protos.com
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.