A new website called Ordinals Scrapyard is allowing users to see exactly how much money they’ve lost buying inscriptions — and harvest the losses for tax reporting purposes.
The site is an embarrassing bookend to a series of stories about the theory that Ordinals could bring NFT trading onto Bitcoin’s blockchain despite its popularity on other chains like Ethereum and Solana.
Despite being heralded in early 2023 by Bitcoin developer Casey Rodarmor as a Bitcoin-native protocol for minting, buying, and selling collectibles, the floor price of most inscriptions has now fallen to $0.001.
Indeed, prior to the website’s launch, most inscriptions had no bid whatsoever and the vast majority of purchasers minted or purchased their NFTs once and now could not resell them.
ORD, a centrally maintained and off-chain record-keeping system, attempted to chronologically number each sub-unit of every bitcoin (BTC) in existence.
By tracking these satoshis or “sats,” each worth 1/100 millionth of one BTC, Ordinals traders could inscribe and pass around sats with numismatic value due to the extra data they added.
At their speculative peak, certain inscriptions traded for over $1 million. Most are now worth only the sat on which they were inscribed.
Read more: Did Taproot ruin Bitcoin with NFT inscriptions of monkey jpegs?
Tax loss harvesting Bitcoin inscriptions
The tax harvesting gimmick employed by Ordinals Scrapyard is similar to that used by a company formed in 2011, ET Brutus.
ET Brutus is a tax harvesting service, launched to help investors with failed investments prove to tax authorities that they actually sold the asset for a 99.9% loss.
The company pays exactly $1 for anyone’s stock, note, warrant, SAFE, escrow, or earnout. In addition to a $35 service fee, that sale can help tax filers report a near-total loss to reduce capital gains on other, profitable investments.
Similarly, Ordinals Scrapyard will pay exactly 1 sat or $0.001 for an inscription.
Like ET Brutus, Ordinals Scrapyard also adds inscription Postage plus a service fee of 1,000 sats to complete the transaction.
The Ordinals community laughed at the new service offering.
“I thought this was a joke but ordinal gamblers are really down that bad huh,” someone commented. Senior Bitcoin developer Peter Todd also thought the website was hilarious.
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Source: https://protos.com/ordinals-scrapyard-turns-bitcoin-nft-wreckage-into-tax-write-offs/
