A newly launched website, Ordinals Scrapyard, is enabling users to track their losses from buying inscriptions, which can then be utilized for tax reporting. This site emerges at a time when Ordinals—initially believed to be a revolutionary approach for minting, buying, and selling digital collectibles directly on the Bitcoin blockchain—are facing a significant decline in value.
Back in early 2023, Bitcoin developer Casey Rodarmor touted Ordinals as a groundbreaking protocol that could potentially integrate NFT trading into Bitcoin. However, the reality has changed drastically. Current floor prices for most inscriptions have plummeted to as low as $0.001, with the majority of past buyers finding no market willing to accept their once-coveted NFTs.
The Ordinals protocol aimed to chronologically number the smallest units of Bitcoin, known as satoshis or “sats,” each equivalent to 1/100 millionth of one BTC. This numbering allowed traders to inscribe and circulate these sats with added data, enhancing their perceived value. However, while certain inscriptions once fetched prices exceeding $1 million during their peak, most are now valued merely by the satoshi on which they are inscribed.
Tax loss harvesting has emerged as a primary tactic among investors dealing with the fallout from the falling values of these NFTs. Drawing inspiration from established tax services like ET Brutus—which assists investors in reporting losses—instructions from Ordinals Scrapyard offer a similar structure. The site will purchase any inscription for 1 sat, which translates to $0.001, alongside a fee of 1,000 sats to process the transaction.
Reactions from the Ordinals community have struck a sarcastic tone, dubbing the website’s operations as a humorous commentary on the current state of the market. One user remarked on social media, expressing disbelief at how far the situation had declined, while prominent Bitcoin developer Peter Todd joined the laughter, finding the website’s premise amusing.
As the landscape for digital collectibles on Bitcoin continues to evolve, Ordinals Scrapyard reflects both a pressing need for users to manage losses and the growing acceptance of tax loss harvesting in a struggling market.
