













As part of my continued mini-series of case studies on earning small amounts of bitcoin interest, I have officially begun another case study. This time it’s all about earning bitcoin interest with a company named BlockFi and out of all of the services like this that I have experimented with, BlockFi has the highest interest rate.

Before we fully dive into this case study, please take a moment to read my disclaimer and disclosure. It goes into detail on how none of this is financial advice and that bitcoin is risky. It also covers how I generate revenue with the use of affiliate links and a single banner ad on each study. Here’s what the ad looks like.

Now it’s time to get back to learning about earning bitcoin interest with BlockFi.

What Is BlockFi?

BlockFi is a new Bitcoin bank that enables its users to be able to borrow fiat against their Bitcoin or just earn 5.1% APY for letting them hold onto your Bitcoin on your behalf.

Earning Bitcoin with BlockFi

There are 2 different ways that you can earn bitcoin with BlockFi. You can earn interest on your bitcoin deposits in what they call a BlockFi Interest Account (BIA) or you can earn revenue with the BlockFi referral program by sending new users to their platform with your unique referral link. I’ll go into detail on both in a bit.

Case Study Parameters

I like to keep these studies simple so I am going to deposit some Bitcoin to my BlockFi Interest Account where I will let it earn 5.1% interest annually in BTC, not fiat.

I intend to keep it in their custody for at least 12 full interest payment cycles which take place on the first of every month. I will request an on-chain withdrawal after the 12 interest payments have been made.

I also fully intend to refer new users to try the service and generate affiliate revenue. Any and all of my referral commissions will get added here in the study.

This case study will be concluded after I have made an on-chain withdrawal for more bitcoin than I have deposited.

Since BlockFi is a custodial service (basically a bitcoin bank) I will keep my deposit with them for as long as I feel like I might actually be able to withdraw it. If I feel like they might seize my bitcoin or

I suspect that BlockFi may be insolvent, I will request a withdraw as quickly as possible.

Infographic: Earning Bitcoin with BlockFi

In order to make all of the data from each case study easier to understand, I always make sure to include an infographic that makes it nice and easy to understand exactly how much bitcoin I am earning each month. Here’s what it all looks like.

Bitcoin Deposits

Since I am dealing with a custodial service that I have not built any sort of trust with, I want to do some experimenting with smaller deposits and receive some sort of confirmation before I send another one. After I get a feel for how things work, I send my larger deposits.

Deposit 1: 1,000,000 sats

I sent my very first deposit if just 1,000,000 sats (0.01000000 BTC) to see how the whole deposit confirmation process works. Shortly after I received my first on-chain confirmation, I received an email from BlockFi telling me that my deposit was “pending”. A short while after, I received yet another email letting me know that my deposit has been confirmed and my balance is now showing.

I officially sent 1,000,000 sats (0.01000000 BTC) to a custodian.

Deposit 2: 1,000,000 sats

Since I wasn’t sure how much I wanted to deposit, I just decided to make a second payment of 1,000,000 sats. Again taking note of how the whole deposit process works.

At this point, my new balance is 2,000,000 sats (0.02000000 BTC).

Deposit 3: 3,000,000 sats

After I had an idea of how their deposit process works and that I could see how they display my balance, transaction history, etc. I decided to send another 3,000,000 sats over.

After my third deposit, my balance was at 5,000,000 sats (0.05000000 BTC).

Deposit 4: 5,000,000 sats

After I checked back into my account to see how much interest I had earned over the course of the month, I decided to add some more to my balance to bring my deposits to a nice round number which is 10% of an entire bitcoin.

My final balance is now sitting at 10,000,000 sats (0.10000000 BTC) and I will probably keep it that way for the duration of this study.

Earning Bitcoin Interest with BlockFi

Earning bitcoin interest is the primary reason why I created an account with BlockFi. I want to be able to stack sats just for lending my bitcoin to BlockFi. Here’s a breakdown of every interest payment that I have received from my BlockFi Interest Account.

January Interest: 815 sats

I made my first deposit a few days before the 1st of February so I only had a few days to earn interest in the month of January. Even though my balance was small, I still received an interest payment after just a few days.

February Interest: 28,000 sats

February 2020 was the first month where I had a balance for the entire month so this was the first month that I received a decent payout. On March 2nd (the first business day of the month), I received an email with a detailed breakdown of my balance and my interest payment for the month.

I am looking forward to the first business day of April so I can add another data point to this study as well as see the breakdown of my next interest payment.

March Interest: 40,331 sats

About a week before the end of February, I received a notification from BlockFi that they are changing their payout structure but it wasn’t bad news. They increased the interest rate from 5.1% to 6.0% so my payout for this month was larger than the month before.

Earning Bitcoin with BlockFi’s Affiliate Program

I have only been using BlockFi for a little over a month so I haven’t really had much opportunity to generate any affiliate contacts but as soon as I get any signups I will add them to this study.

BlockFi’s payout structure is based on the amount of interest that your referred users generate. BlockFi pays you 10% of the interest payments that your referrals receive and it doesn’t affect the payout of who you refer.

BlockFi’s referral program does not offer any sort of signup bonus for either you or whoever you refer to their platform which is kind of a bummer since I feel like there should be some sort of incentive for new users to want to use a ref link to join.

In short, the more users you send to their service, the greater the potential to generate long-term residual bitcoin revenue. That is a potentially HUGE upside.

Things To Consider

Just like in Bitcoin Case Study #12: Earning Bitcoin Interest with Celsius, there are a few things to keep in mind when using the platform. Here’s what I think you need to be the most aware of.

BlockFi Has 100% Custody of my Bitcoin

Again, this is one of the hardest things for me to do but since I am only depositing a little bit, I feel like it is a reasonable risk to take for my readers.

Their website says that I can withdraw at any time but that is based on trust in BlockFi rather than verification. There are countless stories of custodians basically holding onto people’s money and exit scamming. Since I am using a custodial service, I could get Gox’d at any time.

BlockFi Requires 100% KYC

This is yet another hard thing for me to do but since BlockFi is a fully licensed and regulated financial institution, they require a complete KYC ID verification. They have my social security number and a picture of the front and back of my state-issued ID just like my bank does.

Potentially Insolvent or Ponzi Scheme

I have heard rumors that their payout structure is based on making interest payments to existing BIA account holders with money from new depositors. Since there is no way for me to audit BlockFi, I have to trust (rather than verify) that they are actually solvent.

Fluctuating Interest Rate

In late January, BlockFi announced that they will be lowering their APY interest payout rate from 6.2% APY to 5.1% APY. This could potentially become a trend if there are substantially more people who are trying to earn interest while not enough users are taking out loans. I am hoping that the interest rate stays above 5% APY but that could change at any point.

Conclusion

If you are looking for a way to stack some extra sats for letting a custodian hodl your bitcoin for a while then you might want to try BlockFi. Not only can you earn 5.1% APY bitcoin interest with BlockFi but you can also earn bitcoin with their affiliate program which has the potential for passive bitcoin revenue and a $50 minimum for referring new users who apply for crypto-backed loans.

I think this kind of service will appeal the most to institutional investors and older money as it resembles the legacy banking system and currently, the interest payout is much higher than any legacy banking institution that I am familiar with.

Thank You!

Thanks for taking the time to read this case study. If you have any questions, comments or concerns, please don’t hesitate to reach out to me on KeyBase.

Also, if you would like to help me to work full-time on bitcoin projects like this one as well as help me get even more data points for my study on earning bitcoin with Tippin.Me, please consider sending an LN tip my way.