2021-07-21 Bloomberg - New IRA Product Allows for Tax-Free Bitcoin Mining

acquafredda

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Quote from: NeuroticFish on August 03, 2021, 05:51:43 AM

I somehow believe that you can do this only if you mine bitcoins now and you'll keep them (there) until your retirement age.
So you can mine only for yourself and you'll benefit of the money much much later. Those products use to be tax free and such...

Edit: and a link where one can properly read the news: https://www.cnbc.com/2021/08/01/bitcoin-mining-tax-free-in-ira-proposed-but-irs-may-not-approve.html

That sound not bad if someone really sees Bitcoin having great potential of appreciation over the long run, right? I would be happy to keep some of my BTC to be able to benefit from them tax-free at some point in the future. As it is right now, I have no intention whatsoever to sell any of my satoshis given the bad banksters are coming for them. Wink

NeuroticFish

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I somehow believe that you can do this only if you mine bitcoins now and you'll keep them (there) until your retirement age.
So you can mine only for yourself and you'll benefit of the money much much later. Those products use to be tax free and such...

Edit: and a link where one can properly read the news: https://www.cnbc.com/2021/08/01/bitcoin-mining-tax-free-in-ira-proposed-but-irs-may-not-approve.html

DaveF

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Quote from: stompix on August 03, 2021, 05:27:16 AM

It's simple, they do pay some taxes but they also can claim some bonuses, one is that they can deduct equipment depreciation, which when it comes to mining gear it's a huge thing, plus many others, in the end they will make a lot more than you on the long run. But that's what everyone knew already

That is the case with most businesses. The investors get to pay for the owners of the company to make money.
The only advantage I see with this is for people who wanted to get a little into BTC but don't understand it, and don't want to understand it, and don't want to deal with the potential tax issues. A small group. But a group nonetheless. As with many things, going to have to see how it plays out.

-Dave

stompix

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Quote from: acquafredda on August 01, 2021, 08:33:34 AM

Anyway, I was referring to the opportunity, if available to have tax-free vat-free bitcoin everywhere. Why? Becuase they are out of the system they should be out of the tax system. Easy. Taxes in bitcoin are the mining fees

So I guess I shouldn't pay VAT because I already pay my monthly bank subscription for my cand and account? Right? Grin

Why should my family pay tax on our profits from our farm when already there is VAT paid on every purchase people make from us.

Like it or not mining is an economical activity, you consume stuff, you employ people, you take profit you must be taxed, it's fair.
Why should somebody pay income tax on the profit he makes on forex and not on the profit he makes trading shitcoins?
Should we tax betting profits? The income is also made "out of the system".

No, it makes no sense to exempt any economical activity from paying taxes, you wither do this for every single one or for none.

Quote from: Woodie on August 01, 2021, 02:43:19 AM

As much as they claim bitcoin mining to be tax free isn't the mining equipment subjected to some form of tax when making the initial purchase and let's not forget the electricity does come with tax.

It's simple, they do pay some taxes but they also can claim some bonuses, one is that they can deduct equipment depreciation, which when it comes to mining gear it's a huge thing, plus many others, in the end they will make a lot more than you on the long run. But that's what everyone knew already.

acquafredda

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Quote from: stompix on July 31, 2021, 02:36:06 AM

Quote from: acquafredda on July 30, 2021, 09:57:20 AM

That was my dream all along but it is a long time I am not a miner. Grin

What, to buy some cloud mining shares? Grin

Because I have a feeling that's what you're going to buy.

I've checked compassmining, for their colocation services.
Antminer S19j Pro 100 TH (Quebec) / $11700 , Energy is at Price: $0.062 / kWh, current ROI is around 10months with no difficulty change.
Assuming a difficulty growth of 5% per month, so arriving at above 25T (level seen in May) at around July 2022, you will ROI in one year and 9 months. If we add 5% to the price also so 75k by next July it goes down to one year.
Assuming gear doesn't break till then.

Not really as bad as I expected but if they are going to slap you with some extra monthly fees then ...
Anyhow, it's expected, not only do you have to make a profit but so do two companies on top of that, the piece of the pie gets smaller.

Quote from: acquafredda on July 31, 2021, 01:57:51 AM

IMO, mining should be tax-free by definition and certainly VAT exempt.

Why?

I should have been more specific I know; my dream would have been to become a professional bitcoin miner back in 2012 but I was not financially nor knowledgeable enough. I think I lost some units after my father's desktop got formatted. I was so dumb back then.
Anyway, I was referring to the opportunity, if available to have tax-free vat-free bitcoin everywhere. Why? Becuase they are out of the system they should be out of the tax system. Easy. Taxes in bitcoin are the mining fees

Woodie

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As much as they claim bitcoin mining to be tax free isn't the mining equipment subjected to some form of tax when making the initial purchase and let's not forget the electricity does come with tax.

To be honest all I see is the IRA avoiding over taxing its citizens especially in a time when the economy has been slowed down because of the pandemic.

bbc.reporter

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I am not certain, however, America might be expecting a surplus in electricity production from renewables. Also reading from the news, renewbles are clearly beginning to make up for more of the share of America’s sources of electricity but the grids might not be able to switch to them immediately. The government might be trying to create the needed demand.

This might be similar to the time when America had a surplus in prison buildings. What did America do? They had the judges give more heavier charges for delinquents to have those prisons in use hehehe. Another one is America also has a surplus in corn production so they have many products produced from corn.

Obito

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But what would be the catch for being in that list though? I mean I know that IRA is a really good investment but I feel like there's an ulterior motive behind the inclusion of bitcoin mining in the IRA. Also, that's a bit too good to be true for me, tax free from a government which has tax as it's source of life?

stompix

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Quote from: acquafredda on July 30, 2021, 09:57:20 AM

That was my dream all along but it is a long time I am not a miner. Grin

What, to buy some cloud mining shares? Grin

Because I have a feeling that's what you're going to buy.

I've checked compassmining, for their colocation services.
Antminer S19j Pro 100 TH (Quebec) / $11700 , Energy is at Price: $0.062 / kWh, current ROI is around 10months with no difficulty change.
Assuming a difficulty growth of 5% per month, so arriving at above 25T (level seen in May) at around July 2022, you will ROI in one year and 9 months. If we add 5% to the price also so 75k by next July it goes down to one year.
Assuming gear doesn't break till then.

Not really as bad as I expected but if they are going to slap you with some extra monthly fees then ...
Anyhow, it's expected, not only do you have to make a profit but so do two companies on top of that, the piece of the pie gets smaller.

Quote from: acquafredda on July 31, 2021, 01:57:51 AM

IMO, mining should be tax-free by definition and certainly VAT exempt.

Why?

acquafredda

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Thanks for pointing that to me, being not american I can not have that anyway. So I will be glad to have somebody like philipma to work the numbers here for us. In the end, this must be something that could interest many old-time miners and new wannabies.
IMO, mining should be tax-free by definition and certainly VAT exempt.

SFR10

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Quote from: acquafredda on July 30, 2021, 09:57:20 AM

I mean if I had a mining business I would definitely follow this route or am I missing something here?

It seems great but because of the following parts ^{[+ difficulty adjustments]}, I think it's a bit tricky and in the end, the difference might not be much ^{[don't quote me on that one]}.
^{- I'm tagging @philipma1957 since he's great with calculating stuff ^{[hopefully it's enough to get his attention]}.}

Quote from: https://www.bloomberg.com/news/articles/2021-07-29/new-ira-product-allows-for-tax-free-bitcoin-mining
Purchasing a single new mining unit can cost about $10,000, according to Compass’s website. On top of that, you’ll have to pay for ongoing electricity usage and hosting, plus a one-time setup fee of $500, plus an annual fee of $150, Radloff said in a phone call with Bloomberg.

acquafredda

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Quote

Bitcoin miners just secured a windfall on tax savings.

IRA provider Choice and Bitcoin mining and hosting firm Compass Mining announced that they’re offering an IRA that will allow miners to produce the cryptocurrency in a tax advantaged account.

https://www.bloomberg.com/news/articles/2021-07-29/new-ira-product-allows-for-tax-free-bitcoin-mining

I think this is actually huge news. I mean if I had a mining business I would definitely follow this route or am I missing something here?
Basically, the benefit of mining through an IRA is that any coins exctracted would be exempt from income taxes (!!!) and also benefit from tax-free appreciation (!!!) that other assets like stocks and real estate have traditionally enjoyed through the popular retirement account’s structure.
I would definitely want that, to produce basically clean, tax-free BTC. That was my dream all along but it is a long time I am not a miner. Grin

Topic: 2021-07-21 Bloomberg - New IRA Product Allows for Tax-Free Bitcoin Mining (Read 127 times)