Overview
TaxShield is a turnkey strategy co-designed with Mark Moss and powered by Arch (lending) + Blockware (hosted mining). It converts taxes owed into income-producing Bitcoin mining assets, all without selling your BTC.
Core idea:
Pledge BTC → borrow against it with Arch → purchase hosted miners via Blockware → claim 100% bonus depreciation under IRC §168(k) on the qualifying capex → keep BTC exposure while earning monthly mined BTC that can help service the loan.
Illustrative outcome:
A client with $1,000,000 of taxable income could offset that income with qualifying mining equipment purchases, potentially saving ~$400,000 in federal taxes (assumes 40% combined rates; actual outcomes vary), while continuing to own BTC exposure and receiving mined Bitcoin payouts monthly.
You retain full Bitcoin ownership at all times and your assets are never rehypothecated.
How It Works
Pledge Bitcoin (Arch)
Use BTC as collateral for an over-collateralized USD/USDC loan.
Maintain BTC price exposure the entire time.
Buy Hosted Miners (Blockware)
Blockware sources, titles, deploys, and maintains miners in your name across U.S. facilities.
Hosting, power, uptime, and monitoring handled for you.
You receive direct, transparent reporting.
Claim 100% Bonus Depreciation (IRC §168(k))
Deduct the full qualifying equipment cost against taxable income in Year 1 (subject to eligibility, placed-in-service timing, and current tax law).
Work with your tax professional to validate eligibility and filing.
Receive Mined BTC Monthly
Rewards paid directly to your wallet.
You can use proceeds to service the loan while preserving your original BTC exposure.
Amounts Flow (Exact Cash Mechanics)
To keep the experience frictionless, we align three numbers:
Your target depreciation amount → e.g., $1,000,000 (your goal for §168(k) bonus depreciation).
Blockware equipment purchase total → e.g., $999,950.50 (we round to real-world SKU/pricing).
Loan amount → slightly higher than the equipment cost to account for origination fees and any required upfront costs, so net disbursed equals the Blockware invoice.
Example:
Goal depreciation target: $1,000,000
Blockware equipment total: $999,950.50
Loan amount shown in the calculator: $1,015,178.17 (example; includes origination fees)
Net disbursement to you = $999,950.50 which you then send in full to Blockware to purchase and deploy the equipment.
Result: your tax objective, invoice, and funding all line up without manual juggling.
Example Scenario
Assumptions (hypothetical):
Taxable income: $1,000,000
Combined effective tax rate: 40%
BTC collateral posted with Arch
Equipment cost (qualifying): ≈ $1,000,000
100% bonus depreciation under §168(k) (subject to law in effect, placed-in-service by year-end, business use, etc.)
Arch loan: over-collateralized; flexible LTV; no prepayment penalties
Monthly mined BTC payouts to client wallet
Potential results:
Deduction: ~$1,000,000 (bonus depreciation)
Potential tax savings: ~$400,000
BTC exposure maintained + monthly mined BTC begins accruing post-deployment
Mined BTC can be used to help service interest while preserving original BTC stack
Actual tax outcomes depend on eligibility, entity type, passive/active rules, state regimes, and timing. Always consult your tax advisor.
Key Features & Benefits
Turn taxes into capex — Convert a liability into income-producing mining assets.
Keep BTC exposure — No selling; loan is secured against BTC.
Direct monthly payouts — Mined BTC paid to your wallet.
Compliance-first — Structured for §168(k) bonus depreciation eligibility (subject to law and facts).
Fully hosted — Sourcing, deployment, power, uptime, monitoring managed by Blockware.
Institutional-grade custody — BTC collateral held with a qualified custodian; bankruptcy-remote, not rehypothecated.
Flexible financing — Terms up to two years; flexible LTV; no early repayment fees.
Transparent reporting — Operational data + accounting exports to simplify filings.
Eligibility & Requirements
Who qualifies:
Individuals, businesses, and trusts with taxable income and sufficient BTC to post as collateral.
Consult your advisor regarding trade or business use, passive vs. active rules, at-risk rules, basis, and entity specifics.
Jurisdictions:
All eligible Arch loan customers (U.S. states and international entities supported where permitted). If you don’t see your state/country supported, contact [email protected].
Collateral custody:
BTC held at a qualified custodian (e.g., Anchorage Digital), insured, bankruptcy-remote, never rehypothecated.
Placed-in-service timing:
To utilize bonus depreciation for a given tax year, equipment generally must be acquired and placed in service by year-end. Lead times and energization dates matter so start early.
Getting Started
Apply at archlending.com (or log in to your Arch dashboard).
Choose TaxShield in the product menu.
Set your depreciation target (e.g., $1,000,000).
Review the pre-populated loan amount (it will include fees so net funds match the Blockware invoice).
KYC/KYB, sign docs, and deposit BTC collateral.
Receive the net disbursement that equals the Blockware invoice and fund your equipment purchase.
Blockware deploys; you begin receiving monthly mined BTC payouts.
Coordinate with your tax professional to file for bonus depreciation under §168(k).
FAQs
What exactly is TaxShield?
A turnkey structure to offset taxable income using qualifying mining equipment purchases (bonus depreciation under §168(k)), financed via an over-collateralized BTC-backed loan, with hosted operations run by Blockware. You keep BTC exposure and receive monthly mined BTC.
How does §168(k) 100% bonus depreciation work here?
If you and your entity qualify, you may deduct 100% of the eligible equipment cost in Year 1 once the assets are acquired and placed in service within the tax year, subject to prevailing law, business use, and facts. Your tax professional must confirm eligibility and file properly.
Can individuals use this or is it “business-only”?
Both may participate, often through pass-through entities (LLC, S-corp, etc.) depending on advisor guidance. Business purpose, basis, passive/active rules, and at-risk limitations can affect outcomes.
What are the timelines I should care about?
Acquisition + placed-in-service before Dec 31 for same-year bonus depreciation (subject to law).
Lead times for sourcing, racking, and energization vary. Start early to de-risk timelines.
What LTV and terms should I expect?
Arch offers flexible LTV and terms up to two years, with no early repayment fees. Exact terms depend on loan size, profile, and market conditions.
Interest rate and fees?
Standard Arch loan pricing applies (interest + one-time origination). The loan amount is set so the net disbursement equals the Blockware invoice, avoiding out-of-pocket gaps. Apply for a quote.
Who owns the miners?
You do. Blockware titles the machines in your name, hosts them across U.S. facilities, and manages deployment, power, uptime, and monitoring.
How are mining rewards paid?
Directly to your wallet each month. You can route a portion to service interest, preserving principal BTC exposure.
What reports do I get?
Operations dashboards + accounting exports compatible with bookkeeping and tax workflows.
What are the main risks?
BTC price risk — affects loan-to-value (LTV) and margin buffer.
Mining economics — network difficulty, hashprice, and power costs drive payouts.
Operational risk — uptime, curtailments, maintenance.
Regulatory/tax risk — §168(k) rules or interpretations can change.
Timing risk — missed placed-in-service deadlines can impact deductions.
What happens if BTC falls and my LTV rises?
Arch monitors LTV. If LTV approaches thresholds, you can add collateral or partially repay. Margin call at 70% LTV (24-hour cure window, extendable on request). At 80% LTV, Arch will initiate a partial liquidation of your collateral to bring your LTV back to the cure threshold.
Can I prepay or exit early?
Yes. No prepayment penalties. You can retire the loan at any time.
Is there a credit check?
No.
How is my BTC collateral stored?
With a qualified U.S. custodian (e.g., Anchorage Digital). Assets are segregated, insured, and bankruptcy-remote; never rehypothecated.
Can mined BTC alone cover interest?
It depends on hashprice, difficulty, power rates, and fleet size. Many clients choose to apply a portion of mined BTC toward interest; others pay interest from fiat/stablecoin liquidity. Book a call with us and we’ll model options with you.
What if equipment isn’t energized by year-end?
Bonus depreciation generally requires placed-in-service in the tax year. If energization slips, deductions may shift. Start early; we’ll coordinate realistic timelines with Blockware.
Is there recapture if I dispose of the equipment?
Potential depreciation recapture can apply on disposition or certain changes in use. Discuss with your CPA to plan exits intelligently.
Does state tax treatment match federal?
Not always. Some states conform, others don’t. Your CPA will map federal vs. state impacts.
Do you provide tax or legal advice?
No. We provide structure, custody, financing, and operations. Your advisor provides tax/legal guidance.
What assets can I use as collateral for the loan?
We currently support BTC, SOL, and ETH as collateral. If you’re deciding between assets, we’ll quote asset-specific pricing, LTV, and loan durations side-by-side so you can pick the structure that fits your goals.
Contact & Support
Questions or ready to scope a plan?
Email: [email protected]
Toll-free: +1 855-272-4670
Or apply via your Arch dashboard at archlending.com
Important Disclosures
The example provided above is a general illustration of tax principles. This is not tax, legal, or accounting advice.
Tax outcomes depend on your facts, entity, timing, and current law. Consult your professional advisor.
Mining payouts, uptime, and economics are variable. BTC price, network difficulty, and power markets can impact results.
Loans are secured by BTC collateral; margin calls and partial liquidations can occur if LTV thresholds are breached.