Hi @lulukern123 and thanks for your question!
There will be two taxable events in your scenario.
Because you earned crypto for your mining work, it's considered taxable income and must be reported at the fair market value of the cryptocurrency on the day you received it. You may receive a 1099-NEC for this income. If not, you would still be responsible for reporting the crypto you received.
Now, if you sell, exchange, or use your crypto to purchase anything, this would be another taxable event. You have a capital transaction resulting in a gain or loss just as you would if you sold shares of stock. Your cost basis would be the fair market value of the crypto on the day you received it.
Below is excerpt from the article titled: Your Crypto Tax Guide
For example, let's look at an example for buying cryptocurrency that appreciates in value and then is used to purchase plane tickets. The example will involve paying ordinary income taxes and capital gains tax.
- First, you receive $200 worth of the cryptocurrency Litecoin in exchange for services on January 15.
- Six months later, on July 15, the fair market value of your Litecoin has increased to $500, and you use it to buy plane tickets for a vacation.
- On your tax return for that year, you should report $200 of ordinary income (either as wages if reported on a W-2 or as self-employment income if you are not an employee getting paid in crypto) for receiving the Litecoin in January and a short-term capital gain of $300. That's the $500 value of your Litecoin when you purchased the plane tickets, minus your $200 basis when you received the Litecoin.
I hope this helps!
