The parent's observation is that it is initially taxed as income. If it crashes to zero that is a capital gains loss so it is a write off against capital gains, not against income. So you still would have to pay taxes even though you have no money.
The following are my observations from discussions with my accountant and reading some of the IRS tax codes and "guidance". Do NOT take this as tax advice
In general (within the US) the tax code is treating crypto both as property AND as income.
1) Someone pays you in crypto - income
2) If you mine crypto it is treated as income.
3) If you purchase crypto it is treated as property.
4) If you HOLD crypto it is treated as property.
To break down how this works in regards to taxes. If it is "income crypto" then you are liable for taxes on the value of the crypto at the "moment" you receive it.
1) For example, you received 1 token that is valued at $100 and your tax rate is 22% then you now owe $22 in income tax. If you hold that crypto and it goes to $0; you still owe $22 in income tax.
To further complicate this though, the loss from the $100 to $0 IS a capital loss. So what this means it you made an extra $100 in income, but then you lost $100 in capital losses which you write down against your income so now you are back to owe-ing $0 in income tax on that $100.
Now that may seem like a complicated way of saying you don't owe anything, but the catch is you can only write down $3000 a year of capital losses against your income. You can carry those losses over each year until it is wholly accounted for, but in the meantime, you could end up holding the bag and oweing a lot of money to the IRS.
2) If instead, you purchase 1 token that is valued at $100 and you hold it and it goes to $200 and then sell; you now owe capital gains taxes. If you held for less than 1 year then the $100 gain is classified as capital gains, but taxed like income. If you hold it for more than 1 year it is taxed at the capital gains rates.