Last year I bought six gaming desktops and a dedicated Bitcoin mining device to mine Bitcoin and Ethereum. I mined over $6000, but now that I entered that into TurboTax (desktop), it increased my Federal tax due by $2000 and dropped my state refund about $300 -- essentially a $2300 net increase in Federal/state tax. I entered the crypto mining as "other income".
I use a site called CryptoTrader.tax (soon to be renamed Coin Ledger), which aggregated my mining proceeds from NiceHash, Coinbase, and BlockFi, helping me calculate cost bases, capital gains, and most importantly, the net mining proceeds.
David Kemmerer, the CEO of Coin Ledger, wrote an article (https://cryptotrader.tax/blog/how-to-handle-cryptocurrency-mining-on-your-taxes) where he says that you can claim your mining proceeds as either a hobby or as a business on a Schedule C. If done as a hobby, nothing can be deducted. However, if done as a business on a Schedule C, I would be able to deduct the cost of the computer hardware, which would significantly reduce my tax bill. I do not have an LLC or DBA, but I don't think individuals are prohibited from filing a Schedule C in their own name, as opposed to a registered business entity.
I want to know if I can LEGALLY, LEGITIMATELY go the Schedule C route. Mr. Kemmerer's article doesn't give guidance one way or the other. I am NOT looking to write off the cost of electricity (I don't have a separate meter), and I am NOT looking to do a home office deduction. But being able to write off at least some of the expense would be very helpful. But only if I can do so legally and legitimately; I don't want to guess and get it wrong.
