You could take the easy way out. Starting Monday, Denver's Treecyle program will cart away your tree for free, provided that you strip it of balls, angels and tinsel, and drag it to the side of the road. The collected trees will be ground into mulch, which will be given away for free to Denver residents this coming spring.
But you don't take the easy way out, do you? If you're looking for more of a challenge, here are the top five things to do with your dried-out Xmas tree, gleaned from the ever-wise internets:
1. Use it to help stabilize a dune, like the good citizens of Jacksonville, North Carolina. This would involve finding a dune in Denver, but you said you wanted a challenge.
2. Strip the bark and make it into a coat rack. The world's jenkiest coat rack.
3. Make it into a fish habitat by throwing it into a pond or stream. Though several earth-friendly websites suggest doing this and it seems to have the blessing of many states' fish-and-wildlife folks, it seems sort of lazy. Do Egg McMuffin wrappers make good fish habitats? How about old Chevys?
4. Make it into a bird feeder. To do this, smear peanut butter all over a bunch of pine cones, hang them on the tree and stick it in your yard. The neighbors won't gossip. I swear.
5. Burn it in your fireplace. Der.