Are mined cryptocurrencies taxed?

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It depends on whether you are a hobby miner or a self-employed (business) miner. Here are some of the measures that the IRS provides for determining which camp you are in:

  • The manner in which the taxpayer carries on the activity
  • The expertise of the taxpayer or his advisors
  • The time and effort expended by the taxpayer in carrying on the activity
  • Expectation that assets used in activity may appreciate in value
  • The success of the taxpayer in carrying on other similar or dissimilar activities
  • The taxpayer’s history of income or losses with respect to the activity
  • The amount of occasional profits, if any, which are earned

As you can see, there is some amount of subjectivity to the classification. As an example, if you have a full-time custom mining rig, you are probably a business, and if you are randomly doing some mining on an old computer, you are probably a hobbyist. In both cases you will need to report your mined coins as taxable ordinary income and your basis will be the fair market value at the time you receive the coins.


  • Income will go on line 21 (other income) of your Form 1040 Schedule 1 (Additional Income and Adjustments to Income)
  • Expenses directly associated with mining will go on a Schedule A form (Itemized Deductions); miscellaneous subject to 2% of AGI limitation (does not apply in 2018 onward)
  • Your income is not subject to the 15.3% self-employment tax (only normal income tax), however you receive fewer and less valuable deductions against your income

Business Miners

  • Income and expenses both go on a Schedule C form (Profit or Loss from Business)
  • Your income is subject to the 15.3% self-employment tax, though there are more valuable deductions against your income

Note: the rules are different in Canada and the United Kingdom