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Bitcoin Miners Can Escape US Taxes by Sending Mining Proceeds Direct to IRAs
Compass Mining is enabling clients to mine bitcoin without triggering a taxable event.
U.S. clients of Compass Mining can now avoid tax on the bitcoin they mine by buying mining hardware through their individual retirement accounts (IRAs).
STORY CONTINUES BELOW
- Through an agreement with Choice IRA, a crypto-friendly retirement offering by digital asset custodian Kingdom Trust, Compass clients can mine bitcoin without triggering a taxable event.
- Compass provides individual miners with a hosting facility and operates their hardware for them, in what could be seen as an Airbnb-esque model for mining facilities.
- The miners might be discouraged by having to pay tax twice: once as income on the bitcoin they mine and again on the capital gains when they sell.
- The Compass arrangement allows clients to circumvent this requirement by buying mining hardware with funds in their Choice IRA, which then receives the payouts.
Read more: Bitcoin Miners Now Have a Tool to Verify Their Machines’ Hashrate
CORRECTION (JULY 29, 16:01 UTC): Corrects that mining hardware needs to be bought through the IRA.
Jamie Crawley
Jamie has been part of CoinDesk's news team since February 2021, focusing on breaking news, Bitcoin tech and protocols and crypto VC. He holds BTC, ETH and DOGE.
