Your mortgage and your spare cash
Two households, the same house and the same loan, spending the same cash every month. One puts the extra on the mortgage and, once the loan is gone, its whole freed payment into bitcoin. The other buys bitcoin with the extra from the start and pays the loan on schedule. The house is worth the same either way, so what differs at the end is the loan still owed and the bitcoin held.
Tax, costs and how the dollars are shown
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Each line is a household’s bitcoin less the loan it still owes, valued each year. If sold, after tax sells the bitcoin that year, less its trading cost and the tax on its gain; Held is before any sale. The heaviest, light line is the difference, holding minus paying down: above zero, holding is ahead. The house is left out because it is the same in both.
The hurdle against bitcoin’s record
The scenarios above are paths a model draws. The record is what bitcoin did. Across every stretch between two month-end closes since January 2011, how often did bitcoin’s average yearly growth clear the hurdle?
Hypothetical history, not a forecast and not a performance record. The stretches overlap, so they are not independent tries; they all come from one asset’s first fifteen years, which include its adoption from almost nothing; and a long-period record that has never failed is a short record, not a guarantee. Month-end closes from the site’s own series, 2011 to the latest month. Shorter stretches failed often, and the worst year in the record fell about 74%.
The risks, on both sides
Paying it down
- It doesn’t lower the payment you owe. Extra principal shortens the loan, but the monthly bill stays the same until the loan is gone, unless the lender recasts it. In a month when cash is short, prepaid money doesn’t help.
- The money is locked in the house. Getting it back means a home-equity loan, at about 7.3% today (Bankrate’s average, September 2026), or selling.
- Inflation works for the borrower. A fixed-rate loan shrinks in real terms every year. Paying it off early gives that up; the today’s dollars view shows the effect.
- It is the certain return. Every dollar of principal earns exactly the mortgage rate, with no drawdowns and, for most owners, no tax. That is the case for it.
Holding bitcoin
- It can fall a long way. Between month-end closes bitcoin has fallen 73% or more four times: 83% in 2011, 81% in 2013–15, 76% in 2017–19 and 73% in 2021–22. The lows within those months were deeper. The Floor scenario shows a sustained low path.
- A forced sale at the bottom. If you need cash during a fall, you sell at a loss. Holding works only if you can wait.
- Behaviour. Holding through a deep fall is harder than a model makes it look.
- Tax. Gains are taxed when sold; the interest saved by prepaying is, for most owners, a tax-free return. The hurdle already includes this.
Before either. As general education, not advice: the usual order is an emergency fund first, then any high-interest debt and any employer retirement match, and only then this choice.
How the page computes
- Month by month. Both households pay the same: the loan’s scheduled payment plus the extra. One sends all of it to the loan until the loan is gone, then all of it to bitcoin; the other sends the scheduled payment to the loan and the extra to bitcoin, and the whole payment to bitcoin once its loan ends. A lump sum goes to the loan or to bitcoin on day one.
- Bitcoin’s price follows the chosen scenario from today’s price, the same paths as Bitcoin vs. Real Estate and Bitcoin vs. Rental Property. Each purchase pays the trading cost, and so does a sale.
- The hurdle is found by search: the steady yearly growth at which the two households end level, after the tax on a sale at the end (and, beside it, before tax).
- Tax is on the gain over what was paid, at your federal long-term rate, your state’s rate and the 3.8% net investment income tax where the bracket brings it in. With the deduction on, the interest’s tax saving is invested in bitcoin by both households.
- Today’s dollars divide each year’s values by inflation compounded to that year, at the site’s inflation setting (the same one every calculator uses). Sums over the years, the interest paid and what the bitcoin cost, stay in the dollars of each year and say so.
- Not modelled: a recast or refinance, private mortgage insurance, escrow for property tax and insurance (the same in both households), a home-equity loan, and lending the bitcoin out. The house’s value is the same in both households and is left out.
- Defaults come from the Federal Housing Finance Agency’s National Mortgage Database, second quarter of 2026 (released 30 September 2026): the average outstanding balance, the average rate and the average age of a loan.