How does blockfi pay so much interest?

Introducing the BlockFi Interest Account

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Cryptocurrencies have come a long way over the past decade. When Bitcoin took the world by storm, most financial experts thought it was just a fad. But it didn’t go away. Then other cryptocurrencies like Litecoin and Ehtereum came along, and crypto just kept getting bigger and bigger. Today, crypto is widely accepted as a legitimate financial asset. In fact, some financial experts think younger investors should allocate anywhere from 1 to 5 percent of their portfolios to crypto. The only question is, what’s the smartest way to do that?

The answer is BlockFi.

BlockFi is an online crypto investing and management platform created to make investing in crypto easier and more productive. They offer a suite of wealth management products designed to serve as a bridge between the worlds of traditional finance and crypto. However, their marquee product is the BlockFi Interest Account.

The BlockFi Interest Account (BIA) is the world’s first compound interest cryptocurrency savings account. For those who may not be familiar, compound interest is when the interest earned over a specified period is added to the principle balance. That means you get to earn interest on interest, which helps you grow your money exponentially. While compound interest has been available in traditional finance for centuries, it hasn’t been available for crypto investors until now.

How does BlockFi Make Money?

BlockFi makes money in several different ways.

One of these ways is withdrawal fees on BIAs. When you have a BIA, you are allowed to make one cryptocurrency withdrawal and one stablecoin withdrawal per month for free.

But when you want to withdraw more than that, the following fees are applied: 

Source: BlockFi


Whats Next for BlockFi 

“We’re confident that we will become a very large and successful company that provides financial services on a global scale to the benefit of millions of clients. We plan on going through three distinct growth phases based on our addressable market and products:

  • Phase 1 
    • Products for people who already own Bitcoin or another crypto asset that’s supported on BlockFi’s platform
    • Ability to earn interest borrow USD secured by your crypto
  • Phase 2
    • Expand the addressable market to include people who don’t own cryptocurrency yet.
    • Launch the ability to buy and sell on the platform and payments category products like a Bitcoin rewards credit card
  • Phase 3
    • Focus on global expansion and expand the addressable market to include users that may not ever want to own crypto
    • Heavily utilize stablecoins to provide traditional banking products on blockchain rails

BlockFi’s newest product, the BlockFi Credit Card (source: BlockFi)

All of our indicators for this BlockFi review (history, team, communication with support, and business model evaluation) point to yes: BlockFi is legit. There is very little evidence that suggests otherwise. 

Whether or not BlockFi is worth it comes down to your risk profile and what you’re doing with your cryptocurrency.

It’s worth remembering that any time your cryptocurrency leaves your hardware wallets, it’s exposed to a higher degree of risk. If BlockFi or Gemini were to experience some (highly unlikely) catastrophic hack, your cryptocurrency would be at risk. 

Our BlockFi review comes back positive. After speaking with team representatives, and with their support team on the client-side, we look forward to seeing BlockFi establish itself further in the space and lead the charge in working with regulators in building a better and safer financial ecosystem. Projects such as BlockFi simply existing provide cryptocurrency investors with a much-needed diversification of tools. 

CoinCentral's Score

Editor’s Note/disclaimers: The above article isn’t investment advice. This review is written for educational and entertainment purposes. Do not invest anything you cannot afford to lose, and speak with a licensed financial advisor if you’re interested in cryptocurrency. 

Who BlockFi is Best For

Current long-term bitcoin holders

If you already have bitcoin or Ethereum and its sitting in Coinbase or another exchange, it seems to be a no-brainer to bring it over to Blockfi to earn interest. Fees and liquidity can vary, so if you are actively trading these coins, this might not be the best move. 

If you have cryptocurrency already, then you might as well open a BIA and begin earning interest on your deposits.

You want to use your crypto to take out a loan

Because BlockFi lets crypto investors use their cryptocurrency to earn interest or as collateral for a loan, this company is best for seasoned cryptocurrency experts who already buy, sell, and trade cryptocurrency as part of their portfolio but need to take out a loan against their balance. 


If you’re interested in crypto, but don’t want to take too much risk, the BIA is a great place to start. You can earn so much more than a traditional savings account. Although you do have more risk than an FDIC-insured bank, I view it as an acceptable risk with a portion (not all) of your cash. 

Earn a little extra while you learn more about the world of crypto investing and then decide to make the leap later. Just keep in mind that your account funds are not protected by the same type of insurance as traditional bank accounts and brokerage accounts are. 

The BlockFi Team

BlockFi’s leadership team has decades of experience in the traditional financial services and banking world. The company claims to take a conservative approach to regulation to position itself favorably for sustainable long-term growth and expansion. 

BlockFi executive team

Founder & CEO, Zac Prince has leadership experience at multiple successful tech companies. Prior to starting BlockFi, he led business development teams at Orchard Platform, a broker-dealer and RIA in the online lending sector, and Zibby, an online consumer lender. 

Co-Founder & VP of Operations Flori Marquez has experience managing alternative lending products. She helped build and scale a $125MM portfolio for Bond Street (acquired by Goldman Sachs) as Head of Portfolio Management. She managed all operations including point of origination, default, and litigation.

BlockFi Products and Services

BlockFi builds alternative banking products for crypto investors, and they even have new offerings in the works. Here are the main ways you can use BlockFi to help you reach your financial goals.

BlockFi Interest Account (BIA)

This non-traditional “savings account” lets you deposit cryptocurrency you already hold and earn up to 8.6% APY in the process. Note that interest accrues daily on your account balance, yet it is paid out monthly. This account is also free of hidden fees and minimum balance requirements. 

If you already have cryptocurrency as part of your portfolio and you’re a long-term investor, you might as well deposit it at BlockFi and earn interest on your account. Just keep in mind that how much you’ll earn depends on the type of cryptocurrency you hold. For example, as of writing, Bitcoin (Tier 1) currently earns 6%, whereas Ethereum earns 5.25% and PAX earns 8.6%. 

Photo from BlockFi
Photo from BlockFi

BlockFi Trading Account

BlockFi also offers a platform for buying, selling, and trading cryptocurrency. You can conduct all your crypto moves using the innovative mobile app, and trades are instant. Currently, you can buy, sell, or trade BTC, ETH, LTC, and PAXG, as well as USD-based stablecoins like USDC, USDT, GUSD, and PAX.

Since trades and purchases are instant, you can begin earning interest on your crypto right away. You can also use the app to set up recurring trades.

BlockFi Crypto-Backed Loans

BlockFi Crypto-Backed Loans

If you keep cryptocurrency on deposit with BlockFi, you can use the funds in your account to secure a low-interest loan. Currently, loan rates can be as competitive as 4.5%. Since you use your crypto balance as collateral for your loan, you can qualify without a hard pull or a soft pull on your credit. This makes crypto-backed loans easy to qualify for regardless of your credit score.

Crypto-backed loans from BlockFi also move along at a rapid pace. Once you apply, you can get your loan funds as soon as the same business day.

BlockFi Fees

BlockFi doesn’t charge trading fees. Instead, the cost of spread, or the difference between what it costs and what you pay for it, is baked into the listed price, and you might find cryptos for less on other exchanges. The prices at which you can trade might be different than the market price you see listed, so take note of the actual price you’re exchanging at, rather than the list price. This will help with your record-keeping and help you stay aware of your transactions.

Withdrawal fees

There is no fee for a withdrawal to a bank account via ACH transfer, although you will see a $20 fee for domestic wire transfers.

If you decide to withdraw crypto to an outside wallet, you will pay a withdrawal fee based on the cryptocurrency involved, and you might be subject to a minimum and a withdrawal limit. While this won’t affect many everyday investors, for example, you can only withdraw up to 100 BTC in any seven-day period.

Some assets allow for one free withdrawal per calendar month on BlockFi, including:

  • BTC
  • LTC
  • USDT
  • USDC
  • DAI

Other assets, like ETH, LINK, PAXG, UNI, and BAT don’t come with any free withdrawal option, so you will always pay the fee to cash out.

Withdrawal fees are charged in the associated cryptocurrency. So if you withdraw ETH, you’ll pay a fee of 0.015 ETH. Fees and limits might change in the future, however, so check the terms before you move assets from BlockFi to your own wallet. 


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BlockFi Funding, Revenue Valuation

According to Crunchbase, BlockFi has raised a total of $508.7 million across 11 rounds of debt and equity funding.

Notable investors include Valar Ventures (led by Peter Thiel), Akuna Capital, Bain Capital Ventures, Morgan Creek Digital, SoFi, Winklevoss Capital, and many more.

BlockFi is currently being valued at $3 billion after raising $350 million during its Series D round in March 2021.

The company simultaneously announced that it is now generating $50 million a month in revenue – giving it a revenue run rate of about $600 million.

BlockFi Company History

BlockFi, headquartered in New York City, was founded in 2017 by Zac Prince (CEO) and Flori Marquez (SVP of Operations).

Marquez, whose parents immigrated from Argentina in the 1980s, studied Economics at Cornell University. After graduating from college in 2013, she went on to work various positions in finance.

One of her employers was Bond Street, a company providing loans to small businesses. In 2017, Goldman Sachs acquired Bond Street alongside the firm’s employees.

Marquez, having this entrepreneurial itch, had other plans though. A few months prior, she met Prince who himself held various leadership positions in the world of finance.  

Apart from his professional accolades, Prince was also personally invested in the cryptocurrency space. In fact, he made his first Bitcoin investment back in 2014 and began buying Ethereum in 2016 (one year after its inception).

Prince became so invested that he started joining local blockchain and cryptocurrency meetups to engage with other enthusiasts.

His lightbulb moment eventually came in 2017. Back then, the crypto rally propelled his asset holdings to unprecedented heights. As a result, he applied for a bank loan to purchase an investment property, using his crypto holdings as collateral. Unfortunately, the bank did not recognize them as a legitimate asset class and even accused him of being involved in some illicit activity.

Right after Goldman offered Marquez a highly lucrative job, she met with Prince to discuss an idea he just had. That idea and meeting eventually resulted in the inception of BlockFi.

After months of hard work, BlockFi launched into public beta in January 2018. BlockFi became one of the first companies that issued loans backed by bitcoin and ether to individuals and institutions. In fact, BlockFi worked much like a traditional bank in that it holds customer funds with a registered custodian and reports loan performance information to the major credit bureaus.

In the beginning, the service was available in 35 U.S. states. Soon after launching, the team successfully raised its first-ever round of venture capital funding, netting them $1.55 million from a variety of investors.

Being one of the first crypto loan services allowed BlockFi to grow like gangbusters in the early days. Soon after, in July, the company was able to raise a $52.5 million venture round. The capital injection allowed them to meet necessary capital requirements for further market expansion, increase the amount of money it lends out, as well as developing new product lines.

In March 2019, three months after raising a $4 million convertible note from Coinbase Ventures, BlockFi expanded its offering to include interest accounts. Weeks after the launch, client assets grew by $40 million to over $50 million. People from more than 50 countries signed up for BlockFi to open an account.

Later that year, in December, BlockFi launched a crypto zero-fee trading product. The expansion of its product line allowed the company to grow annual revenues by twentyfold in 2019 alone. Furthermore, assets under management grew to over $650 million (up from the $50 million back in March). What was particularly impressive was that the majority of the firm’s growth came by virtue of organic referrals, meaning people recommending the service to each other.

Despite continuing growth well into 2020, the firm also experienced some setbacks along the way. In May, BlockFi was the subject of a data breach that exposed sensitive customer information. The firm was able to block access immediately after, thereby minimizing further damage. Furthermore, it hired Adam Healy as its first Chief Security Officer, an executive with over 15 years of experience in the field.

Despite expanding competition, BlockFi was continually able to acquire more users. By August, the firm was valued at $400 million after a $50 million capital injection. Over the coming months, the firm used its moat around borrowing and lending to build other financial products, including an over-the-counter (OTC) trading desk, a crypto trust, or even its own branded credit cards.

In fact, BlockFi’s growth playbook was (and still is) heavily inspired by financial services provider SoFi, one of the firm’s initial seed investors. SoFi started out with student loans and has since expanded into a variety of other businesses, including mortgages, personal loans, or checking and cash management products.

The strategy is to build a loyal user base around one core product. Normally, this product enables companies to collect a fair amount of data – in BlockFi’s loan product case, this included information such as credit scores or existing crypto holdings. That information was then used to launch the company’s interest account, its second product, which in turn informs the launch of successive products and services.

Continuous expansion as well as a heated crypto market propelled the firm’s valuation to $3 billion in March 2021.

Regardless, there were still some growing pains that the firm encountered. That same month, BlockFi accidentally sent over 200 bitcoins (worth around $60,000 each at the time) to users on its platform. That same month, a malicious actor began spamming BlockFi’s sign-up page with fake accounts while using offensive language.

Today, BlockFi employs close to 1,000 people across offices in the United States, Singapore, Poland, and the United Kingdom.

Final Thoughts

BlockFi is an extremely innovative cryptocurrency institution that is expanding into spaces that have never before been explored.

As long as you can look past the risk that comes along with putting your crypto into an interest account and an investment account that are uninsured, BlockFi can be a great way for you to grow your money.

If this BlockFi review helped you make a decision, leave a comment below to tell us what you think!

Oh, and don’t forget to join the waitlist for the BlockFi Rewards Credit Card!

DON’T MISS OUT: Get up to $250 in free Bitcoin when you open an interest account with BlockFi and make a $100 deposit. That’s basically paying you to make money!