Thanks for clarifying the re-investing situation. I do itemize. So I spent $5k in 2017 on the overall investment purchase and earned $800 in 2017. I can only claim $800 (out of the $5k) of hobby expenses in 2017? Am I correct in assuming that the balance of the original expense ($4,200) does not help to possibly offset the assumed income to be earned in 2018 as an itemized deduction since the $5k was spent in 2017 and can't be carried over? Or can I use that $4,200 balance on my 2018 tax return?
I am confused on your last statement regarding the $5k initial investment being my cost basis. The $5k was used to purchase a certain amount of mining hashrate that is used to mine the bitcoin. To me this is an expense. The basis of the cryptocurrency earned on a daily basis is the fair market value of each daily payout at the time of payout. Am i missing something?
