Crypto Mining Tax Treatment Guide for Miners
Understand cryptocurrency mining tax treatment: income recognition, self-employment tax, equipment depreciation, and electricity cost deductions.
Summary
Crypto mining creates taxable income at fair market value when mined. This guide explains income recognition timing, expense deductions, and self-employment tax obligations.
Key Steps
- 1Recognize mining income at fair market value on date of receipt.
- 2Report mining income as ordinary income (not capital gains) on Schedule 1.
- 3Pay self-employment tax (15.3%) on mining income if materially participating.
- 4Deduct eligible expenses: mining hardware, electricity, pool fees, internet.
- 5Track hardware depreciation: 5-year MACRS for mining equipment.