• Bitcoin IRA, a large digital asset IRA platform, said more than 75% of their clients are over the age of 45 and 31% of near-retirees between the ages of 55 to 64 are invested in cryptocurrencies.
  • Kingdom Trust’s platform Choice, an individual retirement accounts provider, and bitcoin mining firm Compass Mining announced today that they’ve joined forces to offer IRAs in a tax advantageous account for miners that produce crypto.

The global cryptocurrency market is growing at a fast pace and while people generally think crypto retail investors are a younger demographic, there’s a new group emerging as prominent players: people looking to save for retirement via IRAs and benefit from tax advantages. 

According to stats from Bitcoin IRA, a large digital asset IRA platform, more than 75% of their clients are over the age of 45 and 31% of near-retirees between the ages of 55 to 64 are invested in cryptocurrencies.

In order to take advantage of the opportunity, Kingdom Trust’s platform Choice, an individual retirement accounts provider, and bitcoin mining firm Compass Mining announced that they’ve joined forces to offer IRAs in a tax advantageous account for miners that produce crypto. 

In general, the US Internal Revenue Service views bitcoins as taxable property, so they’re taxable in the same fashion as stocks or bonds. But, it’s possible for those investing in bitcoin to avoid hefty capital gains taxes by including digital assets in certain retirement accounts.

This means Choice users can buy bitcoin mining machines through an IRA and any coins created would be able to have tax-free appreciation in their retirement account like other assets such as real estate. 

“We want to make it simple, approachable, relatable and easy,” Whit Gibbs, founder and CEO of Compass Mining said during a Twitter Space “Bitcoin Circular Economy” event on Thursday.  

“You get to make bitcoin for yourself and we’re in a golden era of bitcoin where it’s incredibly profitable as well. It’s awesome to be able to onboard people to mining and get the tax advantage they can stack until they’re ready,” Gibbs said. 

The platform launched in 2020 and has more than 125,000 retirement accounts with 20,000 alternative assets and $18 billion assets under custody. 

As the retirement space grows, more companies in the crypto space are working together and building awareness in a tax-advantaged way, Meltem Demirors, chief strategy officer at CoinShares, said during the Twitter Space event. 

Crossing generations

Although Bitcoin IRA mainly has an older user base, its service is available to people 18 years old and older, as long as they have earned income to contribute to the IRA. 

While the younger generation is known for diving into crypto, the older generation is catching on as well, Chris Kline, chief operating officer and co-founder of Bitcoin IRA, said in an interview with Blockworks. The older demographic is investing in cryptocurrency through self-directed retirement accounts due to a desire to catch up on retirement funds, inflation fears and tax benefits, he said. 

Bitcoin IRA started in 2016 and went through waves of interest as price volatility loomed, Kline said. But he believes in the value of bitcoin long term and sees a huge shift in clients now wanting exposure to the cryptocurrency world.

In 2017, Bitcoin IRA had 700 account holders and as to date it is up about 14,186% to over 100,000 users with about $1.5 billion in total transactions, Kline said. 

“What’s driving the investments is that [users] are seeing accelerated growth in crypto at seriously large levels,” Kline said. 

About 13% of Americans invested in cryptocurrency in the past 12 months, according to a recent survey by NORC at the University of Chicago. While 62% of the respondents said they aren’t investing in cryptocurrency because they don’t understand it enough. 

The cryptocurrency markets have a lot of movement and volatility, which is something older generations aren’t used to, Kline said. But in order to reassure customers, he said Bitcoin IRA is hyper-focused on expanding its functions and accessibility, while sharing content and education beyond their products to educate users on the crypto space, too. 

Although Kline said he isn’t a financial advisor or tax expert, he said there are more benefits to an IRA because you won’t have to pay capital gains taxes, even though funds are subject to normal tax rates when accessed. 

“To help Americans retire we have to offer more options, what started as a manual concept of a bitcoin IRA has evolved into 24/7 self-trading and expanded further with the first earned program so users could make interest on their assets,” he said. So, people can use bitcoin and get paid in bitcoin as rewards. 

“Bitcoin is here to stay, it’s a big thing and we’re seeing clients wanting exposure to it,” Kline said. “Our mission is to help Americans retire, they’re behind on retirement planning and using alternatives [like bitcoin] is where they’re going for that accelerated growth,” he said.

  • Jacquelyn Melinek is a Houston-based reporter covering digital asset funds and markets. She previously reported on energy markets for S&P Global Platts and Bloomberg News and is published in over 65 news outlets. She graduated from the University of North Carolina at Chapel Hill with a degree in Media and Journalism.