As a beginner miner with a few rigs, I will admit to being overly excited and diving first into the ‘easy’ part of mining ( tech ) without doing as much research as I need to about the most difficult part ( taxes! ). I’m here to try and catch up.
I did try to Google but only managed to confuse myself more. Hoping you guys can be gentle and spoon feed a bit.
Q: How do I value my coin ?
“If you mined your bitcoins, as IRS Notice 2014-21 elaborates, miners have to recognize income for each bitcoin mined during the taxable year. The amount of income equals the market price of bitcoin on the day it is awarded on the blockchain, which is also then the miner’s basis in the bitcoin going forward and is used to calculate gain/loss in the future. The IRS illustrates an example for taxpayers.”
However, when I’m mining, its not directly but either with NiceHash or in a pool.
With NiceHash, I’m technically not mining directly for any coin but instead am just renting hashing power and getting paid on interval with fractions of BTC. The coin stays in my NH wallet for weeks until there’s sufficient amount to transfer out to my personal wallet.
With pool mining, I’m mining directly and am earning fractions of that coin that gets paid directly to my personal wallet ever few days. Until it gets paid to my personal wallet, I just have an outstanding balance that the pool owe to me.
With both scenario, I don’t know when a coin is awarded on the blockchain to the pool or nicehash. This information is transparent to me.
What would be the correct method to properly value my coin for taxes ?