considers crypto as property, unlike stocks, which are considered securities. Crypto transactions can fall into the following three categories: capital gains, ordinary income, and nontaxable income.

The IRS applies different tax rates depending on which of the above categories a particular transaction falls under.

When you report cryptocurrency on taxes, it’s important to combine all your profit and loss data from all the platforms you use before analyzing it. It’s very unlikely that all your income comes from a single platform or exchange. And because the crypto scene only continues to grow, the IRS also continues to update its guidelines.

To minimize your taxes, you not only have to keep up with all those developments, but you also need to apply those updates to your tax returns. This can indeed prove to be quite a taxing (pun intended) piece of work!

This is where Cointelli comes in. Cointelli’s service is intended to ease this pressure by automatically compiling your transactions from across your wallets and exchanges, fixing errors therein, preparing a comprehensive report for tax purposes and having it sent out to your accountant or other relevant tax platforms. Apart from freeing up a great deal of precious time, Cointelli will also help you generate the required stats and reports with more accuracy, thus potentially even saving you money.

How does Cointelli Work?

Cointelli achieves this through the following 4 easy steps:

1. Import your data – synch your wallets and exchanges in just a few clicks or manually upload a CSV or your trade history.

The critical first step in filing your cryptocurrency taxes through tax reporting software is to collect and import your transaction data from across multiple exchanges and wallets. Cointelli counts every type of cryptocurrency transaction, such as buys, sells, staking, trade, and transfers as one transaction each. These are counted automatically based on data provided by the exchange.

Cointelli not only boasts support for many of the major wallets and exchanges (such as Binance) and several other niche ones, but also provides seamless methods of importing transaction data from across these platforms, including API or CSV. To add to this, Cointelli also features support for at least 15 blockchains, including major ones like Bitcoin, Ethereum and Polygon. I also noted that Cointelli supports a number of other crypto service platforms like YouHodler and Nexo. This makes Cointelli very easy to use for first-timers.

2. Review your data – see your entire transactions history and automatically or manually fix any errors therein.
Once your data has been imported you will get an overview of all the imported transactions, categorized according to the related exchange or wallet.

From here you will then be able to review the individual transactions in more detail.

As mentioned previously, not all transactions are taxed in the same way; some transactions may count as capital gains or ordinary income (taxed at different rates), and other transactions may be considered tax-exempt. If the imported data is not correctly categorized upon compilation, you risk being over-taxed. Cointelli helps to mitigate this risk by providing a review function that allows you to look through the transaction data and correct any miscategorized transactions, including internal transactions, to make sure you submit an accurate picture to the IRS and avoid paying unnecessary tax. The review feature is quite unique to Cointelli in that it is not common with other crypto tax software.

Cointelli allows you to review your data in either Manual or Auto Mode. While manually inputting specific transactions would typically be laborious, Cointelli makes it easy by means of a simple and user-friendly process. Cointelli’s Auto Mode is just as effective at getting the job done. Those who are still relatively new to the crypto trading experience may struggle with tweaking their data in Manual Mode, which is why Auto Mode is there to make the process more straightforward. At the click of a button, Auto Mode fixes any gaps or inconsistencies in your data.

3. Get your report – preview or download your comprehensive tax report

Once you have ensured that all the relevant transactions have been compiled and categorized correctly, you can preview and download your tax report. You can then also forward directly to your accountant.

4. Send your report out – share a copy of your report with your CPA or other tax platforms

Another advantage with choosing Cointelli is that the tax report generated by its software is compatible with popular accounting software applications such as TurboTax and TaxAct given that many accounting professionals participated in its design and development. With Cointelli, your accountant can therefore swiftly generate tax reports that work with their accounting software.

Cointelli Pricing

Cointelli’s pricing structure is lean with a one-size-fits-all price for consumers and customized packages for large transaction-volume enterprises.

For a single flat fee of $49 annually, clients benefit from all the Cointelli suites and services for up to 100,000 crypto transactions, be it DeFi, margin trades, or NFTs. If during a given year your trading volume increases after you have paid, you will not be charged with an additional fee. This compares well with other similar platforms which typically offer tiered pricing depending on the number of transactions in your portfolio. From a general comparison with other market players, Cointelli’s price is competitive particularly if your yearly transaction count exceeds 100.

Any enterprise handling large volumes of more than 100k transactions per year can negotiate a bespoke plan with Cointelli’s sales team.

Furthermore, Cointelli have just announced a limited-time offer of a 20% discount at checkout if you sign up to their service using the below link:

Do Your Crypto Taxes With Cointelli

Cointelli also offers a free preview of what your tax report would look like after having imported and reviewed your transactions in line with the above-described procedure. In this case, you would only be required to pay should you want to download the tax report.

Cointelli Safety

According to Cointelli, their team is trained to safeguard your data, protect your privacy (GDPR and CCPA compliant), and respond quickly to incident reports. This is driven by the Cointelli Information Security Committee which also ensures that security awareness and initiatives permeate throughout the organization.

To keep all your work secure, Cointelli encrypts data that is both in transit and at rest. While Contelli’s services are hosted in US-based AWS (Amazon Web Services) facilities, the servers live within Cointelli’s own virtual private clouds (VPCs) to prevent unauthorized network requests. Cointelli also runs daily comprehensive backups for additional protection. Its payment processing partner is Stripe, which has the most stringent level of certification available and is one of the most trusted names in the payments industry.

Furthermore, all Cointelli logins are protected by Amazon Cognito to keep your ID safe and secure. When Amazon Cognito detects unusual sign-in activity, such as sign-in attempts from new locations and devices, it blocks the sign-in request and notifies the user of the attempt.

Cointelli thus appears to be both a safe and sound platform. The firm has also not reported any data breaches until now.

Cointelli Customer Support

Customer service commitment and availability are some of Cointelli’s strengths. In fact, Cointelli not only offers customer support via email and chat widget, but also provides 24/7 live customer service with dedicated tax experts. This level of cover and support stacks up well to other platforms providing a similar service.

Notwithstanding that Cointelli has only been around since 2021, a TrustPilot scan indicates an overwhelmingly satisfied customer pool with an average rating of 4.7. Apart from its quality of customer support, Cointelli seems to be particularly voted for its accurate and swift tax report production (half an hour seems to be the average process time) and relatively cheap service.

Cointelli – Room for Improvement

An important feature that Cointelli does not cater to as yet is the facility to be able to track your holdings and growth. With Koinly for example, you will be able to see how much capital you have invested into digital coins and how much returns you are getting along other details, such as profit and loss and any unrealized capital gains.

That said, I anticipate that it won’t be long before Cointelli adds this facility to its service given its data capture mechanisms are already in place.

Concluding Thoughts

Overall, Cointelli’s software seems to be a viable option for US cryptocurrency users to simplify their crypto tax filing by making the entire process much easier to manage. The platform is intuitive and can be configured with minimal effort.

Apart from integrating with most cryptocurrency services (allowing you to extract all your transactions in one place) Cointelli allows you to manually or automatically review these transactions individually prior to finalizing your tax report.

Cointelli has essentially managed to cover the needs of US investors playing in the ever-dynamic crypto field. If you require help or want to save time and money in preparing your crypto tax report, Cointelli is one of the best tools you can currently use.

Get your crypto tax report with Cointelli

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 DEGIRO if you’re European or eToro USA if you’re from the states.

Securities trading offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC.
Cryptocurrency offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC
insured. Investing involves risk.

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

Securities trading offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC.
Cryptocurrency offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC
insured. Investing involves risk.

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.

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?