U.S. Clients of Compass mining can now avoid tax on Bitcoin they mine by purchasing mining hardware through their Individual Retirement Accounts (IRAs). In an announcement, Compass Mining partnered with IRA provider Choice by Kingdom Trust to allow tax free mining directly to their IRAs “without ever triggering a taxable event.”
Under the current tax laws, revenue from Bitcoin mining is taxed as income. Currently, miners have to pay income taxes on the bitcoin they mine. Sometimes, miners have to sell some of their bitcoin to cover tax-bills, which requires miners to pay capital gain taxes.
Choice and Compass claim their product permits miners to avoid taxes on mining revenue “in the short term or indefinitely”. It will depend on the type of IRA they use. Compass explained: “Tax-efficient mining presents enormous benefits to retail miners and empowers them with another tool to mine even more profitably at a smaller scale.”
The choice platform currently hosts over 125,000 retirement accounts, with over $18 billion across 20,000 assets under custody.
Compass is a fast-growing marketplace for bitcoin miners to operate profitably at any scale. Retail miners are provided access to the same high-quality mining hardware and verified hosting facilities as large scale industrial competitors. In July, Compass mining reached over 450 Petahash (PH) of hashrate across all its mining customers. The tax benefits of mining a Choice IRA account are limited to retail miners who have to buy hardware through Compass. The mining payouts are then sent directly to the Choice account.
Ryan Radloff, CEO of Choice, Commented, “Being able to purchase a compass miner within your IRA and mine bitcoin in a tax-advantaged account is an incredible opportunity. Our entire team is excited to work with Compass and as the industry continues to evolve.