Bitcoin News Today: Bitcoin Investors Reduce Tax Liabilities, Earn BTC via Arch's TaxShield

Bitcoin holders are increasingly seeking ways to optimize their assets, and Arch Lending, a New York-based crypto-backed loan provider, has introduced a novel solution to address both tax efficiency and compounding opportunities. The company's new product, TaxShield, launched in collaboration with Bitcoin educator Mark Moss and mining infrastructure firm Blockware, allows high-income investors to convert tax liabilities into income-generating Bitcoin mining assets. The offering, which leverages U.S. tax code provisions like §168(k) bonus depreciation, targets a growing demand among institutional and individual investors to maximize the utility of their Bitcoin holdings .

Under the TaxShield framework, eligible investors pledge Bitcoin as collateral for overcollateralized loans from Arch. The proceeds from these loans are then used to purchase hosted mining hardware through Blockware, which manages the infrastructure, including deployment, maintenance, and power costs. Investors can claim 100% bonus depreciation on the cost of the mining equipment in the first year, effectively reducing their taxable income. Simultaneously, they retain exposure to Bitcoin's price appreciation while earning mined BTC monthly .

For example, an investor with $1 million in taxable income could reduce their federal tax liability by up to approximately $400,000, according to Arch. This strategy not only mitigates tax burdens but also generates ongoing Bitcoin rewards, which can be used to service the loan or reinvested. "TaxShield turns a line item most investors dread into a growth engine," said Dhruv Patel, CEO of Arch. Co-founder Himanshu Sahay added that the product simplifies complex tax strategies by integrating Arch's lending infrastructure, Moss's educational reach, and Blockware's mining expertise .

While TaxShield focuses on tax optimization, Arch's broader mission is to position Bitcoin as the backbone of a new financial ecosystem. The company recently announced a platform designed to enable real yield and decentralized finance (DeFi) directly on Bitcoin's base layer. This initiative, developed over 18 months, introduces a virtual machine compatible with Bitcoin's UTXO model, allowing programmable smart contracts without relying on bridges or wrapped tokens .

Ted Pillows, a crypto researcher, noted that institutions are increasingly favoring Bitcoin for tokenized settlements due to its liquidity and neutrality. Arch's approach aims to expand Bitcoin's role beyond a store of value, enabling it to facilitate lending, real-world asset tokenization, and on-chain finance. Early partners include HoneyB, which focuses on real-world asset integration, and Autara, a Bitcoin-based money market backed by firms like Circle and Liquid Funds .

Arch's initiatives align with a broader industry shift toward tokenization, where real-world assets such as stocks and real estate are being moved onto blockchain networks. While Ethereum and Solana have dominated this space, Arch is positioning Bitcoin as a viable alternative by leveraging its existing liquidity and institutional trust. The company has raised $20 million in funding, with ecosystem projects securing an additional $40 million, and has onboarded over 30 validators to support institutional entry .

As Bitcoin's role evolves, products like TaxShield and Arch's tokenization platform highlight the growing demand for innovative financial tools tailored to digital assets. By bridging traditional finance strategies with blockchain technology, Arch is helping institutions and high-net-worth individuals navigate the complexities of the crypto economy while unlocking new avenues for yield and growth.

---