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.

AccessTimeIconJul 29, 2021 at 2:00 p.m. UTC
Updated Aug 21, 2021 at 12:15 p.m. UTC

Presented By Icon

Election 2024 coverage presented by

Stand with crypto

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).

  • 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.
  • Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
    13:18
    Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
  • Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
    05:10
    Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
  • The first video of the year 2024
    04:07
    The first video of the year 2024
  • The last regression video of the year 3.67.0
    40:07
    The last regression video of the year 3.67.0
  • CORRECTION (JULY 29, 16:01 UTC): Corrects that mining hardware needs to be bought through the IRA.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information have been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of the Bullish group, which owns and invests in digital asset businesses and digital assets. CoinDesk employees, including journalists, may receive Bullish group equity-based compensation. Bullish was incubated by technology investor Block.one.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.