A new website called Ordinals Scrapyard allows users to accurately see the money they purchased the inscription and harvest the losses for tax reporting purposes.
The site is an embarrassing bookend to a series of stories about the theory that ordinals can bring NFT transactions to the Bitcoin blockchain despite their popularity in other chains such as Ethereum and Solana.
In early 2023, the floor price for most inscriptions fell to $0.001 despite Bitcoin developer Casey Rodorzer being announced as a Bitcoin native protocol for mint, purchase and sale.
In fact, prior to the launch of the website, most inscriptions had no bids at all, and the majority of buyers had cast or purchased the NFT once. I couldn’t resell them.
Ord, a centrally maintained off-chain record-keeping system, sought to count each subunit of all Bitcoin (BTC) present in chronological order.
By tracking these Satoshus or “sat”, each equivalent to one-tenth of a billionth of one BTC, ordinance traders were able to tick and pass the SAT with monetary value as additional data was added.
In speculative peaks, certain inscriptions Trades for over $1 million. Most are now worth just the SAT they have engraved on.
Read more: Did Taproot ruin Bitcoin with the NFT inscription of the Monkey JPEG?
Bitcoin inscription harvest tax loss
The tax harvesting mechanism employed by Scrapyard ordinarys is similar to that used by Et Brutus, a company founded in 2011.
Et Brutus is a tax revenue service launched to prove to the tax authorities that an investor whose investment failed actually sold his assets at a loss of 99.9%.
The company will pay exactly one dollar for anyone’s stock, memo, warrant, safety, escrow, or art out. In addition to the $35 service fee, the sale helps tax returners report nearly two losses to reduce capital gains on other profitable investments.
Similarly, the target editor will pay exactly one SAT or $0.001 for inscriptions.
Like Et Brutus, Scrapyard also adds an inscription postage and a service fee of 1,000 SAT to complete the transaction.
Ordinance Community I laughed at the new service offered.
“I thought this was a joke, but order gamblers are really bad,” someone commented. Senior Bitcoin developer Peter Todd also thought the website was hilarious.