Is it better to borrow cash using BTC as collateral, or just to sell BTC?
In terms of the taxes in the US.
Selling makes income, income have to be declared and paid taxes of it.
Borrowing means no income = no taxes.
How do you plan on making this work, exactly? Do you plan on purposefully defaulting on your loan to essentially get earnings without directly selling? That might work in theory, but the collateral must have higher value than the actual loan in practice. You might lose more money in taxes than defaulting your collateral, depending on the amount, but it's really better to simply pay your taxes to avoid any potential legal complications. If you're going to incur fees anyway, you may as well go the (explicitly) legal route.