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.
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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.
Bitcoin of 2020: On the Rise, Better Established, and Much More Stable
Why Bitcoin is Continuing to Climb, from More Solid Ground Than Ever
Last night saw Bitcoin once again soaring up the market, with a 6% increase over the course of three hours. This continues a fantastic start to the year for the world’s largest decentralized currency, which is up 30% since January 1st, and pulling along with it several other primary cryptocurrencies, including Ether, Litecoin, Ripple, and Dash.
A Significant Moment for Bitcoin
January 2020 is certainly proving highly significant for Bitcoin. The sharp increases and painful falls of the past pale into comparison with now, as the current increase seems to come from a far better-established position with much more stability. Furthermore, the activity around Bitcoin is expanding in exchanges, banks, and other financial institutions, together with its legitimacy and relevancy.
World Economic Forum
Last week, at the World Economic Forum annual summit at Davos, Switzerland, Bitcoin, cryptocurrencies, and blockchain technology were honored guests. Many of the billionaires, bankers and treasury ministers who gathered in Davos are still fairly skeptical about the decentralized economy, but despite this, they also realize that they cannot stop it.
The World Descends into Chaos, And Bitcoin is on the Rise
It seems that the more agitated the world agenda, the more Bitcoin’s popularity grows, and strengthens its status as a…
World’s Richest 22 Men Are Worth The Same As All 325 Million Women In Africa — New Oxfam Report Reveals
The 162 richest people on the planet boast the same wealth as the poorest 50 percent — 3.85 billion — in the world.
From Tuesday, January 21, close to 3,000 delegates — including 53 heads of state — from 117 countries, will participate in the WEF summit in Davos-Klosters, Switzerland. According to the website blurb, the WEF Annual Meeting is “the foremost creative force for engaging the world’s top leaders in collaborative activities to shape global, regional and industry agendas at the beginning of each year”.
This year’s topic, for the great and the good of the business world and politics, is “stakeholders for a cohesive and sustainable world”. While the hellish fires raging in Australia fan the flames for climate change, the perverse irony that most of the 774 public speakers will have been flown into the summit will not be lost on the people who are truly concerned about the heating of the world.
Similarly, that many of the wealthiest people in the world will gather to no doubt use the WEF platform to further boost their richest, through additional business deals and contacts, while…
Cryptocurrency Prices Rally Towards Double-Digit Gains in 2020
The cryptocurrency market has started 2020 with a huge bang, expanding by an impressive 23% within the first two weeks of the year. The overall market capitalization of the cryptocurrency market – a measure of the size of the market – has grown from $192 billion at the start of the year, to well over $240 billion by the middle of January.
Leading the pack is Bitcoin (BTC), which constitutes more than 65% of the overall market size. Going from just under $7,200 at the end of 2019 to a high of $8,800, Bitcoin recorded double-digit gains within two weeks. January 14 saw a spike of more than 11% in Bitcoin’s price, fuelling speculation that the two-year-long cryptocurrency recession could finally be over.
Among the many factors that contributed to Bitcoin’s price increase was the geopolitical upheaval emanating from increasing tensions between the USA and Iran, which led to a flight of safety capital by investors, to safe-haven assets such as gold. Already established as a manifestation of digital gold, it seems hardly coincidental that the prices of both gold and Bitcoin went up.
Another catalyst for the increase was the official…