Two crypto firms are partnering on a product that they say will allow Bitcoin (BTC) miners to deposit tax-free BTC into an individual retirement account (IRA).
The Bitcoin mining marketplace Compass Mining says its miners can now use accounts from IRA provider Choice to avoid income taxes on their mining revenue in the short term or indefinitely, depending on the type of IRA they utilize.
The product will help to reduce the often-substantial tax burden crypto miners face in the United States, according to Compass.
“Cryptocurrency mining revenue is currently taxed as income, requiring Compass miners to pay income taxes on the bitcoin they mine. Miners are also sometimes forced to sell a portion of their mining revenue for dollars to cover their tax bills, which creates an additional taxable event, requiring miners to pay capital gains taxes…
Tax-efficient mining presents enormous benefits to retail miners and empowers them with another tool to mine even more profitably at a smaller scale.”
According to Compass, miners will need to purchase mining hardware with Choice funds in order to use the IRA. After that hardware comes online, mining payouts will be sent to a miner’s Choice account.
Choice CEO Ryan Radloff suggests that the product will help Bitcoin miners plan for the future.
“We’re always looking to find solutions for customers who are trying to save more of their hard-earned money and plan for their future. Being able to purchase a Compass miner within your IRA and mine bitcoin in a tax-advantaged account is an incredible opportunity.”