2022 In Review ($$$)

I have calculated everything for 2022 tax purposes, just wanted to share what I ended up with.

My farm grew very aggressively from Jan to Jul from ~.7 to approx 2.2 PiB. I’ve been solo all year. Most of equipment was purchased 1st half of the year. Some 2021 equipment was liquidated. For the purpose of tax reporting, I’ll give a very conservative estimate of farm using 1 KWh, that equates 24 KWh/day. In reality I spent a lot more energy plotting and cooling, but I don’t want to claim too much, as the farm is located in my house.

Let’s start with the easiest one: electricity. Added up all bills and calculated overall cost/KWh: $0.14
Assumed 1KWh consumption, 24/day, avg cost per day $3.36, multiply by 365 = $1225.49 for year 2022

Equipment is a lot more complex topic. I started in 2021 and bought a lot of hardware. Total amount for 2021 was $21,972.78
I claimed amortization of 1/5 for that year which amounted to -$5,493.19

In 2022, I bought a lot more equipment and sold some of the 2021 hardware on the second hand market:
$41,009.18 purchases
-$2,430 liquidations of 2021 equipment

This allows me to claim the following amortization in 2022:
Tax 2022 year amortization (1/5): -$8,201.84
Tax 2021 Residual Value Less Liquidation in 2022: $19,542.78
Tax 2021 Amortization Deducted (1/4): -$4,885.69
Total 2022 Amortization: -$13,087.53

2022 Gains:
Total XCH earned: 272
USD Total: $11,750.42 - this is assuming “cost basis valuation”. Whenever you get XCH, find out price that day and multiply by XCH obtained. Considering downtrend, this is worth a lot less today.
I haven’t sold anything.

So the math at the end is this:
+$11,750.42
-$13,087.53
-$1225.49
result:
-$2,562.60

And this is considering $62k of equipment purchases over 2 years. ROI my ass

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Thanks for posting - always good to see how others have approached this & what the figures show

At least in the US you seem able to deduct certain losses for tax purposes.

In the UK and trying to get my head around current crypto legislation but doesn’t look like we can claim/deduct any expenses for farming!

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I thought that, however, i believe i was wrong and possibly electricity cost can be deducted from income tax , but not from cap gain.
Being as mining / farming is initially taxed as income that option is there.

Edit.

However, the HMRC guidance for individuals slightly touches on this by stating that the costs for mining activities (electricity and equipment) are not allowable costs for capital gains tax purposes. This implies they may consider them to be allowable trading costs, but the position is unclear. It is considered that under normal business expense principles the cost of additional electricity used in order to mine and capital allowances on the mining equipment used should be allowable expenses, but it is recommended a qualified tax professional is consulted as HMRC’s position is unclear.

Source.

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Yea - I saw that section in the HMRC guidance. My accountant doesn’t think HMRC will take electric costs into consideration even from an income perspective.

I’ve just submitted my tax return with a claim for electric costs so will be interesting to see what they approve!

Will feed back if anything useful!

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As per my accountant, you report XCH value only when you sell them.

Uk or where?

Uk, you pay income tax for mining ( valued when you mine not sell ) then when you sell you have a cap gain or cap loss to file dependant on if price went up or down vs mined price.

You also need to take into accound b and b, section 104 pooling, 30 day pooling etc.

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You’ll be in the money of the price goes up (obviously). If it goes up a lot you’ll be sitting pretty.

I am talking about USA. Report when you sell coins.

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Ive heard contrary, but never bothered to find the facts as it really doesnt affect me.

Or just use flexpool and download it.

Tax only occurs at payout our terms were drafted with that in mind.

I highly doubt your terms overule country law! ( despite your opinion ).
Cmon now.

I’m in the UK, what’s the above mean?

I’ve just been recording the value in Sterling when I’ve received my pool payout for tax purposes.

They make it very clear that the funds are not yours until payout. A dividend that has not been paid out yet is not taxable, similar situation. That being said yes we are not lawyers, do your own diligence.

2 Likes

Ok, thats fine.
Have you sold anything or traded?
Thats when the other bits apply.

Read here.

Hi Bones, thanks for the reply, I traded some of the various chia alt coins, but my record keeping was poor, eventually I just bought Chia with it. Sold my Bitcoin/Eth from Nicehash and bought chia, any sales are well under CGT allowances though.

I’ll have a read of the link- thanks.

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Please do get back to me with regard to taxes.
Doing my own searches i found the link i really wanted to share, but its just opinion as all things in life, even from specialists… or so called experts.

“If the mining activity does not amount to a trade, the sterling equivalent (at the date of receipt) of the tokens received from mining will be taxable as miscellaneous income subject to income tax. Additionally, fees received for verifying new transactions should be included within this mining income. Allowable expenses such as additional electricity used in the mining can be deducted from the income.”

Source

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who is sane enough to report taxes on crypto? ROFL

you joking right?

if tax thieves even ask me about tax, I am in heavy losses. I wanna see them to pay me back ROFL

Average IT guy in Central Europe earns at least 100€/h…20+ years of experience, educations, and mistakes. Setting up Linux server, plotting…let’s say 100 hours of work over the years…10000 losses in your work.

They will happily tax you for your imaginary income that you didn’t even sold/exchanged for real fiat…I highly doubt, they will account for 50k € equipment, energy uses…it somehow doesn’t count.

Why the hell would you even report it if they only rip you off? They already rip you off in salary.

Unless, you draw 1MWh from grip every month, how they even find you if you are not stupid and write about it on Internet.

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Who is insane enough to try to cheat the IRS?

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90+ % population ROFL including the <10% super wealthy people that sponsor the remaining >90% population :wink:

No wonder dying governments thrive with so much smart people around :stuck_out_tongue:

You guys are first two I know in last 50 years that wanna pay taxes ROFL

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Exchanges mostly. But if one were to just fill bags you are correct. They might be harder to unload in the future though, they keep hammering the heck out of mixers, DeFi and exchanges to save baby seals and orphans and reforesting efforts or something… coins might be hard to unload in the future if we can’t prove where they came from and they’ve been cleansed by the agents with chalices and robes.