What Are the Pros and Cons of Investing in Bitcoin IRAs?

What Are the Pros and Cons of Investing in Bitcoin IRAs?

What Are the Pros and Cons of Investing in Bitcoin IRAs?

Everyone knows that Bitcoin has volatile price swings, sometimes on a more than desirable basis. Due to this, Bitcoin is often seen as a bad option as a retirement investment.

However, there are several financial services companies out there that do offer Bitcoin investing as a retirement option through self-directed Individual Retirement Accounts (IRAs).

These companies all report that their services are becoming more popular as, despite the volatility of crypto, many people are seeing it as a good option for retirement. One of the forerunners in IRAs for crypto states that, as of March 2020, they have handled more than $400 million in client retirement investments in digital currency.

If you’ve ever thought about using a Bitcoin IRA for your future but aren’t sure if it’s the right option for you, then read on. In the article below, we’ll explore more about what a Bitcoin IRA entails, as well as the pros and cons of investing in one as opposed to the more traditional retirement account options out there.

What Are Bitcoin IRAs?

As of November 2021, El Salvador is the only country in the world to accept BTC as legal tender. While the U.S.A is on the list of countries expected to include Bitcoin as legal tender in the future, there is still no room for crypto as an official currency anywhere in the states.

Therefore, there is no specific Internal Revenue Service (IRS) account designed for cryptocurrencies. Because of this, when crypto owners use the term “Bitcoin IRA”, they are simply talking about an IRA that includes Bitcoin or other cryptocurrencies in its portfolio.

Since 2014, the Inland Revenue Service has considered Bitcoin along with other forms of crypto and digital currencies as property. Thus, they have been taxed in the same way that bonds and stocks are taxed. If an owner of an IRA wants to add crypto or digital tokens to their account they must hire a custodian to help with the process.

However, finding a custodian that is happy to accept Bitcoin and crypto in an IRA can be a real challenge. The good news is that anyone who is adamant about having Bitcoin in their IRA can instead use a self-directed IRAs (SDIRAs) since these allow alternative assets to be included more frequently.

Nonetheless, if you’re currently looking for a custodian or company that does include crypto and digital tokens in their IRAs then you can check out some of the most popular companies below.

These are companies that have become the most commonly used since the beginning and are included on the list based on popularity rather than our personal opinion.

  • Bitcoin IRA
  • BitIRA
  • Equity Trust

What Are the Advantages and Disadvantages of Investing in a Bitcoin IRA?

Now that we covered what a Bitcoin IRA is, it’s time to look at the pros and cons to give you a better idea if this is something that will be right for you.


1. Diversification

If you already know anything about the stock market, you’ll know that having a diverse portfolio is one of the keys to success. Not putting all your eggs in one basket, so to speak, is the only way to avoid losing everything if one area of the market experiences a huge crash.

Bitcoin and altcoins have offered investors yet another way to diversify their portfolio, giving thousands of options of coins and tokens to invest in. If you’re looking to keep your money safe until retirement, which could be several decades away, then a Bitcoin IRA could help protect your money until that day comes.

2. Promising Future

While no one on earth could have predicted the value of BTC back in 2009, many experts now agree that Bitcoin’s value will continue to rise in the future. The growth in popularity, accessibility, and altcoins has cemented the idea that Bitcoin is here to stay and its value will only get better.

Of course, this doesn’t mean there might not be downturns, flash crashes, or dips along the way, but BTC undoubtedly has a lot of confidence behind it.

3. Better Tax Rates

If you had the chance to avoid large capital gains taxes, would you? Of course, you would. And using a retirement account with crypto could be the way to do that!


1. Instability

Bitcoin is volatile. Even compared to other assets, it has a volatility that can make seasoned investors anxious. If the world’s most popular cryptocurrency can ebb and flow so frequently by large amounts, is it worth having BTC or other currencies as part of your retirement plan?

2. Negative Talk

Sometimes, hearing others talk negatively about certain investments can increase your anxiousness and lead you to sell early or not invest as much as you wanted. Unfortunately, there are crypto pessimists out there that believe the success of BTC is only due to its novelty.

Other altcoins are in the same boat and eventually, the value of crypto will decrease naturally as they become too popular and less exciting. Not to mention the fact that only one county in the world currently accepts BTC as legal tender.

However, negative talk doesn’t mean it’s true, only time will tell.

3. Fees

Trading Bitcoin comes with certain fees including fees to the trading platform, exchange provider, or withdrawal fees. Aside from this, custodians charge fees, set up of the IRA costs money, annual maintenance fees soon add up. And if these fees weren’t already enough, you can expect to pay extra fees if you ever want to withdraw any of your assets from the account early.

You could end up paying more in fees than you’re saving in taxes thus not making it as worthwhile as it should be.

All of these costs have to be considered to see if you’re willing to pay what’s required. Due to the costs, it’s always advisable to consult with a professional to fully understand what you’ll be paying before you set one up.

Important Points to Take Away

  • A Bitcoin IRA is a self-directed Individual Retirement Account that uses cryptocurrency as its portfolio
  • From the point of view of the IRS, Bitcoin and other crypto is seen as property and therefore, is taxed accordingly
  • Bitcoin is taxed in most countries in the world although the exact rules and how taxes work as regards cryptocurrency will vary by country
  • People see Bitcoin as a tax advantage because often BTC and other cryptos are tax differently to more traditional property types such as income, cash, and homes
  • Since crypto is predicted to continue to grow in popularity and availability, it’s may be seen as a good retirement option due to its diversity, although nothing is guaranteed
  • Like all investments, no one can ever truly predict what the future of crypto looks like
  • As Bitcoin and other crypto grows in popularity, tax rules may change in the future for the worse
  • There are several fees involved with setting up and maintaining an IRA
  • For the time being, very few countries accept Bitcoin as a real payment method of any kind, only one country accepts it as legal tender, and some countries have even banned crypto all together thus limiting what certain people can and can’t do with their investment

While it’s easy to focus only on the positives or only on the negatives, it’s essential you carefully consider points from both sides before making a decision. Perhaps further research with a Bitcoin IRA company would be the next step so you know exactly what to expect, what to pay, and how it’ll affect your current investments.

Act Now with Mining Syndicate

Of course, before you can even begin to think about opening a Bitcoin IRA, you need to own Bitcoin in the first place. If you’re looking at becoming a Bitcoin investor and don’t know where to begin then we’re here to help.

At Mining Syndicate, we offer the chance for everyone to become a Bitcoin investor and own via Bitcoin mining.

If you would like any more information about starting or expanding your Bitcoin horizon; reach out to us at Mining Syndicate. Our mission is simple: Strengthen the Bitcoin network by enabling small-scale miners to affordably purchase and reliably host miners.

As a small miner, Chris became frustrated by the lack of hosting options available for miners with under 100 units. As luck would have it, he found a 2.5MW mining facility for sale right down the road, and thus, Mining Syndicate was born. Facilities #2 and #3 are already in the works.

Why is Mining Syndicate so successful? Because we have a team of people who are just like you, eager to be a part of the future of mining. If you would like more information about how you can be a part of Mining Syndicate, how our facility works, or the products we sell, you can reach out to us and start your future. Together we are stronger!