There are two things at hand here:
- Crypto mining is taxed as regular income, not investment income.
- Crypto mining can be either a hobby or a business.
- This is determined by your dependence on mining for income, and your mining profitability.
- If you're running a crypto mining business, you may owe self-employment taxes if your income exceeded your expenses for the year.
- Mining Businesses are allowed to write off mining-related expenses and record depreciation.
- A miner can classify themselves as a trade or business through a limited liability company (LLC) or as a sole proprietor.
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