In July, leading cryptocurrency lender BlockFi officially launched its credit card that allows customers to earn cryptocurrency rewards based on their spending. Today, the company said the number of BlockFi cardholders has grown to over 50,000 in the past three months.
Unlike cryptocurrency debit cards offered by companies like BitPay and Coinbase – which allow customers to spend their crypto – the BlockFi credit card tricks users into spending US dollars to earn crypto.
BlockFi first announced its partnership with Visa to issue a bitcoin rewards credit card in December 2020. Instead of the cash back or frequent traveler rewards typically offered by credit cards, BlockFi’s card pays out to holders 1.5% BTC (BTC-USD) on all purchases.
According to the most recent financial statements from American Express, Mastercard and Visa, the average user of US credit cards from these three major issuers spends about $ 20,000 per year. For comparison, for its three months of data, BlockFi cardholders are on track to spend an average of $ 30,000 per year, which is 50% more than major issuers. Based on the same spending projections from the company, BlockFi cardholders are expected to spend more than $ 2 billion annually.
The BlockFi report also states that Costco, Amazon and Home Depot are the merchants where cardholders spend the most, but, notably, in the first month, BlockFi issued the Compass Mining card, the user-friendly bitcoin mining company, was in the top 10 list. depending on the volume spent.
“Our typical cardholder is a younger, savvy investor who has successfully increased their wealth,” BlockFi CEO Zack Prince told Yahoo Finance. “They generally believe in the power of bitcoin and see access to the BlockFi Rewards card as a valuable way to earn passive income and strengthen their financial health.”
Since announcing its credit card late last year and launching this summer, several other companies have stepped up the competition by issuing their own crypto-back rewards card variant: Venmo, SoFi, Brex (a partnership between the cryptocurrency exchange Gemini and Mastercard), a partnership between the fintech company Upgrade and NYDIG, and the upcoming Unfimoney credit card with Visa.
Each crypto-back credit card puts a different spin on the rewards. Gemini offers levels of 3% on meals, 2% on groceries, and 1% on all other purchases, and pays out rewards in BTC as well as 30 other cryptocurrencies. The upgrade offers 1.5% BTC back, but customers won’t receive any rewards until they pay for their existing credit card purchases.
BlockFi launched its bitcoin credit card with Visa on July 6, when the price of bitcoin was around $ 34,000. Since then, it has run an advertising campaign with online and physical billboards as well as a series of advertisements (1, 2, 3).
The company gave its cardholders 3.5% bitcoin rewards for their first 90 days as a sign-up bonus. Thanks to the increase in bitcoin since then, cardholders have effectively earned over 4% of their BTC spending with a signup bonus, or 1.8% without the signup bonus.
In the past, according to a report by consumer spending data provider Cardify, syncing crypto investments with an increase in the price of bitcoin has gone badly for retail investors. It showed that retail investor crypto investment deposits were lower than the bitcoin price hike in May before soaring just as the price slumped at the end of the month. Earning bitcoin or other crypto rewards on spending could provide the same investors with a relatively safer access ramp into the crypto markets.
David Hollerith covers cryptocurrency for Yahoo Finance. Follow it @dshollers.
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