Bitcoin Mining Taxes in the US: What You Need to Know
Income recognition, deductions, and entity structure for US-based miners.
Mining income is taxable
The IRS treats mined Bitcoin as ordinary income at the fair market value on the date it's received. If you mine 0.01 BTC on a day when BTC is $95,000, you have $950 of ordinary income. This applies regardless of whether you sell the BTC.
Deductible expenses
Mining expenses are deductible: electricity/hosting costs, hardware depreciation, internet, and related business expenses. Proper record-keeping of all expenses is essential. Most miners can depreciate ASIC hardware over 5 years (or take bonus depreciation).
Entity structure
Many miners benefit from operating through an LLC or S-Corp. This can provide liability protection, cleaner accounting, and potential tax advantages. Consult a CPA familiar with crypto mining.
Disclaimer
This is educational content, not tax advice. Tax laws change frequently. Always work with a qualified tax professional who understands cryptocurrency mining for your specific situation.