What you’re doing is illegal in America. If you have a home mining operation you have to pay income tax on the coin earned.
Discussion
Wouldn't it only matter when you go to sell?
No, it’s considered income. You might be able to get some deductions since you own a capital asset (miners) that depreciate, but idk all the details around that for home mining
No. It’s income at the time it’s mined.
I’m not an accountant but if I don’t sell it how it can be income. Manhattan’s Real estate moguls have been doing this forever. They never sell their properties and just keep borrowing against them. They don’ pay taxes on this dollars because is a liability on their balance sheet. They use this dollars to generate the cash flow to pay interest. Rinse and repeat not illegal at all. Is it different with commodities such as Bitcoin or gold?
First, i’m, not advocating for people to do anything illegal.I’m asking questions because I really trying to learn here. So according to what you are saying I owe “unrealized capital gains” for the sats that I mined in my garage. But, what conversion rate should I use to calculate my tax burden if I have not sold?
At the time they hit your wallet. That’s your cost basis and they’re treated as income. If you’re in America you should really talk to an accountant bro.
what sats?
UPDATE: on the legality of a home mining operation. Where I live you only have to REPORT the coins at “fair market price” when they hit your wallet. However, this is not a taxable event. And even then you only pay income taxes on 50% of your coins when you sell them (if you are not an industrial operation). Or you can never sell and borrow against them as they appreciate (like Manhattan’s real estate). So my comment stands, it makes no sense to bury newly earned money on a legacy system “Tax free savings account”. I checked a couple of other countries in America (the continent) and the taxable event is when you sell the coins. So, in most of America(the continent) is legal as long as you report it. But apparently this is not the case in the United States according to some people here.