I did look into the tax implications here in Canada. From what I gather, you only pay the capital gain (at 50%) when you sell or use the coin to buy something. In a normal capital gain you could consider the hardware costs to offset the capital gain (you'd only pay 50% of the difference between the cost and sale), but I think you need to be registered as a mining 'business' to do that.
I don't know how interested CRA would be with such small transactions, but you never know. They let billionaires get away without paying any tax, but if we cash out $80 of bitcoin, look out! From their site:
This refers to the way you get rid of something, such as by giving, selling or transferring it. In general, possessing or holding a cryptocurrency is not taxable. But there could be tax consequences when you do any of the following:
- sell or make a gift of cryptocurrency
- trade or exchange cryptocurrency, including disposing of one cryptocurrency to get another cryptocurrency
- convert cryptocurrency to government-issued currency, such as Canadian dollars
- use cryptocurrency to buy goods or services
Capital gains by definition take expenses and depreciation into account (i.e. power and PC equipment, wear and tear on components, sale of said components), and only apply when you dispose of the asset. I'd really not want to have to pay an accountant to figure this out. By that definition though I say you'd be ok holding Bitcoin, but at some point you'd still have to pay the tax.
It does go on to say this however:
Some examples of cryptocurrency businesses are:
- cryptocurrency mining
- cryptocurrency trading
- cryptocurrency exchanges, including ATMs
Does that mean joe-blow mining in his basement? If I'm going to lose 50% of the profit to taxes, it's a no-brainer and I'd best sell the 5700XT while I can still get stupid money for it. On the other hand, you have to think there is still some significant profit involved here or these guys wouldn't be building these mining farms (even someone with a home farm of 5 or 6 GPUs)?