Borrowing Money Platinum - running a profit with BTC as collateral?
Someone please check my math. Numbers are rounded so they make some sense.
I am just thinking of loaning some using BTC as collateral. Due to possible timing I thought about running the loan now, even though I do not really need it hopefully before tomorrow - you know, easier to have it. Obviously this means I have to pay interest immediately, so... I ran this though my calculator. How much does the loan cost me, really.
Not USA and taking interest in Nexo tokens. I KNOW that they fluctuate, just going for an optimized simplified model here. Note, again, I ran the numbers up because at this point they actually are easy to work with.
* A 3M loan (3 million) has 60% LTV so I have to moe 5M BTC into the credit wallet.
* I get charged 5.9% per year, which runs down to 0.177 M per year 14750 per month, roughly 492 per day.
* I earn interest of 10%+2% on the loan, 0.36M per year, which is significantly more than the interest. Clear. 1000 per day.
Obviously I loose the income from the BTC:
I loose the income from the BTC:
* That is 5%+2% due to Nexo token. 0.35M per year, 29166 per month, 972 per day.
* The loan itself is self sustaining. I get more in value than I pay in interest.
* I loose around a smidgeon below 500 per day due to the lost opportunity cost (i.e. the now collateral income).
The moment i actually buy some crypto assets with the money and deposit them, my income from that side drops to 7% (again, platinum and Nexo token payout), For a total purchase that means...
* I now pay 492 per day for the loan.
* Income is now 210000, 17500 per month, around 583 per day.
So, I am STILL getting more income than the loan costs me (91 per day), though I still carry the 972 per day opportunity cost. OTOH I have significantly more crypto which may make me a profit when going up - but that is not part of this calculation. Obviously if crypto goes down, I loose money AND loose income from the loan side, so I may end up in a cashflow negative position...