- What is BlockFi, and how does BlockFi work?
- How does BlockFi make money?
- Interest Fees (from BlockFi Crypto-Backed Loans)
- Account Withdrawal Fees
- Interchange Fees (BlockFi Credit Card)
- Revenue from Spreads
- BlockFi subsidiaries, acquisitions, and exits
- BlockFi profit and revenue
- What is the BlockFi business and revenue model?
- BlockFi funding, net worth, and valuation
How does BlockFi make money if they don’t have any trading fees? Well, here is a full, in depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the BlockFi business and revenue model, how much BlockFi makes per year, and how BlockFi works.
What is BlockFi, and how does BlockFi work?
BlockFi is a cryptocurrency financial institution that allows users to store their crypto in a crypto-style bank account; where they can earn interest on it, borrow against it, etc.
Founded in 2017 by Zac Prince, BlockFi now has $10+ billion in assets under management (AUM) for more than 1 million clients and 350 global institutions.
So, how does BlockFi work? To use BlockFi, users can first download their mobile app in the Apple App Store or Google Play store; or visit their website and sign up for an account
Once an account is created, users can buy crypto, sell, and store crypto in their BlockFi wallet account. From which they can earn interest on it, borrow against it to get a loan, and more.
How does BlockFi make money?
According to BlockFi, they have $10+ billion in assets under management (AUM) for more than 1 million clients and 350 global institutions.
So how does BlockFi make money off of all those assets under management and clients?
Below is a breakdown of how much money BlockFi makes and its revenue model. Including all revenue streams and how much they charge for their services.
Here are the 4 ways of how BlockFi makes money in 2022
BlockFi has a revenue model that makes money in four (4) ways; interest from crypto-backed loans, account withdrawal fees, interchange fees, and revenue from spreads.
#1. Interest Fees (from BlockFi Crypto-Backed Loans)
One of the ways BlockFi makes money is from the interest it collects from the crypto-backed loans they lend out.
The way it works is: the amount of USD a user can borrow is contingent on the amount of crypto collateral the borrower posts against the loan, which will determine the loan-to-value (LTV) ratio the borrower secures. And the LTV ratio they secure reflects what the borrowers’ interest rate will be. Which you can see the rates below.
What are the BlockFi interest rates?
- BlockFi interest rates are between 4.5% to 9.75%, plus a 2% loan origination fee
Note: The minimum loan amount is currently $10,000.
#2. Account Withdrawal Fees
BlockFi also makes money from the withdrawal fees they collect when a user withdraws funds from their BlockFi Wallet Account.
Fees vary depending on the cryptocurrency being withdrawn and the USD market value of that cryptocurrency when it’s withdrawn (unless it’s a stablecoin).
BlockFi withdrawal fee:
- BTC: 0.00025 BTC withdrawal fee
- ETH: 0.0135 ETH withdrawal fee
- Stablecoins (USDC, DAI, USDT, etc): $25 USD withdrawal fee
Note: BlockFi has 8 cryptocurrencies users can withdrawal. Above, we chose the top 3. You can see the full list here.
#3. Interchange Fees (BlockFi Credit Card)
BlockFi also makes money off of the interchange fees they receive from their BlockFi credit cards that are issued to users who have a BlockFi account, are US residents in qualified states (excluding NY), and are approved.
How does BlockFi make money from interchange fees? BlockFi makes money whenever a BlockFi cardholder swipes their Visa issued credit card.
When this happens, Visa charges the merchant an interchange fee between 1.15% + $0.05 to 2.40% + $0.10 of the charge amount. From that, Visa gives a percentage of its interchange fee revenue to BlockFi. Although it’s unclear what percentage BlockFi receives from Visa.
#4. Revenue from Spreads
Another way BlockFi makes money is through the spreads they create.
How does BlockFi make money from spreads? BlockFi makes money from this by marking up the price of the crypto assets that they sell to their BlockFi users on their exchange after purchasing that asset for about 1% cheaper. Thus, keeping the 1% markup as profit – also known as a spread.
BlockFi spread fee:
- it’s reportedly around a 1% spread per trade or more
Note: Since BlockFi does not charge its users trading fees, they make their money on the backend through spreads.
BlockFi subsidiaries, acquisitions, and exits
To date, BlockFi has made a total of 12 investments, 1 lead investment, and 1 successful exit.
BlockFi profit and revenue
BlockFi has not released any official reports in regards to company earnings.
Note: Because BlockFi is a privately held company, they are not required to make their annual reporting, such as Form 10-K’s, pubic.
What is the BlockFi business and revenue model?
BlockFi makes money through a few revenue models that they combine within their company, they are:
- Interest based business model
- Fee for service (FFS) business model
- Transaction based business model
- Business to business (B2B) business model
- B2B2C (partnerships) business model
BlockFi funding, net worth, and valuation
According to BlockFi’s Crunchbase profile, BlockFi has raised $1.3 billion over 12 rounds and has a post-money valuation of $1 billion to $10 billion as of June 9, 2021.