Thread by @BTCPhteve

Want a simple way to pump your home #btc mining bags⛏️👜?

Here’s why US mining plebs should consider mining as a business (and not a hobby).

Read on for some high level thoughts from a CPA who mines #btc (also, this isn't tax/legal advice)…

AHM is profitable (🖕skeptics) but taxes are often the largest expense after⚡️⚡️. With this in mind, many miners leave a lot of meat on the bone because they can’t deduct electricity, rig costs, etc. for taxes (or anything actually).

So how much meat you ask? Let’s see...

Below is a back of the envelope tax return P&L assuming you....
-Bought an S19j Pro (100 Th) for $11,440
-Run it for the next 12 mo’s at today’s prices (shoutout @braiins_systems )
-$.12 kWh residential electricity
-$750 in startup/build costs
-22% federal tax bracket

From the IRS' POV, that's ~$32k less in taxable income. Now let’s look at actual cash flow.

Turns out you have 38% add’l cash in hand simply by mining as a business. Plus, this doesn’t factor in that your ASIC still has value and will likely appreciate.

Are you convinced?

The key is that “hobby” miners can’t deduct ANY expenses (as of 2018). They pay taxes on top line revenue but businesses can deduct cash AND non cash expenses (eg 179 depreciation). This also doesn’t consider add’l OPEX costs (eg home insurance, etc).

bit.ly/3JP1GHV

There are, however, a number of practical considerations.

1) First and foremost, you have to qualify as a business and not a hobby. Essentially, you have to be doing this for a profit.

bit.ly/3eUxYTB

2) You will have to “recapture” your depreciation if/when you sell your ASIC, but that could be 5+ years away and you could put your tax savings to work via add’l miners or DCA'ing in the meantime (but that’s a post for another time).

3) Some might object to claiming your BTC income and how it nullifies KYC-free sats (based on your definition of that) but I’m assuming all income is reported to IRS (again, that’s a post for another time).

4) You should, at a minimum, keep mining/personal records separate (setup an LLC/business bank acct and maintain financials).

In MN, it cost me $150 and in less than an hour I had a single member LLC taxed as a pass through entity (likely setup for most plebs).

5) Business vs. personal⚡️costs.

Best scenario = separate meter (if allowed).

Next best = legit mining only area (@barnminer & @Won4Jon come to mind), calc your mining use, and "pay yourself" back monthly (consider even invoicing your LLC).

bit.ly/3FdEuzD

Generally, that’s it! Pretty simple no?

Study the rules, document EVERYTHING, don’t mix funds, and consult w/ a tax pro/lawyer before you do.

You’ve now unlocked a world of deductible expenses to supercharge your bags… BTC Miami 2022 is a business development expense btw 😉

Want to go a step further? Stay tuned for how to hold #BTC in your new business' 401k plus the tax benefits of converting your BTC bags for miners.

@NeilsNews @BigCohoo @econoalchemist @compass_mining @wsfoxley @ausenhus @Marketsbylili @zackvoell @BitcoinMagazine @DailyMiner @ethan_vera @MitchKlee_ @BikesandBitcoin @ODELL @IIICapital @_amanda_fab @denverbitcoin @dfrumps @btc_buddhist