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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.
Updated Sep 14, 2021, 1:32 p.m. Published Jul 29, 2021, 2:00 p.m.
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).
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- 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.
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