How to Earn Interest on Bitcoin: An Actionable Guide
.webp)
Ledn has over $9 billion in loan originations since 2018 and counting!
At a glance
Can You Earn Interest on Bitcoin?
Your Options for Earning Interest on Bitcoin
Why Can Bitcoin Earn More Interest Than Banks?
Chart: Bitcoin Interest Rates vs Traditional Banks
How to Earn Interest on Bitcoin with Ledn
The Risks of Earning Interest on Bitcoin
Earning interest on Bitcoin is one of the easiest ways to grow your holdings without selling. Unlike traditional savings accounts that offer low returns, interest on Bitcoin can come in at significantly higher rates. But not all options for earning interest are the same. Some carry higher risks, and others offer more security. Here’s how you can start earning interest on your Bitcoin, the safest ways to do it, and what to watch out for.
Can You Earn Interest on Bitcoin?
Yes. Platforms like Ledn allow you to earn interest on your Bitcoin by lending it to institutional borrowers. Other options include crypto savings accounts, staking, and DeFi yield farming. Each method offers different rates and risk levels.
Read more: How To Use Bitcoin in 2025
The Different Ways To Earn Interest on Bitcoin
Crypto Lending Platforms
How it Works: You deposit Bitcoin with a lending platform, which then lends it to institutional borrowers. These borrowers pay interest, and the platform shares a portion of it with you.
Crypto lending platforms, such as Ledn, allow you to deposit Bitcoin and earn interest. These platforms lend your Bitcoin to institutional borrowers, such as trading firms and market makers, who pay interest on their loans. The platform then shares a portion of that interest with you. Crypto lending is a straightforward way to generate passive income, but it carries counterparty risk. If the borrower defaults or the platform becomes insolvent, your funds could be lost.
Bitcoin Savings Accounts
How it Works: You deposit Bitcoin into an interest-bearing savings account. The platform lends it to vetted borrowers and pays you a portion of the earnings.
Bitcoin savings accounts, like Ledn’s BTC Growth Account, function like traditional savings accounts but offer higher interest rates. You deposit your Bitcoin, and the platform lends it to vetted borrowers, generating returns. Unlike traditional savings, many Bitcoin savings accounts are not insured, so you need to choose a platform with a strong security track record. These accounts allow you to maintain access to your funds while earning passive income, making them an attractive option for long-term Bitcoin holders.
Read more: How To Store Bitcoin - Everything You Need To Know
Crypto Exchanges with Interest Accounts
How it Works: You deposit Bitcoin into an exchange’s interest-bearing account, and the exchange lends it out or uses it for other yield-generating activities.
Some cryptocurrency exchanges offer interest-bearing accounts where you can deposit Bitcoin and earn passive income. These accounts operate similarly to lending platforms, but they carry additional risks. Since exchanges are often targets for hacks and regulatory scrutiny, your funds could be at risk if the exchange is compromised or faces legal issues. Additionally, interest rates on exchanges can fluctuate more than on dedicated lending platforms. It’s crucial to research an exchange’s security measures and withdrawal policies before using their interest-bearing accounts.
Staking Wrapped Bitcoin (WBTC)
How it Works: You stake WBTC in a proof-of-stake network, contributing to network security and earning rewards in return.
Bitcoin itself does not support staking since it operates on a proof-of-work (PoW) consensus mechanism. However, Wrapped Bitcoin (WBTC), an ERC-20 token that represents Bitcoin on the Ethereum blockchain, can be staked in proof-of-stake (PoS) networks. By staking WBTC, you help secure blockchain networks and earn rewards in return. While staking offers attractive returns, it requires trust in the smart contracts managing the staking pools, as any vulnerabilities could lead to the loss of funds.
DeFi Yield Farming
How it Works: You deposit Bitcoin into a liquidity pool on a DeFi platform. Your Bitcoin is used for lending or trading, and you earn rewards based on the platform’s yield structure.
Yield farming in decentralized finance (DeFi) allows you to earn rewards by providing liquidity to DeFi protocols. You can deposit Bitcoin into a liquidity pool, where it is used for trading or lending, and receive interest in return. Some DeFi platforms offer exceptionally high returns, but they also come with high risks. Smart contract vulnerabilities, platform exploits, and impermanent loss can all impact your earnings. Yield farming requires careful research, as poorly designed platforms can result in the loss of deposited funds.
CeFi Lending Services
How it Works: You deposit Bitcoin with a centralized lending platform, which offers structured lending programs with fixed or variable interest rates.
Centralized finance (CeFi) lending services work similarly to traditional banks, offering structured lending programs where you deposit Bitcoin and earn fixed or variable interest. Unlike DeFi platforms, CeFi lenders operate through a centralized entity, which can provide greater transparency and risk management. However, CeFi platforms are subject to regulatory oversight, which can impact their operations. The key advantage of CeFi lending is ease of use and lower technical barriers compared to DeFi alternatives.
Why Can Bitcoin Earn More Interest Than Banks?
Bitcoin earns more interest than traditional savings accounts because crypto lending operates in a fundamentally different environment. Institutional demand for Bitcoin is high, as trading firms, market makers, and other financial institutions borrow Bitcoin for arbitrage, derivatives trading, and market liquidity. This demand drives up the interest rates that lending platforms can offer depositors. Traditional banks, by contrast, have less need for customer deposits because they can access funding through central banks and other financial instruments at lower costs.
Crypto lending platforms also operate with fewer regulatory restrictions compared to traditional banks. Banking regulations limit how much interest can be paid on deposits, and most banks pass only a small portion of their earnings to customers. Crypto lending platforms, which function in a less restricted financial ecosystem, are able to pass on more of their returns to depositors.
Interest rates on Bitcoin are set by market demand rather than central bank policies. The crypto market operates 24/7, with lending rates fluctuating based on liquidity needs, risk factors, and competition among platforms. Traditional savings accounts, on the other hand, are influenced by macroeconomic factors, such as interest rate policies set by institutions like the Federal Reserve or the Bank of England.
Another major difference is that crypto lenders do not have reserve requirements. Banks are required to keep a portion of deposits in reserve, limiting how much they can lend. Crypto lending platforms are not subject to these constraints, meaning they can allocate a greater percentage of deposits to generate returns. While this can result in higher interest rates, it also means that there is little regulatory oversight to protect depositors in case of insolvency.
Higher interest rates in crypto lending are also a reflection of risk. Lending Bitcoin comes with counterparty risk, market risk, and liquidity risk. Borrowers may default, regulatory changes can impact lending platforms, and Bitcoin’s price volatility can affect returns. These risks necessitate higher interest rates to attract depositors. In contrast, traditional savings accounts offer lower rates because they are insured, regulated, and designed to minimize risk for account holders.
Bitcoin Interest Rates vs Traditional Banks
Here’s how Bitcoin interest rates compare to traditional savings accounts:
How to Earn Interest on Bitcoin with Ledn
Step 1: Open a Ledn Account
Go to Ledn’s website and sign up.
Complete the identity verification process.
Step 2: Deposit Bitcoin
Navigate to the “Growth” section in your Ledn dashboard.
Transfer Bitcoin from your wallet to your Ledn Growth Account.
Step 3: Start Earning Interest
Interest starts accruing as soon as your deposit is confirmed.
Ledn pays out interest monthly and compounds it automatically.
Step 4: Track Your Earnings
Check your balance and earned interest on the Ledn dashboard.
View the Open Book report for transparency on how your funds are managed.
Step 5: Withdraw or Reinvest
Withdraw your Bitcoin anytime, subject to Ledn’s policies.
Keep your BTC in the Growth Account to earn more over time.
The Risks of Earning Interest on Bitcoin
While earning interest on Bitcoin is a great way to grow your holdings, it comes with some risks. Reputable platforms will minimize these risks and keep your Bitcoin safe.
Counterparty Risk
If a platform goes bankrupt, your funds could be at risk. Celsius Network filed for bankruptcy in July 2022, leaving thousands of customers unable to withdraw their funds. Many users lost their Bitcoin holdings as the platform faced insolvency after risky lending practices and a market downturn.
Regulatory Risk
Crypto lending regulations can change and impact your ability to earn interest. In 2023, the U.S. Securities and Exchange Commission (SEC) took action against Kraken and Nexo for offering unregistered crypto lending products. Nexo had to shut down its interest-bearing accounts for U.S. customers.
Market Risk
Bitcoin’s price fluctuations may affect your overall returns. In November 2022, Bitcoin dropped from around $21,000 to below $16,000 following the collapse of FTX. Investors who had deposited BTC for interest saw their holdings significantly devalue, even if they earned interest.
Liquidity Risk
Some platforms have withdrawal restrictions. In November 2022, Genesis Global Capital, a major crypto lender, froze customer withdrawals, citing “unprecedented market turmoil” caused by the collapse of FTX. Many users were unable to access their funds.
Why Choose Ledn to Earn Interest on your Bitcoin?
If you’re looking to earn interest on Bitcoin with a platform that prioritizes security, compliance, and financial stability, Ledn is a strong, low-risk choice.
Unlike platforms that engage in unsecured lending, Ledn ensures loans are fully collateralized, reducing default risk. There is the option to avoid rehypothecation, meaning your Bitcoin is not used for leverage.
Read more: Rehypothecation in Lending: What Is It & How Does It Work?
Ledn operates with a strong compliance framework, structuring services to align with regulatory requirements. Unlike some competitors, it proactively adjusts its offerings to avoid sudden shutdowns due to legal challenges.
Market volatility is another key concern. Ledn mitigates this by enforcing strict loan-to-value (LTV) ratios and adjusting interest rates based on market conditions. This approach helps balance returns with sustainability.
Liquidity is also a priority. Ledn has never frozen withdrawals and undergoes regular proof-of-reserves audits to verify that customer funds are always available. This transparency reassures users that their Bitcoin remains accessible.
Is Earning Interest on Bitcoin Worth It?
Earning interest on Bitcoin can be a winning strategy for long-term holders who want passive income. However, the decision depends on your risk tolerance and financial goals. If you plan to hold Bitcoin for years, interest-bearing accounts can help you accumulate more BTC without trading. The key is diversification—don’t put all your Bitcoin into one platform, and regularly review security practices and platform policies.
Make your Bitcoin work for you. Sign up for a Ledn Growth Account. Or read more about How to Use Ledn to Grow Digital Wealth.
The experts opinions:
CTA Block 1
Ledn was created by people who believe in Bitcoin’s power to revolutionise finance and build wealth reliably.
CTA ButtonCTA Block 2
Ledn was created by people who believe in Bitcoin’s power to revolutionise finance and build wealth reliably.
CTA ButtonCTA Block 3
Ledn was created by people who believe in Bitcoin’s power to revolutionise finance and build wealth reliably.
CTA ButtonCTA Block 4
Ledn was created by people who believe in Bitcoin’s power to revolutionise finance and build wealth reliably.
CTA Button
