Tax and accounting consultancy Mining

Have you started mining ETH, BTC, DOGE or LTC and don’t know the tax and legal implications of mining cryptocurrencies?

Cryptocurrency mining

Are you a company that has mining rigs with GTX, RTX and other graphics cards and are looking for a consultant who understands your operation?
Are you a group of investors involved in the purchase of specialised mining equipment and do you share the profits equally?
Don't know if LPs earned in Axie Infinity are considered as mining?
Did you know that you can capitalise on unemployment to start mining cryptocurrencies?
Do you know the steps to follow to apply for capitalisation?

Cryptocurrency mining is probably one of the most well-known and increasingly adopted cryptocurrency activities by the general public. There are many ways of doing this, whether through the traditional Proof Of Work (PoW), the growing Proof Of Stake (PoS), or some of the other new formats that are beginning to be heard such as the Proof of Human (PoH).

Each of these formats is taxed differently, and even the same type of transaction may be different depending on the regularity and purpose for which it is carried out. For example, you do not have the same obligations if you are mining BTC with your own hardware as you do if you delegate it and operate through a Cloud Miner.

How does BTC mining work?

To understand in detail how bitcoin mining works, it is necessary to understand how blockchain technology works. We will explain it in a very simple way so that you understand the concept behind it.

When a cryptocurrency is transferred from one user to another user by buying and selling it, i.e. it is transferred from one wallet to another, this transfer of ownership is recorded in the last open block associated with that cryptocurrency.

For this transaction to be recorded on the blockchain, computational capacity is required so that the information it contains cannot be modified. This computational capacity is generated either by mining farms or by the computers of users, the miners, who make the computational capacity of their computers available to the network to encrypt the block and open another block.

Hence the terminology blockchain. The more computational capacity, the more likely it is to close the block and open the next one.

To compensate for the provision of computational capacity by each user, the miner is rewarded with the cryptocurrency for which he or she is working, as soon as the transaction is successfully recorded.

If this process is too complicated, we can help you: Gestoría criptomonedas

Regarding the mining of cryptocurrencies through the PoW, the Tax Agency has stated that it is considered an economic activity and as such has formal obligations, which would mainly be the filing of Form 130 for payments on account of income tax.

To calculate the return we subtract the expenses associated with the activity, such as freelancers, amortisations, etc., from the income (which are the rewards received for providing a service to the network).

If you find yourself in this situation, or want to become a miner, ask our cryptocurrency tax experts exactly what obligations you will have depending on the type of mining.