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Written by Cari Scribner on August 24, 2021
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How Does BlockFi Make Money?

BlockFi is a platform that’s quickly gaining momentum among cryptocurrency owners. It is a way for them to earn interest on their crypto rather than just having it sit idly.

BlockFi also offers people and businesses the ability to borrow cash using cryptocurrency, and to trade cryptocurrency. The platform offers excellent rates, a flexible structure and the highest degree of security available in the blockchain lending ecosystem.

blockfi earn bitcoin

What Is Cryptocurrency?

Cryptocurrency is a virtual currency that utilizes cryptography for protection and security.

It is used as a means of exchange to buy and sell, however it exists solely digitally. There is no tangible version of it.

Does BlockFi Charge Any Hidden Fees?

BlockFi was designed to give you a way to use your cryptocurrency to earn money. You can earn up to 8.9% APY with a BlockFi Interest Account. The interest on this account compounds daily and is paid out monthly.

There is no minimum deposit to begin earning interest. There are zero hidden fees, and if you want to use your account to make trades, they are completed instantly.

However, it stands to reason that although there are no fees, BlockFi is nonetheless in the business of making money via your account transactions.

BlockFi Earns Withdrawal Fees

Currently, BlockFi offers just one free crypto withdrawal and one free Stablecoin withdrawal from your interest account per calendar month. For withdrawals above and beyond this, you will be charged a withdrawal fee.

This is a very limited allowance for withdrawals. BlockFi has kept this low number of withdrawals to earn money from you when you need to make more than one transaction per month.

The amount of the fee you will be charged is based on tiers, which depend on the balance you maintain in your account.

  • Tier: 1 | Balance Maintained: $100 - 249
  • Tier: 2 | Balance Maintained: $250 - $999
  • Tier: 3 | Balance Maintained: $1,000 - $4,999 BlockFibit
  • Tier: 4 | Balance Maintained: $5,000 - $9,999
  • Tier: 5 | Balance Maintained: $10,000 - $19,999
  • Tier: 6 | Balance Maintained: $20,000+

The amount of your withdrawal fee is a percentage that is based on both the tier and the type of currency you have in your account.

All fees are charged using the same type of cryptocurrency that is in your account, with the exception of  Stablecoins, where a $10 fee is levied.

 

Currency Withdrawal Limit Fees
BTC 100 BTC per 7-day period 0.00075 BTC
ETH 5,000 ETH per 7-day period 0.02 ETH
LINK 65,000 LINK per 7-day period 0.95 LINK
LTC 10,000 LTC per 7-day period 0.0025 LTC
Stablecoins 1,000,000 per 7-day period $10.00 USD
PAXG 500 PAXG per 7 day period 0.015 PAXG
UNI 5,500 UNI per 7 day period 1 UNI
BAT 2,000,000 BAT per 7 day period 35 BAT

 

BlockFi Earns Origination Fees

 BlockFi also offers crypto-backed loans to customers.

Crypto-backed loans allow you to access liquidity without selling. By using your crypto as collateral, you can borrow up to 50% of the value of these assets in USD. BlockFi will fund you the money on the same day that they receive your collateral.

The amount of USD you can borrow depends on the amount of collateral you post against the loan, and which loan-to-value (LTV) ratio you secure. LTV is determined by the amount of the loan divided by the value of the collateral for that loan.

BlockFi charges a flat 2% origination fee when you take out a crypto-backed loan.

BlockFi also offers a new credit card that lets customers use their crypto to pay for everyday purchases like groceries, gas or entertainment, but does not charge fees for this product. The only time you will be charged is for late fees if your payment is not on time.

How Does BlockFi Make Money: Conclusion

Like many platforms offering a variety of financial products, BlockFi is competitive and cutting edge, but also needs to earn money to stay in business.

There are no fees for opening an account or trading. However, BlockFi earns money through 2% origination fees for crypto-backed loans, and also through withdrawal fees when customers need to make more than one withdrawal per calendar month.

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Article written by Cari Scribner
Cari Scribner is a career journalist with 20 year’s experience writing for newspapers and magazines. Now a freelance writer, she is also a published fiction writer with more than 15 short stories in literary mags. She recently completed a novel that is on the desk for consideration at two publishing houses. She lives with her two small dogs, Miloh and Lucy, in Upstate NY.

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