Here is my question about this whole mess. Let’s say I use a “cloud mining” service website to mine bitcoins. Where I physically am not mining anything on my end. Do I still have to report the income the day the coins are created(which is daily), or, since they are not yet in MY personal crypto wallet and not in my complete control UNTIL I withdraw them from my balance on their website, can I just report the value on the day I withdraw them to my personal wallet where I have control over and will sell them for USD IMMEDIATELY, (for no hassle of capital gain calculations)? I mean, I think it is silly to report cloud mining earnings each day especially since they are not yet in my control and the website can be a total scam and take my cash and coins and run/shut down / etc. which there is NOTHING stopping them from doing that. Also, they give the option of CONVERTING your mined coins for more “hashpower”, instead of withdrawing them. I guess what I am wondering and I am sure a lot of people are ...can I do this...???
Pay them a fee for hashpower to mine coins, then each month like clockwork, convert 75% of the coins to more hashpower (reinvestment) , and then withdraw the other 25% to my wallet on Coinbase to sell immediately for USD. In turn only reporting that USD each month as profit/income? With a cost basis of zero? What form would I need to report this, if this is an ok way for Uncle Sam ?
