Transitioning to Bitcoin Maxi

[ChessforDummies]

Looking to sell my remainder ETH (~15), in order to fund a Bitcoin mining operation with a few other investors. Have a fairly large stack of BTC that I do not want to touch. Looking to get rid of my ETH to go full BTC maxi.

Was wondering if at this point, it's best to fund by taking a loan against the ETH, or to eat up the capital gain tax that would come from selling outright.

Anyone have any experiences with loans? I have no preference in keeping the ETH, but would rather not touch the Bitcoin stack for this. Goal is to gather more Bitcoin.

[Jawhead999]

Taking a loan for any investment always a bad idea, there's no guarantee your investment always increase and cover up the interest loan based on your math. Instead you just taking double risk or losing money on your investment and also taking risk to pay interest when you're rekt.

You fund to a Bitcoin mining rigs or cloud mining? If you fund a cloud mining you'll get scammed. However you should understand how Bitcoin mining work and how to taking care the mining rigs, not only rely to other people with your money.

[ChessforDummies]

Taking a loan for any investment always a bad idea, there's no guarantee your investment always increase and cover up the interest loan based on your math. Instead you just taking double risk or losing money on your investment and also taking risk to pay interest when you're rekt.

You fund to a Bitcoin mining rigs or cloud mining? If you fund a cloud mining you'll get scammed. However you should understand how Bitcoin mining work and how to taking care the mining rigs, not only rely to other people with your money.

Thanks for the thoughts, appreciate the insight on doubling down on the risk. I understand the Bitcoin mining industry, this is just a larger scale Flare Mining setup so pooling a few million. Might make more sense to sell the ETH and eat up the capital gains tax, then be fulling into Bitcoin for the lower risk compared to a loan.

[jackg]

Yeah I think it might be an idea to take a loan out to avoid the tax (if that's what you're wanting to do).

I've used defi platforms to lend funds before and take out loans - the interest is cheap but transaction fees aren't on eths main chain (there may be ways around using weth).

Make sure you do your own research on where you plan to invest and take out your loan with enough funds or a plan for what happens if it gets liquidated (if it does, you probably then become liable for gains tax).

I think:
You can borrow up to 80% of loan value (most defi platforms recommend 80% of 80% though) and will then be liquidated if the borrowed to collateral ratio falls below 90-95%.

[ChessforDummies]

Yeah I think it might be an idea to take a loan out to avoid the tax (if that's what you're wanting to do).

I've used defi platforms to lend funds before and take out loans - the interest is cheap but transaction fees aren't on eths main chain (there may be ways around using weth).

Make sure you do your own research on where you plan to invest and take out your loan with enough funds or a plan for what happens if it gets liquidated (if it does, you probably then become liable for gains tax).

I think:
You can borrow up to 80% of loan value (most defi platforms recommend 80% of 80% though) and will then be liquidated if the borrowed to collateral ratio falls below 90-95%.

Thanks! Appreciate the comment. Just a strange position as I wouldn't mind offloading my ETH, but feels smarter to loan against it to fund the mining operation while keeping enough just incase collateral falls below LTV. Instead of getting hit with the cap gains

[cabron]

You are going full BTC maxi so just sell all your ETH and use the funds for your mining gears. That's going to ease your mind over thinking about the interest that keeps growing, stress-free for you and you can concentrate more on what you are doing.

Maybe also try that renewable energy which you have less electricity cost. I'm not knowledgeable in mining but I'm guessing joining pools will still be worth it as long as you are using renewable like turbine or solar?  

[Darker45]

~snip~

Thanks! Appreciate the comment. Just a strange position as I wouldn't mind offloading my ETH, but feels smarter to loan against it to fund the mining operation while keeping enough just incase collateral falls below LTV. Instead of getting hit with the cap gains

If you don't find value with your ETH anymore, then why don't you dispose it instead? If I were in your shoes, I think I would do just that. After all, you're claiming that you are in transition to becoming a Bitcoin maxi. And that option would be less risky on your part. You can completely avoid a possible liquidation of your funds in case the price of ETH falls down. Moreover, instead of getting only a portion of the full value of your ETH by taking a loan against it, you can get 100% of it by selling.

[ChessforDummies]

~snip~

Thanks! Appreciate the comment. Just a strange position as I wouldn't mind offloading my ETH, but feels smarter to loan against it to fund the mining operation while keeping enough just incase collateral falls below LTV. Instead of getting hit with the cap gains

If you don't find value with your ETH anymore, then why don't you dispose it instead? If I were in your shoes, I think I would do just that. After all, you're claiming that you are in transition to becoming a Bitcoin maxi. And that option would be less risky on your part. You can completely avoid a possible liquidation of your funds in case the price of ETH falls down. Moreover, instead of getting only a portion of the full value of your ETH by taking a loan against it, you can get 100% of it by selling.

Thanks for this, I agree that the hassle of not having to worry about liquidations is nice. Transitioning cold turkey seems the easiest route.

[Poker Player]

Taking a loan for any investment always a bad idea, there's no guarantee your investment always increase and cover up the interest loan based on your math.

No, it's not always a bad idea. Taking a mortgage at 1 or 2% interest and more in an inflationary environment like the current one when you could pay the house in cash is a very good idea, for example, but I agree that in most cases it is usually not a good idea.

Looking to sell my remainder ETH (~15), in order to fund a Bitcoin mining operation with a few other investors. Have a fairly large stack of BTC that I do not want to touch. Looking to get rid of my ETH to go full BTC maxi.

Was wondering if at this point, it's best to fund by taking a loan against the ETH, or to eat up the capital gain tax that would come from selling outright.

Anyone have any experiences with loans? I have no preference in keeping the ETH, but would rather not touch the Bitcoin stack for this. Goal is to gather more Bitcoin.

In this case I am more inclined to sell ETH, mostly because of the volatility. If it were a more stable asset it would be a different matter. Also, if you want to go full Bitcoin maxi you better do it in a practical way and get rid of the shitcoin.

[worle1bm]

Looking to sell my remainder ETH (~15), in order to fund a Bitcoin mining operation with a few other investors. Have a fairly large stack of BTC that I do not want to touch. Looking to get rid of my ETH to go full BTC maxi.

Was wondering if at this point, it's best to fund by taking a loan against the ETH, or to eat up the capital gain tax that would come from selling outright.

Anyone have any experiences with loans? I have no preference in keeping the ETH, but would rather not touch the Bitcoin stack for this. Goal is to gather more Bitcoin.

My suggestion is also to sell ETH because you are having future plans of mining with other investors and already have huge stash of bitcoin untouched which is growing substantially so if you hold it for another few years you would be having good percentage of profits from it only.The ETH prices at this time is fine and your 15 ETH could give you around $49k a little above btc at this time so you can convert it directly to btc if you want to do.Rest if you are on loans option then yes you can take it but why go for it if you have other options available with you selling your ETH?

[Bttzed03]

It's easy to say 'just sell' but OP has mentioned about capital gains tax a couple of times already. You might want to take a look at how much he'll be remitting to the government (15 ETH at $3200+ is around $48,000+). Depending on where he is from and the tax laws that applies, he could be spending at least $5,000. With that said, borrowing with ETH as your collateral might be the better option.

[franky1]

Taking a loan for any investment always a bad idea, there's no guarantee your investment always increase and cover up the interest loan based on your math.

No, it's not always a bad idea. Taking a mortgage at 1 or 2% interest and more in an inflationary environment like the current one when you could pay the house in cash is a very good idea, for example, but I agree that in most cases it is usually not a good idea.

using your mortgage analogy

if i had $500k to buy a house outright. or take a $500k mortgage.. id buy the house outright.
first of all. even at 1-2% interest means at the end of the day that $500k turns out to be more then $500k you eventualy pay in.. secondly. you then end up needing to pay for insurance on the house to protect the banks ownership of the house when you are paying them.. yep they do not insure it for you for free. meaning you have to pay even more a month than just the loan.
then you have to maintain the house and are limited in what you can do with it, because the bank own it and want to protect their investment. EG its why banks offer re-mortgages but request you upgrade the kitchen/bathroom to modern standard to increase the house value(for them)
(pretty standard terms as part of 'equity release' contracts)
..

that said.. ethereum is soon going to 'detonate' into PoS.. meaning instead of being over $1k to mine 1eth. it will become $2-$15 to mine eth. and so ethereum miners will sell down the market, making profit. all the way down to say $20/eth

so if you are planning on having a 2 year loan where you can lock in eth value at todays value, even if ethereum is going to be worth 100-1000x less in 6 months. great do it.
.. or more simply just use your eth to buy a bitcoin miner out-right. and just start mining for btc.

as for mining. just make sure you live in a area with reasonable electricity costs. where you can get ROI quickly

[pooya87]

No, it's not always a bad idea. Taking a mortgage at 1 or 2% interest

It is always a bad idea to invest the money you don't own (that includes loans).
I'm not familiar with mortgage conditions in other countries but can't they raise the interest rate to any rate they want at any time? I read a news the other day that it had risen to nearly 5% in US for example. It doesn't seem like a good ideal to take a loan that can lead you to paying even more money than you'd expected initially.

[Beparanf]

Taking a loan for any investment always a bad idea, there's no guarantee your investment always increase and cover up the interest loan based on your math. Instead you just taking double risk or losing money on your investment and also taking risk to pay interest when you're rekt.

You fund to a Bitcoin mining rigs or cloud mining? If you fund a cloud mining you'll get scammed. However you should understand how Bitcoin mining work and how to taking care the mining rigs, not only rely to other people with your money.

It depends on the interest rate and also if he needs more funds to cover all the expenses. Some crypto loans offer an interest rate below 10% per annum so if the OP need more funds and can compute the possible profit vs the interest rate. He can consider a loan as an option to avoid using his own money.

Many big companies use loan to gain more capital for a higher return. This is risky but you can minimize the risk by doing a proper risk management assessment.

[Poker Player]

No, it's not always a bad idea. Taking a mortgage at 1 or 2% interest

It is always a bad idea to invest the money you don't own (that includes loans).

If you continue reading what I said before, you will see that I am talking about the fact that you have the money to pay the house in cash, that is, you can pay off the mortgage at any time:

No, it's not always a bad idea. Taking a mortgage at 1 or 2% interest and more in an inflationary environment like the current one when you could pay the house in cash is a very good idea, for example, but I agree that in most cases it is usually not a good idea.

If you get a mortgage at 2% and inflation is higher, it is profitable and risk free because you can pay off the mortgage at any time, and it is extremely profitable if we count compound inflation during all the years of the mortgage.

Do you think Mark Zuckerberg doesn't know what he's doing?

Facebook Founder Mark Zuckerberg Has a 1% Mortgage.

But for the general public it's usually not a good idea, I've said it several times, it's better Dave Ramsey than Robert Kiyosaki, although there are exceptions to this rule.

[davis196]

I'm not an expert,but AFAIK,paying capital gains tax is required only when you sell your asset in exchange for fiat money.Why don't you just exchange your ETH for BTC?That way you won't owl capital gains tax and you will get more BTC.
Getting involved into Bitcoin mining is way different than crypto trading and there are risks involved.What if crypto mining suddenly gets banned in your country?What if the electricity prices suddenly increase?What if your mining equipment breaks?
Investing in BTC mining with borrowed money multiplies the risk by two.
At the end of the day,you decide what to do with your coins,OP.Do not take my advise too seriously.
 

[pooya87]

If you continue reading what I said before, you will see that I am talking about the fact that you have the money to pay the house in cash, that is, you can pay off the mortgage at any time:
But for the general public it's usually not a good idea

True but my point is also that for most people the problem is that they won't have the cash to pay off the mortgage, specially if the money is invested in a rather volatile market (the block rewards value goes up and down a lot) it could become much harder to pay it back too. Imagine if the difficulty went up more than usual or price had another dip.

[Poker Player]

True but my point is also that for most people the problem is that they won't have the cash to pay off the mortgage, specially if the money is invested in a rather volatile market (the block rewards value goes up and down a lot) it could become much harder to pay it back too. Imagine if the difficulty went up more than usual or price had another dip.

Yes, we agree. There is a lot of guru selling to the general public to use debt to get rich, which is not going to work for the 99%, not only because of volatility, but because many start spending significantly more than they would have if they were operating without debt. This is what I call in these cases a liquidity binge.