Odell Beckham Jr. One of Many Cautionary Tales in Converting Salary to Bitcoin as Market Crashes
Photo by Kevin C. Cox/Getty Images. Pictured: Odell Beckham Jr.
When Odell Beckham Jr. signed with the Los Angeles Rams in November, he struck a deal with CashApp and agreed to convert his $750,000 salary into Bitcoin.
As usual, those involved in crypto applauded his move, one commentator saying that Beckham doing this was evidence that “global adoption” was on the way.
Such deals are only talked about when Bitcoin is rocking, but not when Bitcoin is crashing.
On Sunday, my tweet about the subject generated an incredible reaction, especially given that it was written on the day of the divisional playoffs games.
The amount of people applauding players changing their salary into Bitcoin as if they were heroes has been comical.
Rams WR Odell Beckham Jr., at least in the moment, provides a cautionary tale. pic.twitter.com/uW0QDdJrYy
— Darren Rovell (@darrenrovell) January 23, 2022
Some pointed out that in order to correctly calculate Odell’s true decline, I would have to take into account when he got paid the money. That’s easier said than done.
The new NFL Collective Bargaining Agreement stipulates that players may have their payments stretched out over 36 weeks. Since we don’t exactly know when Beckham Jr. is changing his dollars to Bitcoin — we assume he’s even doing that — some assumptions have to be made.
He, of course, isn’t the only one.
NFL left tackle Russell Okung was the original poster boy and it paid off that he got in so early.
In 2020, Okung said he converted $6.5 million of his $13 million he got from the Carolina Panthers into Bitcoin. If Okung immediately converted the money into Bitcoin upon receiving it, he got about 500 Bitcoin on the conversion given the prices at the time.
Today, even at the low prices, that Bitcoin is worth $17.2 million. And it’s still a large gain even when you lop off the $3 million in taxes he had to pay.
Recently, names like Brady and Rodgers have entered the fray. But, given their financial situation, what they are doing can be seen more as a less-risky diversity play.
The same cannot be said for some others.
Last May, Toronto FC player Ifunanyachi Achara said he would take “around half” of his salary in Bitcoin.
“The rate of inflation is killing us,” Achara said in an interview. “The more the U.S. prints money during COVID to help people, the more it devalues our currency. So my family, when I send them money home, I send them Bitcoin.”
Achara got paid $66,724 by the team.
Let’s assume Achara put $33,362 into Bitcoin, or $1,042 each week he got paid from April to November (32 weeks). Converting to an average of 0.24 Bitcoin a week, Achara held .768 Bitcoin by the end of the season.
As of this morning at 10 a.m. ET, Achara’s .768 Bitcoin, based on a $33,730 price, is worth $25,905.
Now here’s the rub.
When converting cash to Bitcoin, Achara had to pay taxes on the cash value. Figuring for Canadian federal and provincial tax, minus credits he got for playing games in the U.S., Achara was taxed 50% on the cash value when he converted it to Bitcoin.
So Achara’s taxes, based on estimates, come out to $33,362.
For the 2021 MLS season, based on today’s prices, Achara lost $7,457.