Starting a Crypto Mining Business

[JustStartingUp]

Hello,

I have started buying some crypto currency this year. But I want to start mining it next year as a sole proprietorship. To reason I want to do is to account for my expenses such as electricity use, internet use and the cost of the hardware. Then once I have some coin with hopefully some appreciation I can sell them to possibly buy more mining hardware.

Are there any special things I need to worry about?

Plans for the next few days
1. Identify hardware for ming
2. Identify hardware to keep track of electricity use
3. Setup router to keep track of internet usage

Next steps
4. Buy hardware
5. Mine coin

Longer term
6. Sell coins
7. Buy more hardware

Is this the best strategy for keeping my taxes down on mining crypto?

[Harold Mansfield]

I've been following this for some time now, and I think there are bigger things to worry about than taxes.

First, you're getting into the game really late to start mining the higher value crypto. The cost of entry is high to talk about mining Bitcoin, BitCoinCash, Dash, Ethereum, . I supposed you could mine lower value crypto, but there's a lot of instability since major players are using cryto currency like a slot machine and they have the ability to cause wild fluctuations in the market.

That being said, If you truly know a lot about this industry...and I mean you are an expert in it..and you have the start up capitol to buy enough equipment to make it worth while (and a place to run it) and can keep with the electricity costs, and understand that it's a huge risk and the value could crash at any moment ( which we all know it will for Bitcoin) I say go for it.

Talk to an attorney or accountant who specializes or at least is well versed in the industry about your tax liability. New laws new changes.
Here's an article that I ran accoss the other day about how taxes in the cryptocurrencey trade is changing with the new Republican Tax plan.



The sweeping GOP tax bill includes a provision that would increase tax liabilities for investors looking to exchange bitcoin, ether, and other virtual currencies that have soared in value.The legislation would eliminate the ability of investors to defer taxes when they exchange one virtual currency for another if the original currency has appreciated in price. The impact stems from a provision in the measure that limits tax deferments for so-called like-kind exchanges of property to only include exchanges of real estate property.

The tax shift comes as the Internal Revenue Service (IRS) ramps up investigations of individual tax returns for potential unreported gains from virtual currencies, also called cryptocurrencies or digital assets.
https://biglawbusiness.com/bitcoin-cryptocurrency-trades-face-new-liability-in-tax-bill/

[Paul]

That's not such a new regulation. It's basically the same for any currency trading profits. I guess they just now figured to include crypto currency.

[Paul]

I'm not really up to speed on it, but I understand they are now trading options on crypto. Now, that could be fun!

[HumaneHosting]

I've been following this for some time now, and I think there are bigger things to worry about than taxes.

First, you're getting into the game really late to start mining the higher value crypto. The cost of entry is high to talk about mining Bitcoin, BitCoinCash, Dash, Ethereum, . I supposed you could mine lower value crypto, but there's a lot of instability since major players are using cryto currency like a slot machine and they have the ability to cause wild fluctuations in the market.

That being said, If you truly know a lot about this industry...and I mean you are an expert in it..and you have the start up capitol to buy enough equipment to make it worth while (and a place to run it) and can keep with the electricity costs, and understand that it's a huge risk and the value could crash at any moment ( which we all know it will for Bitcoin) I say go for it.

Talk to an attorney or accountant who specializes or at least is well versed in the industry about your tax liability. New laws new changes.
Here's an article that I ran accoss the other day about how taxes in the cryptocurrencey trade is changing with the new Republican Tax plan.

.
https://biglawbusiness.com/bitcoin-cryptocurrency-trades-face-new-liability-in-tax-bill/

The "short version" if cyro is your "cup of tea" and you understand the risks involved then go ahead. But it not a "money making machine" in your basement that you will be rich "overnight".