Have you used hodl hodl for borrowing against your stack for mining? \ stacker news ~bitcoin

Have you used hodl hodl for borrowing against your stack for mining?

1287 sats \ 39 comments \ @fedelang 23 May 2023 bitcoin

I am evaluating using Hodl Hodl to buy miners against my stack. I've seen APR figures about 10% but then an extra 1.5% Origination fee appears, shouldn't this fee be included in the APR? Maybe I am not following or HH has obscured this a little bit. I need to know I get X and it will cost me Y. For me this is APR... but maybe I am wrong.

Also, does someone know what the counter party risk looks like for Hodl Hodl? Thanks in adavance for helping me get through this.

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105 sats \ 1 reply \ @DarthCoin 23 May 2023

Thanks you for your sats. More sats for me.

0 sats \ 0 replies \ @fedelang OP 24 May 2023

Do you mine?

15 sats \ 1 reply \ @gnilma 24 May 2023

I suggest you stay humble and stack sats. If you want to buy miners, buy them with your own sats instead of borrowing sats to buy them.

Maybe many of us are too used to using debt money and with a constantly devaluing currency, debt makes sense. Yet, with a deflationary currency like bitcoin, it will be much harder to service your debt unless the return on investment from investing your borrowed money is greater than the increase in value of the currency. In other words, your mining venture better be making bank for you to come out on top in this trade; however, with the competitiveness of the bitcoin mining industry, I’m not so sure this loan is a good idea…

0 sats \ 0 replies \ @fedelang OP 24 May 2023

I get you thanks for your insight mate. I am deciding. I guess my only concern is that if price takes a deep dive on a 50% LTV collateral I will for certain loose my sats if I don't chip in more sats.. so I guess there is a time and place for doing this or there isn't at all. I like the non custodial lending offered by hodl hodl. I am only afraid here of the volatility.

5 sats \ 6 replies \ @nullama 24 May 2023

If you give someone else your sats, they are theirs, specially when the company goes under with them.

31 sats \ 5 replies \ @cryptocoin 24 May 2023

Lend at HodlHodl is non-custodial.

The Bitcoin collateral is held in an on-chain multisig transaction.

Doomsday software - Lend at Hodl Hodl 's Escrow Extraction tool #90862 https://gitlab.com/hodlhodl-public/escrow_extractor https://medium.com/hodl-hodl/doomsday-software-f71204bde3da

So even if HodlHodl were to disappear tomorrow, the outstanding loan transaction would continue until either repayment or liquidation upon default or failure to maintain margin maintenance requirement.

But seriously ... the halving is under a year away. You do understand the significance of that, I do hope.

Unless you literally pay $0.00 per kWh, your odds of earning more than 1.0 BTC per 1.0 BTC you invest in mining are not very good. '

Stay humble.

Stack sats.

35 sats \ 3 replies \ @nullama 25 May 2023

Those tools allow you to withdraw funds without their approval, OK.

But what happens if there's no funds to withdraw?, that's how companies go under, because they lend too much and they cannot pay the withdrawals.

10 sats \ 2 replies \ @cryptocoin 25 May 2023

Alice offers to lend Bob USDT. Let's say $1,000 for one year, 10% interest, 50% LTV,

Bob's "initial loan amount" then is $1,100 ($1,000 principal amount + $100 in interest), so he then sends $2,200 worth of BTC to a multisig contract ($1.100 / 50% = $2,200). That BTC is locked until either Alice releases it to Bob (after he repays the $1,100), or until there is forced liquidation, where Alice gets paid the amount owed her, the $1,100, and HodlHodl then receives the balance. In that forced liquidation scenario, Hodl Hodl then subtracts a 5% liquidation fee (5% of the $1,100 -- initial loan amount, or $55) and forwards the remaining balance of BTC to Bob.

Bob has multiple chances to avoid forced liquidation (3 margin calls, the first at 75% LTV, the next at 80% LTV, and the 3rd margin call at 85% LTV). Forced liquidation occurs at 90% LTV.

So there's no lending of Bob's bitcoin. That bitcoin gets locked into a bitcoin multisig contract until either repayment by Bob results in Alice releasing the bitcoin back to Bob, or liquidation occurs.

Hope this helps to explain it. The margin call page on Lend at HodlHodl's website provides more complete details.

25 sats \ 1 reply \ @fedelang OP 25 May 2023

where does the originating fee go? Why is it not included in the APR?

10 sats \ 0 replies \ @cryptocoin 26 May 2023

Is that normal to include, for example, with mortgage loans? This is not my area of expertise.

25 sats \ 0 replies \ @fedelang OP 24 May 2023

I can share my math mate, of course there are assumptions (network hashrate growth mainly) I am currently on sub 3 cents per kWh. My concern is that HW in Argentina are high so USD/Ths is close to double than in the US.

You know.. I am not willing to let go mining as a bitcoin maxi, 99% of mining today is a fiat centrix venture. The only way I can currently think of to have a healthy ROI is by offsetting sats and drive down my sats/THs cost by borrowing against my stack.

Still undecided but I am looking into it.

10 sats \ 2 replies \ @BBitcoinUSA 24 May 2023

What miner and best place to buy it if you want to start mainly to learn, help secure the network, etc, and get some KYC sats in return (even if highly unprofitable fiat-wise) ?

300 sats \ 1 reply \ @fedelang OP 24 May 2023

I do not live in the states but was pointed in the direction of Scott Offord https://t.me/ScottsDeals there are plenty of Telegram groups related to mining that can be of help. I was told there is still a very large portion of miners sitting on shelves in the US. If you decide to run numbers take time to analyze the evolution of hashrate and projected growth. Very important.

Here are some screens of the satflow sheet I use for my calculations. Marginal mining that can happen at the expense of a residential or SOHO meter can prove useful at first but wont scale.

If you want to take a look here is a link to the spreadheet. Any comments or suggestions are most welcome.

https://docs.google.com/spreadsheets/d/1VAYcLjlaVErDv5DwBliTb6Up3vIdWyxx4P9afeAnxoo/edit?usp=sharing

Here some screencaps

10 sats \ 0 replies \ @BBitcoinUSA 28 May 2023

Thank you for this, I haven’t dug into the spreadsheet yet but it looks like it will be great, very much appreciated

10 sats \ 5 replies \ @Darkbulb 24 May 2023

Dont. Do. It. Please. Don't repeat my mistakes. I lost 1 btc in celcius trying to borrow to buy more btc.

Just dont do it.

0 sats \ 4 replies \ @fedelang OP 24 May 2023

I am very sorry to hear that mate. Do you think Celsius is comparable to HodlHodl?

87 sats \ 3 replies \ @Darkbulb 24 May 2023

Mate id say just hold your corn and get a traditional loan if you really need one 👍

5000 sats \ 2 replies \ @fedelang OP 24 May 2023

Yup. Not my intention to dox you out here. But any chance you are citizen of the global north? From a fiat financial standpoint global northerners are way too privileged sometimes to understand the pain we endure in this ever collapsing turmoiled economies. Where I live taking a loan is off the table. Interest rates are above 100% and banks in Argentina have failed many times. I mean ppl got surprised on Luna-UST or FTX,.. oh boy come live in Argentina for 10 yrs any Crypto fiasco will be dwarfed to nothing by comparison.

10 sats \ 1 reply \ @Darkbulb 25 May 2023

😰😰😰😰😰😰😰

I'm an American. Despite all of our many, many, many issues, I realize that we are relatively blessed as a nation. I know that our stabilty and growth comes largely from the US dollar being the world's reserve currency. I know that its exploitive and drains other nations of their wealth. That's why I love bitcoin, because it evens the playing field for all people.

I can only imagine the economic situation in Argentina. I know you all are good people -- Ive had my fair share of yerba mate!

All I can say is hold your corn for the long run. Its not much but here's 5000 sats to get you started. God bless you

10 sats \ 0 replies \ @fedelang OP 25 May 2023

Hey many thanks, I'll pass those 5k sats along to someone I am orangepilling this week that really needs it. Despite the situation I am blessed as well, even considering where I live, I am a privileged myself. So nice to be able to share this conversations over stacker.news. If you ever visit patagonia I'll put steak and wine for you pal. Cheers!

10 sats \ 3 replies \ @notgeld 24 May 2023

No. In the best case you will have 0 APR, albeit with equipment. Mining is very-very competitive. Use just savings may be to buy miners.

0 sats \ 2 replies \ @fedelang OP 24 May 2023

I read you. I know discussing price among bitcoiners is a buzzkill BUT, for bitcoiners thar also happen to mine,.. price is of the essence. So what you say is that from here onwards during the next 12 months BTC price will barely reach the APR offered?

I know narratives tend to break but, in 12 months we will be halved. The trend dictates much higher upside potential than offered APRs. What are your thoughts on this?

10 sats \ 1 reply \ @notgeld 24 May 2023

Exactly. That will be your revenue which will be halved.

Maybe it is better to just leverage your bitcoins and put in long position because mining is the same, basically, if you do not want to try it and figure this out yourself and ready to pay premium for mined bitcoins.

0 sats \ 0 replies \ @fedelang OP 24 May 2023

Yup.. but,.. then I would need to forfeit the protection of my stack to fiat maxis... which for me its a conflict right now. I come from Data Center industry so I have a soft spot when it comes to mining data centers, that is my main driver now to make it happen on a healthy sat roi. All my analysis getting ASICS and paying them at present value with my stack,.. you don't get your BTC back ever. I refuse to let mining go =)

10 sats \ 5 replies \ @sadfsdf 23 May 2023

It depends what is your trading plan. You could just DCA dips and hodl for the bitcoin standard. In terms of mining you sound like you have done your research so gathering bitcoins through means as a business. You will run into a few problems depending where you live. The best is to study renewable with mining as that is taking over. If you can afford to lend out your bitcoins for different types of high yield. You have to make sure the yield makes sense and is actually verifiable especially over the internet. FTX fell for high yield highly leveraged. =] Wish you luck!

0 sats \ 4 replies \ @fedelang OP 24 May 2023

Hey thanks for taking the time to write. I live in Argentina and I am currently maxing out utility meters at a residential or SOHO level moving to SMB meters as well and leverage some tax deductions (politely dodging them I would say).

So its not exactly DCA I call it UCA, utility cost averaging. At a residential level you can pay rates that about now are between 2.5 and 3.5 cents per kWh. Legaly for now if you don't get past the 10kW peak demand for more than 15 minutes you can manage with a three phase connection.

My goal mid term is to run an operation southern than I am right now and mine using flare, just Vaca Muerta region has 308 TCF of gas reserves. That is a shitload of gas. There is plenty oilfields in Patagonia, conventional and non conventional. 99% of gas is being flared.

The only way I found to mine as a bitcoin centrix ROI strategy is to assume a risk collaterlizing stack and minimize the sat/Ths hardware and infrastructure cost. Of course.. you can't do this during a bullrun.

10 sats \ 3 replies \ @2bithits 24 May 2023

You can always add collateral

And the good thing is that you can see your liquidation level. So you could add enough BTC to put that under $10k/BTC

0 sats \ 2 replies \ @fedelang OP 24 May 2023

weekly falls May 2021: -53%, March 2020: -50%, December 2017-December 2018: -84%, December 2013: -50%, April 2013: -83%, August 2012: -56%, June 2011: -99%,....

So I have not used the tool yet but can I overcollaterlize? Like now there are some offer son 12 moth 10% APR with 50% collateral. Can I send 80% collateral? is that possible ?Just asking since published LTV is 50% no those,.. maybe it is the minimum amount? Thanks!

10 sats \ 1 reply \ @2bithits 24 May 2023

Yes, you could put as much BTC as you like into the collateral address. Get it down to 30%, then if we see another catastrophic 50% drop you're still good.

Just think if 1 year is enough time to pay back the loan.

0 sats \ 0 replies \ @fedelang OP 24 May 2023

great I didn't know I could overcollateralize thanks for the tip.

Yup 12 months at this stage of the cycle and price gets me from point A to point B. Probably will end up paying up at month 6. Don't like to speculate much with unreal price projections, but i believe we are passed bear bottom.

10 sats \ 1 reply \ @2bithits 23 May 2023

I have done but not for a while

When they introduce longer lending period like 3-5 years I'll look into it again

0 sats \ 0 replies \ @fedelang OP 24 May 2023

Yup I hear ya. I was thinking about the same periods. 3 ys is the lifecycle I am working for mining HW to be shifted from the operation.

What I worry the most is margin call, at 90% you will get into the force liquidation phase. So... if you take a 50% LTV you have barely a 40% wiggle room. We had weekly falls May 2021: -53%, March 2020: -50%, December 2017-December 2018: -84%, December 2013: -50%, April 2013: -83%, August 2012: -56%, June 2011: -99%,....

So my concern is I will be risking a margin call at 90% whenever MMs decide to dick retailers while playing SQL Liquidations on fractional exchanges... until more healthy volatility is achieved,... don't know if this could be an option if you plan to be away for more than a week or you have perfectly scripted your way into responding the margin call.

10 sats \ 1 reply \ @blacklotus99 23 May 2023

I often get down this rabbit hole. I always come to the conclusion if I borrow against my stack to buy miners. Most cases it would be better to borrow and buy.

0 sats \ 0 replies \ @fedelang OP 24 May 2023

Same thing for me. HW in Argentina don't allow for full SAT ROI. Today we are paying 24USD/Ths for a S19JPro 104. Its better just to purchase BTC and get it over with. Problem is,.. I am a bitcoiner that doesn't believe in fungibility. I want my BTC to stay as clean as possible..

10 sats \ 1 reply \ @Atreus 23 May 2023

I get the temptation but think about this: You're going to have to repay the loan within X-period of time, plus interest.

It's better to wait, save the money for a miner, and use the money you're going to raise in the future to pay back the loan, to just buy the miner in the future, minus the interest, minus the origination fee.

Their APRs aren't cheap either!

(Full disclosure: I've kinda been on an anti-usury high horse the last month or so)

20 sats \ 0 replies \ @fedelang OP 24 May 2023

I have both conflicting viewpoints on the subject. I get you. Just a thought.. do you think a bitcoiner should mine? If so,.. and as a bitcoiner, you will crunch your sats on a satflow to get the return of the original sats plus interest in BTC through running a mining operation. At least that is how I view things. I am too retarded to let the security of my stack in hands of fiat maxis that mine only for the dollar.

If you ever run the numbers you will find out that mining is a fiat maxi business, not a bitcoin one, unless.. you take loans to find a better time to liquidate a lesser part of your stack in order to make room for positive returns. You dont have to trust me, just run the numbers.

10 sats \ 2 replies \ @BlokchainB 23 May 2023

I lend on hodl hodl. Just Micro loans it’s easy to do.

I haven’t borrowed because unsure how to turn stables into cash to actually pay a bill.

0 sats \ 1 reply \ @fedelang OP 24 May 2023

Interesting, so as a lender you can stay in contact with the party that gets the loan?

10 sats \ 0 replies \ @BlokchainB 25 May 2023

Yeah hodl hodl makes it very easy