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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.

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.


Your capital is at risk.

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.

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.

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.

Check out eToro’s crypto tax calculator to see if you owe tax on crypto.

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. 

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Stellar now available on eToroX exchange

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eToroX announces new cryptoasset and multiple fiat pairs

7 August 2019: eToroX, the blockchain subsidiary of global investment platform eToro, today announces that Stellar (XLM) is now available on the eToroX exchange.

As of today, eToroX is making Stellar a base currency for trading pairs on eToroX. It will be tradeable against other cryptoassets and stablecoins. The pairs include USD (XLM-USDEX) GBP (XLM-GBPX), Japanese Yen (XLM-JPYX), Euro (XLM-EURX), and with Bitcoin (BTC-XLM), and Ethereum (ETH-XLM).

“We want to open up the tokenized world for everyone,” said Doron Rosenblum, Managing Director of eToroX. “eToroX is bringing crypto and tokenized assets to a wider audience and enabling them to trade with confidence on a secure and regulated platform.”

“We believe that blockchain technology has the means to include more people in a new financial world, who might have been previously excluded from it. Stellar shares this ethos, which is why we are excited to be adding it to our exchange and on-chain wallet for people to buy, sell and hold, 24/7.”

Stellar is an open source and decentralized payment network protocol with its own currency (XLM), which connects banks, payment systems and people, aiming to provide global access to low-cost financial services for all.

“It’s exciting that eToro has added Stellar Lumens as a base currency on the eToroX exchange,” said Jed McCaleb, CTO of the Stellar Development Foundation. “We believe…

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Are you an accidental bitcoin tax avoider?

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Are you one of the many millions of people who saw the price of bitcoin start rocketing in 2017? Are you one of the hundreds of thousands who bought in? Are you one of the thousands of buyers who is resident, for tax purposes, in the UK?

If your answer is yes to the last question, you need to take a deep breath and read on.

Cryptocurrency is still in its infancy as far as regulators are concerned, with few rules around what you can do with bitcoin and its peers and what can be done to you with it.

While it’s not the Wild West, you’re advised to use registered and regulated platforms, such as eToro, to trade and invest to ensure the best protection from scams.

But if those who make the legal application around burgeoning financial trends are a bit behind the curve, those seeking to tax it are not.

You might not be aware, but if the size of your pot of bitcoin – or other crypto – has risen considerably since you bought it, you need to be thinking about your potential liabilities to HMRC.

In December, HMRC published a list of ways your bitcoin can make you liable for a range of taxes. The main one for those who bought the rising bitcoin…

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Making the most of your bitcoin (by maxing your tax)

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Crypto enthusiasts will know that just because you didn’t know about the tax liable on cryptocurrency gains doesn’t mean you don’t have to pay it. Ignorance is no defence against the taxman.

But there are ways of reducing the tax you have to pay, and they are all entirely legal.

The main tax a holder of bitcoin is most likely to pay is on any gains made when selling the asset. This is called Capital Gains Tax (CGT). Like any investment, if you don’t do anything to make the value increase, it’s seen as something of a windfall – and the government wants a share of the action.

You are liable for tax on the gains you make selling cryptoassets for cold hard cash, exchanging cryptoassets for a different type (i.e. bitcoin for ripple), using cryptoassets to pay for goods or services or giving them away to someone else.

Importantly, you can give the cryptos to a spouse or civil partner and not be liable for gains… but you are just handing over the liability to them to sort out.

Also, don’t think you can just offload them onto a charity, as HMRC can take a view that you are doing it just to get out of paying what you owe.

However, CGT only kicks in after you’ve made…

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