NAICS code for cryptocurrency mining

[CryptoKyle]

Hi there,

I started mining cryptocurrency this year just to see if my computer could do it. From there, it pretty quickly increased into a full blown endeavor and I'm filing my activities as a business this year. I've calculated my fair market value payouts and have my reportable income established. I have all of my receipts for the equipment that was purchased and used exclusively for the operation gathered and ready to go. The only question mark I still have is what NAICS I would code the endeavor as.

This link (https://www.joehxblog.com/example-schedule-c-for-cryptocurrency-mining) mentions several suggestions including:

- Other Computer Related Services (541519)

- Data processing, hosting, & related services (518210)

- Computer systems design & related services (541510)

I know that a well-known Bitcoin mining company, Riot Blockchain, uses 541519 as their NAICS (https://www.riotblockchain.com/investors/company-information/profile) which leads me to think that this code might be the most applicable for my situation.

Does anyone have any further insight on the matter?

[rjs]

The code on Schedule C is not a NAICS code. Line B on Schedule C says "Enter code from instructions." The instructions for Line B say "Enter on line B the six-digit code from the Principal Business or Professional Activity Codes chart at the end of these instructions." Choose one of the codes in the chart in the IRS Instructions for Schedule C.

In my mind, cryptocurrency mining is a financial activity, not a computer service. I would use 523900, Other financial investment activities. That's just my opinion. If you don't agree with me, use 518210, Data processing, hosting, & related services.

It's not really critical what code you use. The code doesn't affect your taxes.

[CryptoKyle]

I didn't realize that it didn't affect taxes, thank you for clarifying! This is my first year filing business income so this is all very new and confusing for me. I won't worry about it so much then.

Just for the sake of conversation though, I'm disinclined to consider cryptocurrency mining a type of financial activity, despite the fact that tokens are traded. From a technical standpoint, the process of mining is essentially the process of providing the foundation of whatever blockchain is being mined on. Miners are paid fees from the network as compensation for providing the computational power needed to sustain the blockchain. While the income (for tax purposes) is the dollar amount of tokenized compensation, the "work" itself is the computational power.

I digress. Thank you again for your help!