Cryptocoin Mining?

[Kenmitch]

It's actually even more simple than that - use BTC to buy silver. Unload silver. Done.

Is there a reliable source in the USA to convert BTC to Silver?

Not like I have to worry about the tax impact anyways. I've only mined to offset the cost of hardware and I'm in the hole still. I recently quit mining as it's not worth the effort anymore.

 

[frowertr]

Not like I have to worry about the tax impact anyways. I've only mined to offset the cost of hardware and I'm in the hole still. I recently quit mining as it's not worth the effort anymore.

Expenses and deduction will be about the only way to survive the post IRS crypto world now. I'll be meeting with my tax accountant soon so we can go over what I need to do. If they are going to treat cryptos like stock, then I'm planning on drawing a salary to manage my funds. That should offset any gains I get.

 

[Dr. Zaus]

Expenses and deduction will be about the only way to survive the post IRS crypto world now. I'll be meeting with my tax accountant soon so we can go over what I need to do. If they are going to treat cryptos like stock, then I'm planning on drawing a salary to manage my funds. That should offset any gains I get.

just depreciate the equipment and don't forget to expense your manufacturing facility.

and your time on this forum.

 

[Kenmitch]

Expenses and deduction will be about the only way to survive the post IRS crypto world now. I'll be meeting with my tax accountant soon so we can go over what I need to do. If they are going to treat cryptos like stock, then I'm planning on drawing a salary to manage my funds. That should offset any gains I get.

I've mined less than $500 anyways....Even if I claimed 100% as gain I'd have no ill effect on my tax liability.

Recent ruling this year by the IRS makes my wife's income exempt from federal taxes! I'll have to amend my last two years returns but I'm figuring between this year and the last two they'll owe me around 15k or so.

 

[Attic]

Expenses and deduction will be about the only way to survive the post IRS crypto world now. I'll be meeting with my tax accountant soon so we can go over what I need to do. If they are going to treat cryptos like stock, then I'm planning on drawing a salary to manage my funds. That should offset any gains I get.

Won't you be taxed on the salary plus self employment taxes?


Miners will need to take deductions where applicable, but the ruling obviously hurts miners. This falls in line with governments attempt to root out the crypto currency, or at least hurt it at it's core. Harm miners, harm spenders.

For buyers of bitcoin the ruling is ok if not a positive. But bitcoin is not intended, nor will it survive being treated like a stock, plenty of stocks to invest in that get their value from production and delivery means that are *not* being harmed by government rulings.


I don't think the small miner is much at risk here regardless, but adhering strictly to IRS rules while not trying to cleverly get around it is going to put mining profitability out of reach for a number of folks.

 

[Subyman]

For a miner in a pool when would the acquired come to play? For example if my share payout was 0.001695 LTC would I have to figure out what it was worth at that split second in time? Would I figure price based on when I cash out from the pool and send to a wallet or exchange? If I send it to an exchange and once the transaction is verified the coin is worth $17.19 and by the time I sell it's worth $17.11 I don't have to bother doing the math to figure anything out?

The gain part is simple to understand.

I'm a X small time LTC miner only using the LTC to offset the hardware costs. I'll never be in the plus once hardware and power costs are factored in.

It has nothing to do with what it is "worth" when you acquire it. It has to do with what you spent to acquire it. Your gain is what you grossed upon sale versus what you spent to acquire the item. For example, if you purchased a R9 290 and spent an average of $20 a month on electricity to gain 50 LTC over six months and then you sold the LTC at current market value, you'd have 50*$13 - $399 - $120 = $131 gain. $131 is your taxable gain.

The math doesn't have to be completely exact. You can easily use estimates such as rough power usage for the PC.

Again, the only time you need to worry about what the LTC is worth is when you sell it (unless you are buying and selling, this is for mining only.)

Since the IRS classified BTC/LTC as a property, it makes figuring the tax pretty easy.

 

[Subyman]

I'm with you here, it's a matter of saying "Each bitcoin costs $12 in electricity costs." But that's totally not true. I have no way of knowing how much my electricity costs are per bitcoin because the mining is spread out over days and days, and within that timeframe the price of bitcoin constantly fluctuates.

You do not need to have exact figures. Much like "maintenance costs" for mileage. They are standardized. You can easily come up with an acceptable metric such as average power usage while mining times the average amount of time you mine per month. Things like that can be a bit fuzzy, they aren't expecting you to keep a log of every time you start and stop mining on your PC. It also doesn't matter how much it costs per bit coin. It just matters how much you spent in total minus how much you sold your asset for.

You can't just assess a basis for bringing the coin into existence, and I don't know how you can. Both things are constantly fluctuating each day; the value of coin you are holding while trying to mine it, and the amount of electricity it finally takes to get the coin.

So I mine all this week and get three 0.01 BTC deposits. Are you saying that I have to record the basis for each 0.01 BTC, so I'll have a basis value that I have to keep track of with *EACH AND EVERY* time the pool makes a 0.01 BTC deposit to my wallet? That's horrendous, but you see how the issue is it could take 3 days or 5 days of mining electricity to achieve that 0.01 BTC deposit. Then it's complicated by the fact that I would also have to make note of the particular value of that 0.01 BTC deposit at the time of the deposit.

That's the only way I can see this being possible. You would have to, with each BTC deposit into your wallet, note the instantaneous dollar value of the deposit, and subtract the amount of electricity it took to get that deposit. Maybe I'm missing something, but is there an easier way to establish the basis for coins that you mine?

I agree for buying/selling, that's easy as pie. The issue is for mining. How do you establish the basis for coins you mined out of thin air? We know it costs electricity, but the issue is the mining is spread out over weeks and weeks of fluctuation in how long it takes to mine a particular fraction of a coin, how much electricity that fraction costs, and how you incorporate the fluctuating value of BTC at the time that fraction was deposited into your wallet.

You do not need to keep track of individual BTCs. You have what you spent (electricity and parts) versus what you sold the asset for. If you hold BTC you never pay tax. When you cash out, you pay tax versus how much you spent. If you only cash out 10% of you BTC, then factor in 10% of your total costs.

I think where you are getting hung up is that you are trying to attach a cost to each individual BTC. That's not how you should think about it. Think about all your BTC and costs as a whole. Do you attach costs to individual dollar bills?

 

[KingFatty]

Ah, that is a nice elegant way of putting it, thanks. I like that we have wiggle room, and we could also probably just use online calculators too. Plus, we could probably use more conservative estimates, because the burden is on us to choose the values.

At least for now it is. I wouldn't be surprised if the IRS eventually comes up with a table of values that they expect us to adhere to when tallying up all the mining etc.

 

[taltamir]

I figured you would just have a monthly or yearly total instead of per transaction costs.
I don't have to report my DAILY electricity consumption (if it is deductible, for example 50% is if you have a home office). I just put my monthly costs in an excel sheet and mail it to my CPA.
Likewise you can tabulate your monthly costs and monthly profits. If you don't cash in a certain month, you are taking a loss.

 

[dajeepster]

don't forget to include er.. deduct internet access as an expense for mining...

 

[wand3r3r]

Is anyone on BlitzCoin which only has a week of mining? It doesn't pay POS but I'd imagine that could be added later, otherwise it seems similar to black coin with a short mine then hold/speculate. It has the potential disadvantage, or maybe it's an advantage, of coming second. Black coin seems to have leveled out atm.

 

[Subyman]

don't forget to include er.. deduct internet access as an expense for mining...

Seriously, no joke. Anything that is used for the process of mining can be deducted. You can't go absolutely crazy such as deducting office chairs (unless you have an office dedicated to mining lol) but anything directly used to mine coins can be reasonably deducted.

 

[IEC]

Sub $400 here we come!

 

[rtsurfer]

Sub $400 here we come!

You buying some..??

 

[IEC]

You buying some..??

Nope.

 

[T_Yamamoto]

Nope.

Buy buy buy

 

[reb0rn]

BTC-e started to trade in Chinis Yuan and accept deposits... downtrend is over!

other exchanges will follow soon

 

[frowertr]

https://litecointalk.org/index.php?topic=18166.0

Thought this was interesting. LTC devs talking about how they are not going to fork the coin with the soon to be flood of ASICs on the market. Also talking about how X11 and Scrypt-N are not good alternatives to long term ASIC resistance.

 

[T_Yamamoto]

https://litecointalk.org/index.php?topic=18166.0

Thought this was interesting. LTC devs talking about how they are not going to fork the coin with the soon to be flood of ASICs on the market. Also talking about how X11 and Scrypt-N are not good alternatives to long term ASIC resistance.

I'm sure they're going to change the algo soon. I guess they haven't found one that suits their needs.

 

[frowertr]

I'm sure they're going to change the algo soon. I guess they haven't found one that suits their needs.

I am not so sure if they want to change it.

 

[IEC]

I'm sure they're going to change the algo soon. I guess they haven't found one that suits their needs.

No, the devs have stated that they have no intention of changing. Furthermore, scrypt-n and X11 are not compelling algos and are not as ASIC-resistant as they are hyped to be.

 

[thilanliyan]

What are people's opinions on X11 coins like Darkcoin?

 

[frowertr]

What are people's opinions on X11 coins like Darkcoin?

Meh. Darkcoin seems overly complicated for the sake of being overly complicated in my mind. I don't ever see it getting widespread acceptance. The upside is that the X11 algo is easier on the power bill and gives off less heat, but if the coin is worthless than what does that matter?

I honestly don't see any of the cryptos being any good for the foreseeable future. If BTC is taking a hit, so will they all. I'm not converting BTC to any alts for the time being. Just going to hold BTC and see what happens.

 

[taltamir]

https://litecointalk.org/index.php?topic=18166.0

Thought this was interesting. LTC devs talking about how they are not going to fork the coin with the soon to be flood of ASICs on the market. Also talking about how X11 and Scrypt-N are not good alternatives to long term ASIC resistance.

Even if they are not long term effective, they could probably provide a moving target.

That being said, a moving target coin that forks every time an asic comes out would just make asics change the asic model of operation into "manufacture in secret and mine" instead of "manufacture and sell asics to the public".

 

[SunnyD]

I'm sure they're going to change the algo soon. I guess they haven't found one that suits their needs.

Why would they? Bitcoin has done just fine without changing its algorithm.

ASICs are just a natural evolution of the network ecosystem, and it has no impact on the actual viability of the coin itself. To be honest, Litecoin itself stands to benefit from ASICs by weeding out all the crapcoins from the garden and leaving the few stable incumbents to prosper.

The cycle will perpetuate with Scrypt-N, this so-called X11, Scrypt-Jane, SHA-3, etc.

Please, for the love of everything sane stop talking like you know what you speak of.