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Mining crypto – a free lunch?

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If you speak to anyone over 50 about mining crypto, it’s likely they will ask you where your pick, hard hat and shovel are. Many of us under 30 will almost certainly have considered it.

Mining is a way of earning cryptocurrencies in your sleep. Or more accurately, a way your computer can earn them while you sleep.

USE ETORO’S CRYPTO TAX CALCULATOR

Using your computer’s internal systems to process the complex calculations to load transactions on to the ledger or block earns you coins. The more you calculate, the more coins you earn. This explains why there are huge “farms” in China and plenty of other places running 24/7 to process these transactions.

It can be lucrative, and it is a lot more certain than trying to second guess how a currency will move.

However, just as there is no such thing as a free lunch in real life, the same is true in the digital world. The taxman is very interested in your mining activities. Her Majesty’s Revenue & Customs (HMRC) have set out guidance as to how it classes these activities and, yes, you’ve guessed it, there might be tax to pay.

FIND OUT IF YOU OWE CRYPTO TAX

Just like regular mining – for coal, tin, diamonds – at the end of the process, you end up with something of value. This means you earned it (even if it was just pushing a button on a keyboard) and all earnings can be considered taxable. Income Tax, which you pay on your regular wage, might be liable on your mining activities.

HMRC says it is willing to offset “any appropriate expenses” against this Income Tax, but so far it is not clear what “appropriate” means. Consider that mining does not just require a relatively high-powered computer, but a decent chunk of your power supply, too – this might be taken into account, or it might not.

The “miner” is also likely to be liable to pay Capital Gains Tax, should they dispose of the cryptos for a higher value (vs sterling) than they earned them. Double whammy.

READ ETORO’S CRYPTOASSET TAX REPORT

But there is a potential get-out clause. HMRC has not publicly announced how much mining makes you an actual miner. It said in December that it would depend on a range of factors, including the degree of activity, organisation, risk and commerciality.

This might mean it is only looking at the massive farms, rather than the smaller setups – but for the moment, we don’t really know.

So, keep an eye on the regulations and announcements from HMRC. No one wants to dig themselves into a hole with the taxman.

To help you understand how this new tax regime might affect you, eToro has created a crypto tax calculator, infographic and crypto tax guide.

You can also listen to eToro, HMRC and ICAEW explore the cryptoasset landscape, the future of crypto, the tax levy and dispel common misconceptions in our webinar here.

LISTEN HERE

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework. Your capital is at risk CFDs work, and whether you can afford to take the high risk of losing your money.

Applies to UK taxpayers only.

The information above does not constitute financial advice, always speak to a tax professional to ensure it is right for your specific circumstances.

eToro does not represent any government entity. You should check with a tax professional or HMRC if you are paying the right amount of tax.

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GoodDollar presents Decentralised Cryptocurrency at OECD Blockchain Policy Forum

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Yoni Assia, Chief Executive of multi-asset trading platform eToro, took the stage at the second Global Blockchain Policy Forum, recently hosted by the Organisation for Economic Co-operation and Development (OECD), to present the not-for-profit GoodDollar project.

The blockchain ecosystem is moving fast with pressure on governments and institutions to keep abreast of the latest innovations. At the prestigious event, held in Paris, the OECD gathered industry leaders together for the second year in a row to discuss the hype around cryptocurrencies and the possibilities that the technology brings to make social impact and lasting change.

Mr Assia told delegates that GoodDollar is launching a decentralised cryptocurrency – also called GoodDollar, or G$ – powered by blockchain, in a bid to reduce global wealth inequality and “fix one of the biggest problems in the world”.

“Today, 94 per cent of the wealth in the world is actually held by the top 20 per cent,” he said. “An even more mind-blowing number is that the richest 26 people in the world have more wealth than the lower 3.8 billion.”

“A lot of very smart and very wealthy people understand that this is a big issue and they understand the responsibility of the elite, or top percentiles, to make sure that we fix this problem before it becomes too significant.”

Mr Assia explained that because of the development of cryptocurrencies and blockchain…

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eToro’s new open-source programming language is first step in bringing $500 trillion OTC derivatives market onto the Blockchain

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-Lira is first project born out of eToro’s acquisition of smart contract company, Firmo, earlier this year –

eToro, the global multi-asset investment company, has today released the details of Lira, a new open-source programming language for financial contracts. Lira is the first step in bringing the $500 trillion OTC derivatives market onto the Blockchain by introducing a new formal contract language.(i)

Lira is a domain-specific language that can be used to write OTC financial contracts for assets currently on the Ethereum blockchain. It is both secure and easy to programme whilst guaranteeing self-executing global settlement and automated trade reporting and monitoring. It’s easy tracking and compression will enable better collateral requirement efficiencies. Furthermore, it is the first decentralised finance (DeFi) project that will look to expand the code across different blockchains now that it is open-sourced.

Yoni Assia, CEO and Co-Founder of eToro, commented: “Bringing the OTC derivatives market onto the blockchain will bring more transparency and capital efficiencies to the industry. Activities in the post-trade cycle, such as settlement and the clearing of derivatives, are both expensive and a source of systemic risk. We believe that blockchain technology can provide a secure execution environment in which settlement is guaranteed by design. That is why today we are introducing a new formal contract language – Lira. This has the potential to open up and transform the derivatives market.”

At…

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eToroX launches new professional API trading program

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AlgoX Prime API introduced by blockchain subsidiary of eToro  

11 September 2019: eToroX, the blockchain subsidiary of global investment platform eToro, today announced the launch of its institutional-grade API trading programme, AlgoX Prime.

AlgoX Prime is the top-tier API program of eToroX Exchange, the eToro Group’s regulated and secure cryptoasset exchange. Employing the deep liquidity of eToro, tight spreads, and bespoke capabilities for cryptoasset trading, AlgoX Prime is carefully tailored to suit the needs and requirements of institutional-grade algorithmic traders from both the traditional and crypto spheres.

The program offers highly competitive fees, a free enterprise-grade market data package, and a high-quality, low-latency colocation service that incorporates professional-level connectivity, enabling direct access to eToroX’s dedicated, high-security data centre. The continuous and ongoing rollout will include an ever-expanding list of cryptoassets, increased volume from eToro, and much more.

From the Consensus invest:Asia event in Singapore, Doron Rosenblum, eToroX Managing Director, said “AlgoX Prime, our new API trading program, offers sophisticated trading capabilities to institutional and corporate traders. We believe that it will open the door for institutional traditional financial algo trading companies to trade cryptoassets, and by doing so, greatly increase market liquidity.” 

“The AlgoX Prime trading program aligns with eToro’s strategy of bridging the gap between blockchain and the traditional financial markets,” saidYoni Assia, CEO of eToro. “The ability to trade on eToroX using APIs will help…

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