From what I understand suppose you have $100 and you invest in BTC and they are priced at $1 so you pay $100. Now suppose BTC goes to $100. Now you have $10,000. You will still have to pay short-term capital gains 28% tax on that, then all the state and local taxes. In the mean time the dollar lost 10% a year in value due to government overspending. Seems you are screwed either way. Unless you decide not to report or buy stuff. suppose all this takes 2 years.
It's only a capital gain when you sell it.
But yes -- when you sell, your gains are taxable.
