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Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

marketwatch.com

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Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#171

Post by nybble41 »

JumpCrisscross wrote: post #150
cwkoss wrote: post #139

Earlier quoted context omitted.

Also note that this crypto tax-reporting provision was slid into a huge bipartisan infrastructure deal. It really never should have been included in this legislation in the first place. Exempting actors in the crypto space who facillitate crypto usage without ever having custodial control of the funds makes a lot of sense. (Just like envelope manufacturers shouldn't have to register as money transmitters because peop…

> this crypto tax provision was slid into a huge bipartisan infrastructure deal. It really never should have been included in this legislation in the first place. Why not? The infrastructure is being paid for in part by this tax. They're fundamentally linked.

> by this tax

This isn't actually a (new) tax, it's a surveillance framework intended to support stricter enforcement of existing taxes. So far as that goes it's an added expense (mostly externalized) and not likely to pay for anything. The claim is that there is $28 billion of tax evasion going on which all this extra reporting would supposedly curtail–assuming all else remained equal—which is pure conjecture and not something that should be relied upon as a funding source.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#172

Post by gruez »

jb775 wrote: post #123
gruez wrote: post #99

Earlier quoted context omitted.

>you'll quickly realize that the end result is the little guy paying the actual tax via inflation while the big guy actually enjoys larger profit totals What's the alternative then? Implement regulations, forcing companies to increase costs => "enjoys larger profit totals "? Tax companies only, forcing them to pass them onto consumers => "enjoys larger profit totals"? Do nothing?

> Do nothing? Yes. If the currently available options intended to fix a particular problem don't actually fix the problem while at the same time make the offending business more powerful while making the little guy less powerful...then yes, doing nothing is clearly a better option in the short term.

>If the currently available options intended to fix a particular problem don't actually fix the problem

Sounds like your expectation is too high. Either something stops climate change in its tracks, or it's not worth doing. Small incremental improvements? Nah, it won't solve the problem so let's not bother.

>doing nothing is clearly a better option in the short term.

But what about the long term?

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#173

Post by barbecue_sauce »

freeone3000 wrote: post #135
X6S1x6Okd1st wrote: post #127

Earlier quoted context omitted.

Miners typically get their funds as income, not necessarily cap gains.

It's a gain based on your invested capital, isn't it? It's textbook capital gains. PoS, PoW, whatever.

Under that definition, almost all income would be considered capital gains.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#174

Post by dragontamer »

meowface wrote: post #151
dragontamer wrote: post #65

Earlier quoted context omitted.

> A federal "money laundering" charge requires an illicit origin, and so since successful money laundering will never have an illicit origin, the charge can only be tacked on to another indictment. Fair. But think about it: a _singular_ person in your mixing pool can make the entire pool illegal. One, singular, person using that money for contraband (illegal porn, illegal drugs, illegal tax evasion) will turn the ent…

>But think about it: a _singular_ person in your mixing pool can make the entire pool illegal. One, singular, person using that money for contraband (illegal porn, illegal drugs, illegal tax evasion) will turn the entire pool illegal. It's very difficult to know, but I'm leaning towards this not holding up in court. At least not upon appeal. If a mixer has tens of millions of known participant addresses and the gover…

At least given today's political environment, I can very well see a simple argument consisting of:

* "The only reason to use a mixer is to hide money"

* "You joined a pool of millions of individuals, all of whom had the explicit goal of hiding money from the traditional financial system".

* "You (probably) knew that the money you get in your output wallet comes from a random individual in the pool".

As such, the implicit assumption in a reasonable person's mind is: this money you got is absolutely from someone else who was trying to hide their money. The law also states that aiding and abetting them is illegal in of itself.

----------

> If it works so that any "dirty money" is purged out within the next few transactions, then they might have to prove that you sent or received funds close to those distribution windows and had specific knowledge that some specific illegal act was likely occurring at that time.

Well, the issue with "faster moving" mixers is that it more closely connects the dirty money with the source. "Slow moving" mixers with larger pools are more entangled, harder to know where the money came from.

--------

I dunno. The RAII has been mildly successful in court over IP addresses used in Bittorrent peers, right? That seems to be roughly the same level of involvement as we're seeing here. I'm not necessarily saying you're going to get jailtime, but you probably will be roped into the court case if someone in your pool was doing something sketchy.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#175

Post by hncurious »

dougSF70 wrote: post #2

Obviously HN community is down on crypto. This exemption is a sign that Bitcoin is getting closer to the mainstream of finance. Like most flanker-moves, Governments should be incorporating it in to their tax policies rather than shunning it. Cannabis is a good proxy, states can keep it illegal and not make tax revenue or they can legalize it, control it and tax it. The feds should do the same. Same for crypto, keepin…

"Cannabis is a good proxy, states can keep it illegal and not make tax revenue or they can legalize it, control it and tax it."

That should be a great proxy, but regulators have so overburdened legal dispensaries that they need to be bailed out. Illegal sources could have been easily been made extinct or at least sidelined, but are still able to thrive because the overhead to get a license and stay licensed is so immense.

https://www.latimes.com/california/story/2021-06-14/californ...

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#176

Post by endless1234 »

awrence wrote: post #132
Tepix wrote: post #46

Earlier quoted context omitted.

I guess we need a proper CO2 tax to encourage better technology than proof of work

The math on the PoW energy FUD just doesn't check out. - At current levels, bitcoin uses very roughly 0.1% of global electricity but electricity only represents 25% of fossil fuels emissions so current PoW contribution to global emissions = 0.025%, ie a rounding error. This issue is currently a total red herring. Now let's project into the future. - bitcoin total addressable market cap if it took over the entire glob…

>At current levels, bitcoin uses very roughly 0.1% of global electricity but electricity only represents 25% of fossil fuels emissions so current PoW contribution to global emissions = 0.025%, ie a rounding error.

How does this argument make sense? Let's split up the world's energy consumption into 0.025% emission sized chunks in some arbitrary way we choose. Does nothing then make any difference, since everything is just a rounding error? The question is, does bitcoin provide value for the emissions it generates? For what it's worth, estimates seem to put the current usage at around 0.6% of total worldwide energy consumption.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#177

Post by gruez »

yellow_lead wrote: post #108
gruez wrote: post #104

Earlier quoted context omitted.

>How does anyone know how long you've held it? The blockchain?

The Blockchain doesn't mandate that you hold the private key of any wallet you owned since you acquired some Bitcoin assets.

And a piece of paper doesn't mandate that you actually transacted on the date it claims you did.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#178

Post by IfOnlyYouKnew »

RamshackleJ wrote: post #153
akira2501 wrote: post #149

Earlier quoted context omitted.

> If the absolute cost of electricity goes up, nothing changes. The cost of electricity does impact the cost per transaction on the network, does it not?

nope, transactions clear at a rate unrelated to mining(so long as at least 1 person is mining). The only thing that impacts transaction costs is how many other people are trying to clear their own transactions and bidding up the sat/vbyte rate.

Either transaction costs go up, or electricity usage per transaction goes down. Anything else just doesn’t add up.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#179

Post by spywaregorilla »

awrence wrote: post #132
Tepix wrote: post #46

Earlier quoted context omitted.

I guess we need a proper CO2 tax to encourage better technology than proof of work

The math on the PoW energy FUD just doesn't check out. - At current levels, bitcoin uses very roughly 0.1% of global electricity but electricity only represents 25% of fossil fuels emissions so current PoW contribution to global emissions = 0.025%, ie a rounding error. This issue is currently a total red herring. Now let's project into the future. - bitcoin total addressable market cap if it took over the entire glob…

I think bitcoin using 1 out of 1000 units of energy produced is pretty disgusting, hard stop.

Re: Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

#180

Post by godelski »

Taek wrote: post #133
Tepix wrote: post #46

Earlier quoted context omitted.

I guess we need a proper CO2 tax to encourage better technology than proof of work

A proper CO2 tax wouldn't be disruptive to bitcoin, bitcoin only cares that everyone pays the same price for electricity. If the absolute cost of electricity goes up, nothing changes.

The cost of electricity (coupled with the rewards and cost of hardware) changes how profitable mining is. The more profitable the more players. The more players the more transaction throughput. This is exactly why miners have bought powerplants and why they operate in locations with cheap electricity, because it makes it more profitable for them. Bitcoin mining is directly related to the cost of electricity.

That said, not every cryptocurrency is reliant upon brute forcing hashing algorithms to verify.

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