It is not possible to stake Bitcoin (BTC) due to the way the technology is built. Bitcoin (BTC) has a proof-of-work (POW) consensus model, which works through pure computer power rather than staked crypto coins like proof of stake cryptocurrencies. What you instead can do with Bitcoin (BTC) is to lend your cryptocurrency out, also called soft-staking. We recommend that you read this article first, if you are not familiar with the terms: staking and soft-staking. If you already know and just want to know how to do Bitcoin (BTC) lending for highest rewards – please continue.
Decentralized finance (DeFi)
There is no decentralized finance (DeFi) functionality built on Bitcoin (BTC). As a Bitcoin owner you do however have two ways of soft-staking and making money with a passive income. The first way is through wrapping your Bitcoin (BTC). This is a fairly new concept and still not widely supported. It is a bit technical, but we will try to explain using a simplified example. Say you own some Bitcoins (BTC), and you want to wrap them. You can use a wrapping tool like WBTC.network to temporarily exchange those Bitcoins (BTC) for Ethereum (ETH). The Ethereum (ETH) is then staked and once the exchange period ends you get back the Bitcoins (BTC) plus the staking rewards.
The second option is to lend out your Bitcoins (BTC) through an exchange or a financial institution like Kraken.com. The exchange will pay you an interest rate for loaning your Bitcoins (BTC). It is important to notice that you cannot hold your own crypto keys and lend out Bitcoin (BTC) at the same time. As always, please remember that there will always be a certain level of risk associated with any investment.
Soft-staking options compared
We have compared a number of options earning rewards on Bitcoin (BTC) lending. The comparison is only taking into account the rewards you can expect. Other factors such as availability and safety can be relevant for you, and you should investigate which option best matches your investment strategy before making a decision on how to allocate your crypto assets.
Binance – Bitcoin (BTC) rewards
Binance has two lending terms for Bitcoin (BTC). The first one is flexible, which lets you withdraw your coins at any time. The second one is locking your crypto coins for 90 days. The second option gives the highest rewards at 7 %, but it has been sold out every time we have checked. The rewards on the first option depends on how much you stake. The first portion of Bitcoin gives you are 5 % APY, the second portion a 0.8 % APY and on everything above that you get 0.1 % APY.
As seen in the chart above, you can actually get a fairly high APY of 5 % on a decent number of bitcoins (BTC).
Celsius – Bitcoin (BTC) rewards
Celsius has two customer tiers. The top tier is for accredited investors. You can apply for this tier, but you must live up to some requirements e.g., by having a yearly income of more than 200.000 $, a saving of more than 1 million dollars or certain certifications. That leaves the second tier which is open to everyone. All the soft-staking options on Celsius are flexible meaning that you can withdraw your coins at any time.
As seen in the chart above, you get as much as 6.2 % APY on a decent number of bitcoins (BTC) before the APY drops.
Kraken – Bitcoin (BTC) rewards
Kraken has a very transparent model where all customers are in the same tier and receive 0.25 % APY regardless of the staked amount. The terms on Kraken are flexible meaning that you can withdraw your coins at any time. Kraken automatically compounds rewards into your initial principal, which is convenient.
Crypto.com – Bitcoin (BTC) rewards
Crypto.com (CDC) has three different terms for entering their soft-staking program. You can lend your Bitcoins (BTC) on flexible terms or lock them for either 1 month or 3 months. The rewards you receive is measured by the amount of staked Cronos (CRO) you have staked with Crypto.com. Cronos is Crypto.com´s own crypto currency.
Your rewards on Crypto.com are measured in annual percentasge rate (APR). We have made an overview of the Bitcoin (BTC) lending options below and converted the rewards to APY. The chart implies that you restake your rewards when they are paid out.
As seen in the tables above, the APY varies from 1.51 – 8.77 % depending on the amount of staked Cronos (CRO) you have.
Nexo – Bitcoin (BTC) rewards
Nexo has four customer tiers Base, Silver, Gold and Platinum. You rise in customer tier by holding certain numbers of Nexos own crypto token (NEXO). You start out in the Base tier. If your total portfolio consists of 1-5% NEXO you step into the Silver Tier. For Gold tier 5-10% of your portfolio must be NEXO and for Platinum its above 10%.
For all customer tiers they offer two earning terms. The first is flexible and you can withdraw at any time. The second is locking your cryptocurrency for 1 month, which earns you an extra 1 percentage APY.
As you see in the table above, the rewards vary from 4-6 % APY depending on your tier and terms. Most of Nexo´s information is well hidden if you don’t have an account, but you can stay updated on the rates here: https://nexo.io/earn-crypto
Bitrue – Bitcoin (BTC) rewards
Bitrue has two different options for soft-staking cryptocurrency.
The first method is called BTR lockups. It is their own homemade staking term. You can soft-stake your Bitcoin (BTC) for an amazing 8.5 % APR, with 1 month locking term. However, the amount you can soft-stake is limited by the amount of Bitrue´s coins Bitether (BTR) you purchase. For every 1 BTR you stake, you qualify to soft-stake 0.4 $ worth of Bitcoins (BTC). It´s all a bit complex, so we will give an example of rewards converted to APY for an investment of 1000 $.
You have 1000 $ to invest. You first need to buy Bitether (BTR) to qualify for Bitcoin soft-staking. The price of one Bitether (BTR) during the writing of this article, is 0.2348 $. You can buy 1573 BTR for 369.3 $. Now you qualify for staking 629.2 $ worth of Bitcoin (BTC). 629.2 $ with 8.5 % APR that you can compound 12 times a year gives 55.62 $ reward after a year. That is an APY of 5.56 % based on your initial 1.000 $.
The second method is called Power Piggy. It is a flexible term that let you earn an APY of 1.9 %. The rewards are paid out daily. Power Piggy has a minimum investment of 0.01 BTC and a maximum of 4 BTC.
Conclusion on soft-staking Bitcoin (BTC)
We examined soft-staking Bitcoin (BTC) on six different crypto platforms to determine how to do Bitcoin (BTC) lending for highest rewards. You recieve the highest rewards from entering the Tier 1 Earn program on Crypto.com for 3 months. However, this does require a huge amount of staked Cronus. The highest interest rates that doesn´t require any initial investments are on Celsius. Here you can gain 6.2 % APY with up to 0.25 BTC. The next highest rewards are on Bitrue, where you can gain up to 5.56 % APY. However, you should expect more exchange fees as it requires more trades. Hereafter comes Binance with 5 % APY on flexible terms, closely followed by Nexo with 5 % APY on 1 month locked terms. The option for 7 % APY on Binance has been disqualified as it was actually never available during the assessment.
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