A Bitcoin-backed loan is a crypto loan where you use your Bitcoin as security to borrow Australian dollars. You keep ownership of your Bitcoin, receive AUD into your bank account, and reclaim your BTC once the loan is repaid. Bitcoin loan borrowers maintain bitcoin market exposure. Here is how it works.
Key Takeaways
- A Bitcoin-backed loan uses your BTC as security to borrow an AUD loan
- Borrowers maintain their exposure to the crypto market when using Bitcoin as security for a loan
- Block Earner offers fixed rates on Bitcoin-backed loans for terms up to five years
- Block Earner is the first crypto company in Australia to hold an ASIC Australian Credit Licence (ACL)
- Your Bitcoin stays in your name throughout the loan. You reclaim it at full market value once repaid
- A 30-day liquidation grace window gives you time to act if Bitcoin's price falls and your LVR rises
Bitcoin-Backed Loan Details
A Bitcoin-backed loan is a secured loan where you use your Bitcoin as security to borrow AUD, instead of selling it access AUD. The lender holds your BTC as security for the duration of the loan. You receive AUD in return, which you can use for home renovations, holidays, wedding rings, debt consolidation and more. Once you repay the loan in full, your Bitcoin is released back to your wallet.
Bitcoin-backed loans are offered by centralised lending platforms like Block Earner, which are regulated under an Australian Credit Licence, and registered with AUSTRAC. They are distinct from offshore unregulated crypto lending protocols, which operate without regulatory oversight, borrowe protections or AUD currency loans.
How Do Bitcoin Loans Work?
Bitcoin is required as security for a Bitcoin-Backed Loan. The amount of AUD you may be eligible to borrow depends on the value of your Bitcoin security and your selected LVR, up to a maximum LVR of 50%. Eligible customers can borrow between $50 and $5 million AUD through Block Earner Bitcoin loans.
Because Bitcoin prices fluctuate, a Bitcoin-backed loan introduces LVR risk. If Bitcoin's price falls, your LVR rises and the lender may require you to top up your BTC security or make a repayment to restore the loan to a healthy level.
How Bitcoin Loans are different From Selling Your Bitcoin
Selling Bitcoin crystallises your position, and removes you from any future price movements. With a Bitcoin-backed loan, you retain ownership of your BTC throughout the loan term, remain fully exposed to price upside and downside.
How to Borrow AUD Using a Bitcoin-Backed Loan?
A Bitcoin-Backed Loan allows eligible customers to borrow AUD using Bitcoin as security, without selling it. Applications are subject to approval, eligibility criteria, loan terms, fees and charges. Bitcoin-backed loans follow a straightforward four-step process with Block Earner:
Step 1: Apply and provide Bitcoin as security
Create or log in to your Block Earner account and submit a loan application. Once your ID is approved, you can apply for a bitcoin loan. You could get 30 day pre-approval before transfering the required amount of Bitcoin to your Block Earner account to be held as security for the loan.
The amount you may be eligible to borrow depends on the value of your Bitcoin security, your selected loan product and the applicable loan-to-value ratio (LVR). Block Earner currently offers Bitcoin Line of Credit loans with an LVR of up to 40% and Fixed Term loans with an LVR of up to 50%.
For example, Bitcoin security valued at $100,000 could support a loan of up to $40,000 at a 40% LVR or up to $50,000 at a 50% LVR.
You can use the Block Earner bitcoin loan calculator to estimate potential loan amounts. Calculator results are indicative only and do not constitute loan approval or an offer of credit.
Step 2: Receive your loan in AUD
Once your application has been approved, the required Bitcoin security has been provided and all applicable conditions have been satisfied, the approved loan amount is transferred in AUD to your nominated Australian bank account.
Block Earner’s application process can be completed via desktop or mobile app, and approved customers may receive funds within 24 hours. The permitted use of the loan is subject to the applicable loan agreement, eligibility requirements and any product-specific conditions.
Step 3: Monitor and manage your LVR
Your LVR may rise or fall as the market value of your Bitcoin security changes. You can monitor your LVR through the Block Earner desktop or mobile app.
Block Earner provides LVR updates through channels including in-app notifications, email and SMS. If your LVR increases, you may be able to reduce it by adding more eligible Bitcoin security or making an AUD repayment.
If your bitcoin loan LVR enters an unhealthy level, a default notice will provide 30 days to restore your LVR to the required level. The specific thresholds, notice periods and available actions are governed by your loan agreement. For more information, see our guide to how LVR works with bitcoin-backed loans.
Step 4: Repay your loan and have your Bitcoin released
You can repay your loan in accordance with your repayment schedule or repay it early through the Block Earner platform. Block Earner currently does not charge an early repayment fees.
Once the loan balance and any other amounts owing have been paid in full, the remaining Bitcoin held as security will be released to your Block Earner account, subject to the terms of your loan agreement.
Because you retain exposure to Bitcoin while the loan remains open, the value of your Bitcoin may rise or fall during the loan term.
What Can You Use a Bitcoin-Backed Loan For?
There are no restrictions on how you use the AUD proceeds from a Bitcoin-backed loan. The most common use cases among Australian borrowers are outlined below.
Personal Liquidity
Renovation costs, medical expenses, debt consolidation, education, or simply needing AUD while holding a long-term Bitcoin position are all valid reasons to borrow rather than sell. A Bitcoin-backed loan gives you fast liquidity without disrupting your investment strategy.
Property Purchase
Block Earner's Bitcoin-backed home loans are specifically designed for Australians who want to use their Bitcoin equity toward a property purchase. Rather than selling BTC to fund a deposit or settlement, you borrow against your holdings and keep your position intact, combining Bitcoin wealth with real-world assets.
Bitcoin Loans for Businesses
Bitcoin-backed loans give business owners access to working capital without selling down their BTC holdings. Whether you are funding an acquisition, covering a cash flow gap, or investing in growth, borrowing against Bitcoin avoids triggering a CGT event while giving you the AUD you need to act.
What Are the Risks of a Bitcoin-Backed Loan?
Bitcoin-backed loans involve risks that borrowers should understand before applying.
Bitcoin price volatility
Bitcoin prices can change quickly. If the value of your Bitcoin security falls, your LVR will rise and your loan may move into a Repayment Notice or Default Notice stage. You may be able to reduce your LVR by adding more eligible Bitcoin security or making an AUD repayment. A lower starting LVR provides more buffer against price falls but does not remove the risk.
Sale of your Bitcoin security
If your LVR reaches the applicable Default Notice threshold, you may be required to restore it within the 30-day period set out in your loan agreement.
If you do not take the required action, Block Earner may sell some of your Bitcoin security to reduce the LVR. This could occur at an unfavourable price.
Custody and platform risk
Your Bitcoin is held under the custody arrangements used for the loan. This involves operational, cybersecurity and custody-provider risks. Security controls can reduce these risks but cannot eliminate them.
Why Choose Block Earner for Your Bitcoin-Backed Loan?
Block Earner is the first crypto company in Australia to hold an Australian Credit Licence (ACL) issued by ASIC, and is registered as a Digital Currency Exchange with AUSTRAC. We are the only ASIC-licensed Australian lender offering fixed-term Bitcoin-backed loans at a fixed rate, with no early repayment penalties.
Here is what sets Block Earner apart:
- Fixed rates for up to five years
- Accepts BTC, ETH, and XRP as security
- 30-day default notice with real-time LVR notifications
- Fully digital application
- Redraw against increased security value
- Award-winning: 2026 Fintech Australia Consumer Lender of the Year
Explore Bitcoin-backed loans, use the bitcoin loan calculator to see your borrowing power, or get in touch with the team to discuss your situation.
Frequently Asked Bitcoin-Backed Loan Questions
Is a Bitcoin-backed loan different from an Ethereum or altcoin-backed loan?
Yes. A Bitcoin-backed loan uses BTC exclusively as collateral. Bitcoin's liquidity, market depth, and global recognition make it the most widely accepted collateral asset among crypto lenders. Block Earner also accepts ETH and XRP as collateral, which operate under the same loan structure but use different assets as security. The LVR limits and rate may vary depending on the asset used.
Can I use a Bitcoin-backed loan to buy property in Australia?
Yes. Block Earner's Bitcoin-backed home loans are specifically designed for Australians who want to use their Bitcoin equity toward a property purchase without selling their holdings. There are no restrictions on how loan proceeds are used for standard Bitcoin-backed loans either.
What happens to my Bitcoin if the BTC price rises during my loan term?
If the price of Bitcoin rises, your LVR will generally fall, giving you more buffer against future price movements. Depending on your loan terms and eligibility, you may also be able to redraw additional AUD up to the applicable maximum LVR. Additional funds are not provided automatically.
What happens to my Bitcoin if the BTC price falls during my loan term?
If the price of Bitcoin falls, your LVR will rise. This may result in a Repayment Notice or Default Notice, requiring you to add more eligible Bitcoin security or make an AUD repayment. If you do not take the required action within the applicable notice period, some of your Bitcoin security may be sold in accordance with your loan agreement.
Is a Bitcoin-backed loan available to Australian SMSF holders?
SMSF lending involving Bitcoin is a complex area governed by strict ATO and ASIC rules. Block Earner currently does no provide Bitcoin loans using Bitcoin held in SMSFs.
