The "$158K in taxes, nothing I can really do about that" line is the part of this story that's actually instructive.
He's not wrong. He's stuck. And the reason he's stuck is the part nobody talks about until it's too late: solo home mining sits squarely inside the hobby loss rules. IRC §183. If you're not operating with a real profit motive: separate books, business plan, the whole posture, the IRS treats your mining as a hobby. Block subsidy is still ordinary income at fair market value the day you mined it. But your electricity, your rig depreciation, your internet, none of it offsets that income. TCJA killed the old miscellaneous itemized deduction path in 2018. So hobby miners owe tax on gross, with effectively zero deductions. You can't just file a Schedule C after the fact and call it a business if the facts don't support it.
The cleaner setup is hosted mining inside an LLC with a real profit motive on paper from day one. Hosting invoices, books in QuickBooks, the works. Block subsidy still hits as ordinary income, but now it lands on net, not gross. For a small operator that's the difference between a tax bill that wrecks you and a tax bill that works with your accumulation strategy. Albeit, the major tradeoff is privacy.
The "$158K in taxes, nothing I can really do about that" line is the part of this story that's actually instructive.
He's not wrong. He's stuck. And the reason he's stuck is the part nobody talks about until it's too late: solo home mining sits squarely inside the hobby loss rules. IRC §183. If you're not operating with a real profit motive: separate books, business plan, the whole posture, the IRS treats your mining as a hobby. Block subsidy is still ordinary income at fair market value the day you mined it. But your electricity, your rig depreciation, your internet, none of it offsets that income. TCJA killed the old miscellaneous itemized deduction path in 2018. So hobby miners owe tax on gross, with effectively zero deductions. You can't just file a Schedule C after the fact and call it a business if the facts don't support it.
The cleaner setup is hosted mining inside an LLC with a real profit motive on paper from day one. Hosting invoices, books in QuickBooks, the works. Block subsidy still hits as ordinary income, but now it lands on net, not gross. For a small operator that's the difference between a tax bill that wrecks you and a tax bill that works with your accumulation strategy. Albeit, the major tradeoff is privacy.
Happy for the guy though. Hell of a story!