How a Bitcoin Line of Credit Works

Most people think borrowing against Bitcoin works like a personal loan. You apply, get a lump sum, and pay it back when it’s due. Done.

But there's a more flexible approach most Bitcoin holders don't know about. One that works a lot more like a HELOC than a traditional loan.

It's called a Bitcoin Line of Credit.

What Is a Bitcoin Line of Credit?

A Bitcoin Line of Credit (BLOC) is a borrowing arrangement where you use Bitcoin as collateral to access a revolving credit facility, rather than a one-time lump sum.

You have a credit limit tied to the value of your Bitcoin. Draw from it, pay it down, draw again. All without selling your Bitcoin or triggering a taxable event.

Think of it as a HELOC, but backed by Bitcoin instead of your home. Except the application takes a few minutes and there's no credit check.

How It Works

Deposit Bitcoin as collateral. Your Bitcoin is held in cold storage with BitGo, one of the most trusted institutional custodians in crypto. It never moves, gets lent out, or gets used for anything while it sits as collateral.

Access up to 50% of your Bitcoin's value. This is your Loan-to-Value ratio (LTV). If you have 1 BTC worth $100,000, you can borrow up to $50,000. You don't have to take the full amount.

Pay interest only. At Lantern, that's 8% annually, the lowest rate in the US. On a $10,000 draw, your monthly payment is around $66.67.

Pay down the balance at any time. No prepayment penalties. Every dollar you repay lowers your outstanding balance and therefore your interest expense. Your interest expense accrues daily based on your outstanding balance. By paying down your loan, you also lower your LTV.

Draw again when your LTV drops below 40%. This is the mechanic that makes it a line of credit. Once your LTV drops below 40%, whether from repayment or Bitcoin price appreciation, you're eligible to draw again up to 50% LTV.

See How You Can Use BLOC

You have 1 BTC at $100,000. You draw $40,000 to cover a business expense. Your LTV is now 40%.

Three months later, Bitcoin rises to $120,000. Your $40,000 loan now represents 33% LTV. You're eligible to draw an additional $20,000, bringing your total to $60,000 (50% of Bitcoin's new value).

Or you paid down $10,000 instead, and your LTV dropped, which allows you to draw up to 50% LTV again.

Either way, you accessed new capital without selling Bitcoin.

BLOC Provides You With The Flexibility During Volatile Markets

A fixed lump-sum loan is rigid. If Bitcoin drops, you're managing fixed debt with fewer options. If Bitcoin pumps and you spot an opportunity, you need to apply for a whole new loan to access that equity.

A Bitcoin line of credit gives you flexibility in both directions. When Bitcoin rises, your LTV naturally falls, and new credit opens up. When you want to reduce risk, pay down the balance, and your buffer increases.

You're managing a credit facility, not sitting on fixed debt.

How Lantern's Bitcoin LOC Is Structured

Here are some advantages of opening a line of credit at Lantern:

• No liquidation fees. We don't profit from liquidating your collateral. We're only incentivized to keep you in your loan.

• 72-hour margin call window. If your LTV approaches 65%, we reach out immediately. You get 72 hours to add collateral, pay down, or make a plan.

• Conservative LTV protects your position. At 50% max LTV, Bitcoin would need to fall over 46% before liquidation territory. A cushion most platforms don't offer.

• Same-day funding for USDC. Funds hit your bank account the same day, and we don’t require credit checks or income verification.

• BitGo custody. Your Bitcoin sits in institutional-grade cold storage.

• 8% interest rate on your loan. This is one of the lowest interest rates in the United States.

• Minimum loan starts at $1000.

A Bitcoin LOC works well if you hold Bitcoin long-term and don't want to sell, have variable or unpredictable liquidity needs, want to avoid taxable events, or need to move fast on opportunities.

Access Your BTC Line Of Credit Today

Run your numbers: https://lantern.finance/borrow Text us: (415) 365-0100

This article is for educational purposes only and does not constitute financial advice. Please consult with a financial advisor before making lending decisions.