Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules • Hacker News Board

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

#201

Post by meowface » Thu, Aug 05, 2021, 7:26 PM UTC

dragontamer wrote: post #190

meowface wrote: post #184

Earlier quoted context omitted.

>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. Is hiding money inherently a crime, though? I think it only might be if you're trying to violate a specific law regarding transparency. Naturally, if you're using a mixer, you must be trying…

I too am not a lawyer. But banks and money transactions have numerous provisions in them to hamper criminals who try to hide money. Perhaps I'm wrong about money laundering. But what if prosecutors instead hit you with smurfing? ( https://www.goldinglawyers.com/smurfing-money-example-lost-e... ) Perhaps smurfing is closer to the mixing. The _intent to hide_ is by itself illegal in the law, and frowned upon severely i…

Structuring/smurfing is done to evade specific bank deposit reporting requirements, though. Unless there's a specific requirement you're trying to evade (e.g. an exchange must, by law, report deposits or balances over a certain size), I don't know if the general notion of "hiding" can be considered illicit.

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

#202

Post by nybble41 » Thu, Aug 05, 2021, 7:26 PM UTC

gruez wrote: post #103

davidlee1435 wrote: post #94

Earlier quoted context omitted.

> And if you quit your job prior to selling (i.e had ordinary income Not a tax advisor, but I thought capital gains counts as taxable income? So someone who sells $50k worth of BTC will pay 15% on $10k.

>but I thought capital gains counts as taxable income It's taxed, but at a different rate compared to ordinary income.

Yes, and the rate depends on the amount of ordinary income you have (including short-term gains) and the amount of long-term capital gains. The capital gains rate is 0% under $40k (for single individuals) but ordinary income is calculated first (after deductions) and the total income determines the bracket. So if you have $40k or more in ordinary income (after deductions) then the 0% rate won't apply to any of your long-term gains. If you had $20k in ordinary income (a.d.) then the first $20k of long-term gains would be taxed at 0% and the next $400k (from $40k to $440k of total income) would be taxed at 15%, with anything beyond that taxed at 20%.

Also, if you have significant income from investments then a surcharge of 3.8% in Net Investment Income Tax may be added on top of the long-term capital gains rate for part of that income for a marginal rate of 18.8% or 23.8%.

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

#203

Post by dmix » Thu, Aug 05, 2021, 7:29 PM UTC

hncurious wrote: post #175

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 imm…

Here in Canada there's a ton of shops that look like normal dispensaries but are just unlicensed ones. Their product selection is usually way better and includes co2 extracted vape products (which last I checked weren't legally available yet and IMO the future of weed consumption) and candy/drinks/etc. They also have better websites which cheap same-day delivery, usually within a few hours.

The municipal governments try to shut them down with daily fines but they either eat the cost because it's so lucrative or shut down temporarily and pop up somewhere else.

At least one shop had large bricks put in front of them at multiple locations and they just put someone outside with a square tablet and sold it there.

https://globalnews.ca/news/5369230/cement-blocks-illegal-mar...

I highly doubt the underground/grey markets will go away.

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

#204

Post by arcticbull » Thu, Aug 05, 2021, 7:32 PM UTC

idiotsecant wrote: post #194

snikeris wrote: post #185

Earlier quoted context omitted.

It's the same transaction throughput regardless of the number of miners.

Same transaction throughput, but not same security.

Right people say that, but here in the real world we usually define some sense of sufficiency. Just adding more "security" by burning up all the worlds coal at some point has no meaningful benefit. This is just a nice narrative. Security is good -> more security is better no matter the externalities is a terrible way of looking at the current situation.

We don't make seatbelts out of titanium 8 inches thick with their own airbags when they're mounted in a go-kart.

When the hash rate dropped what, 75%, off the back of the China exodus literally nothing happened.

tl;dr: Same transaction throughput, same security, just less efficient.

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

#205

Post by vel0city » Thu, Aug 05, 2021, 7:38 PM UTC

akira2501 wrote: post #149

Taek wrote: post #133

Earlier quoted context omitted.

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.

> 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?

The network self-adjusts difficulty so a block is mined roughly every ten minutes. A block has a maximum size of data in it, pretty much the maximum amount of transactions per block. As long as there aren't massive fluctuations to the mining rate, the rate of transactions will remain relatively constant.

As long as there is free space in the blocks, average transaction fees will remain low. If there are a lot of transactions in the mempool waiting to be included in a block, users will need to submit transactions with higher related fees to ensure they get picked to be included in a block soon.

Remember, miners don't necessarily set transaction fees. Users choose what they're willing to pay for their transactions, essentially placing a bid. Miners choose the transactions that maximize the fees per block. Miners always want as full of blocks as possible because there will only be a block roughly every 10 minutes.

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

#206

Post by arcticbull » Thu, Aug 05, 2021, 7:38 PM UTC

IfOnlyYouKnew wrote: post #178

RamshackleJ wrote: post #153

Earlier quoted context omitted.

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.

Most coiners conveniently ignore block reward when calculating the cost of a transaction - that's your missing factor. Consider that the only reason you need to secure the blockchain is because it is mutable, if it were immutable it would be sufficient to simply publish it with a known hash. Ergo, 100% of the energy consumption of the Bitcoin network is attributable to transaction processing and therefore can be quantized into and proportionally assigned to transactions.

  TotalCost = DirectCost + ProportionalAllocationOfBlockReward

The value of the block reward is proportional to the price of bitcoin, and this block reward determines the ceiling of the consumption of resources in mining. The floor is determined by prisoners dilemma and so likely approaches the ceiling at the limit.

So yes, the transaction cost does scale with consumption of resources, albeit in a tail-wagging-the-dog kind of way, because the price of the block reward changes with price allowing more resources to be consumed.

Currently the actual cost of a Bitcoin transaction is $2.44 in direct costs + (6.25 * 41000)/2750 = $93 in indirect costs, so right around $95.44 - and that's using I believe the maximum possible transactions per block, the reality is it's more expensive still.

Move over Bank of America, there's a new king in town.

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

#207

Post by andruby » Thu, Aug 05, 2021, 7:39 PM UTC

IfOnlyYouKnew wrote: post #178

RamshackleJ wrote: post #153

Earlier quoted context omitted.

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.

Sorry, that's not how it works. The network adapts the difficulty to target 1 new block every 10 minutes.

More mining → higher difficulty → higher electricity usage per block.

The transaction costs paid are independent of difficulty or number of miners. Transaction cost depends on the demand. A block has a limited size in bytes. If more people want to send transactions than there is room in the current block, the miner that mines that block will include the transactions that include the highest fee.

When sending a transaction, you can choose that fee. Higher fee → higher chance of being included. Bitcoin clients will usually calculate a reasonable fee for you, based on the demand.

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

#208

Post by tmn » Thu, Aug 05, 2021, 7:39 PM UTC

nickthemagicman wrote: post #5

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…

Isn't crypto a direct threat to their power? If finance can't be tracked it can't be taxed. If it's mainstream more and more people could potentially switch to crypto, which would reduce their tax collections. Just theorizing. I have no idea if this would happen.

Most people thought the internet was a threat to the establishment. In all likelihood bitcoin was developed by the NSA.

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

#209

Post by vel0city » Thu, Aug 05, 2021, 7:41 PM UTC

IfOnlyYouKnew wrote: post #178

RamshackleJ wrote: post #153

Earlier quoted context omitted.

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.

Miners don't set the transaction cost, they can only maximize fee revenue by picking the highest fee transactions at that time in the mempool. So, if it becomes unprofitable or not profitable enough for the taste of the miner, hashrate will go down, which will lead to a difficulty adjustment, which means overall electricity usage per transaction goes down.

So its scenario #2 in your comment.

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

#210

Post by arcticbull » Thu, Aug 05, 2021, 7:47 PM UTC

sunshinerag wrote: post #152

p_l wrote: post #124

Earlier quoted context omitted.

But the core principle of Proof of Work is wasting energy. If it takes from green sources, that just means those green sources won't be available to push out polluting ones. Combine this with buildup of polluting sources as backups for intermittent ones...

No, there is no waste. It is a very efficient conversion of energy to security of the ledger. And with that ledger instead of all the wars and waste generated by manipulatable central bank ledgers it’s a win.

Bitcoin is the single least efficient system ever conceived of or reduced to practice by mankind.