How to Start a Cryptocurrency Mining Business - How Are Mining Proceeds Taxed?

Part two of our "How to Start a Cryptocurrency Mining Business" series and today we talk about mining income. We go over the basics of how mining proceeds are taxed, short and long term capital gains, and more as we try to give some insight into mining income. Please put any and all questions down in the comments and we will get try to answer them all in the follow up video. Thanks for watching!

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0:00 Introduction
0:25 Basics of Mining Income
1:11 6600XT Mining Rig Income Example
2:36 How Mining Proceeds are Taxed
4:50 Long Term Capital Gains
6:29 Mine In One Year and Sell in Another
7:19 Stocks Income vs Mining Income
9:00 Thanks for Watching

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How to Start a Cryptocurrency Mining Business - Introduction

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How to Start a Cryptocurrency Mining Business - How Are Mining Proceeds Taxed?
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[bbtubed]

I’m so glad y’all are doing this series! There’s a severe lack of mining business info available out there. Keep it up!

[RedFoxCrypto]

Amazing dude. Wish I had this back in 2017! Biggest mistake I made in the early days was having way too many payouts from the pool. That was a nightmare to track my first year.

[mixxcast]

I never leave comments, but being new to mining this is priceless. You've already painted a bigger picture of the costs to run a business.

[peterthree]

Thank you for the video!! Please Continue this series, it's really good! It may be particularly helpful to others if you discuss things like starting the LLC and how that affects the "ordinary income". Basically no other crypto channel (afaik) talks about those other than making a single statement like "start an LLC".

[bigchungus]

This is going to be a legendary series, I can feel it. Thank you for sharing your experience!

[DjMines]

Great series. Really enjoying these vids

[ronsouther]

Great video! You explained this very clear and concise. Looking forward to the rest. As someone else mentioned below, no one else is doing business videos like this. This is very helpful for the community. Thanks.

[DavidSmith-tdrh]

Just found your channel today. What bookkeeping system/software/education could you recommend for recording these transactions?

[masterchief]

Hypothetical scenario...I mined 1 ethereum a few years ago when 1 ETH was worth about $400. I stopped mining and didn't report it to taxes that year because it was negligible. Fast forward and now that 1 ETH is worth a few thousand. Since I didn't report the initial income a few years ago what should I do? Btw I have no plan to cash out anytime soon so I won't pay long term capital gain until then right?

[williamsullivan]

Good idea on the series....been debating doing an LLC before the year ends or just leave it as a hobby. I do need some tax breaks though.

[jc]

What is included the cost basis when calculate the capital gain or loss on the mined cryptocurrencies? Other than the fair value of the cryptocurrency at the time it was mined, do we add the electricity and hardware costs to the cost basis? I cannot find the answer anywhere and hopefully you can provide some insights. Thank you in advance.

[ronwatkins]

Can you speak to the difference from a mining perspective of a LLC vs S-corp?

[absolute_gamer]

If I take out 100% of my mining profits and spend 100% of my crypto profits can it be considered a tax write off since I’m reinvesting into my crypto rig or would I still get taxed on what I made from my rigs?

[JediAcolyte]

If I'm just mining with Nicehash for the Bitcion, but I have to cash out what they pay me for now to pay for my GPUs, what part would be considered the income? Every 4 hour payment or when I transfer it to my personal wallet?

[MinerHO]

Thamks. Did you ever make part 2 of this video answering questions? I dont see it so i might have missed it.. please let me know.

Thanks

[raygrenade]

is there an easy way to calculate the payout then convrsion to usd?? or do you manually write it down with current eth price conversion each day

[Robertevo]

Great info love the content and the breakdowns of everything thank you

[jp_rigs]

This is exactly what I've been trying to figure out for 6 months, thank you for what you're doing right now. I'm in PA trying to figure out what I can do up here cuz, it's needed and it's a great business investment.

[TheMiningMersie]

So if you mine .1 eth and hold it, do you pay that ordinary income whenever tax season or whatever comes or you pay it whenever you sell the eth (+ the long-term/short term capital gain)?

[BillyTheKid]

Been following the channel for a while and I’m enjoying this series. Haven’t really seen someone go in depth to the business of mining. Nice, looking forward to the rest of the series