A 65-year-old with an underfunded 401(k) could borrow against Bitcoin holdings to extract cash tax-free. Start with $100,000 in Bitcoin, borrow $150,000 against it, spend the money, then borrow more next year to repay the loan and pocket the difference. This works as long as Bitcoin's growth outpaces the interest rate.
If you were an old guy, let's say 65 or 70, and your 401k looks tenuous, how would you do it starting from nothing? Bitcoin is going up at 50% per year, but it doesn't produce a yield. I would have to sell it and I would pay tax, and then I no longer have the asset compounding, which is terrible. So what we want to do, we can harvest some of the appreciation with debt leverage. So you would borrow against it? I would borrow against it and I would roll the debt every year. I have $100,000 today. In 5 years, it's a million. I would borrow $150,000 against that tax-free, and I would spend that $150,000. Next year, I would borrow $300,000. I'd pay off the $150,000. I'd keep the $150,000 tax-free. The next year, borrow $450,000. And as long as Bitcoin's compound annual growth is higher than the interest on the debt, I can do that forever. Freaking brilliant. I learned it from you, Robert. I learned it from you.
