During one of the panels at the North American Blockchain Summit (NABS), taxation, accounting, and compliance experts, Tim Savage, Tax Partner at Weaver, Joshua Smeltzer, Partner at Gray Reed, and Aaron Jacob, VP and GM of Enterprise Accounting Business at Taxbit – took a deep dive into legal, tax, and accounting considerations for Bitcoin miners.
This blog unpacks the core discussions, providing essential insights to help miners stay compliant, competitive, and prepared for the evolving regulatory framework.
Understanding the Current Landscape of Bitcoin Mining
The legal, tax, and accounting environment for Bitcoin miners is complex and constantly evolving. From groundbreaking accounting standards to critical regulatory developments, the blockchain industry is navigating uncharted waters.
For Bitcoin miners, it’s no longer just about securing the network or maximizing profits—it’s about ensuring compliance while leveraging regulatory shifts that can give your business a competitive edge.
Key Insights from NABS
1. Fair Value Accounting Changes for Digital Assets
What’s New?
The Financial Accounting Standards Board (FASB) introduced a pivotal change that is now in full effect for all public and private companies following US GAAP regarding fair value accounting for digital assets. Under the new standard, companies must now record crypto assets such as Bitcoin on their balance sheets at fair value, rather than acquisition cost.
Why It Matters for Bitcoin Miners
Previously, prices of digital assets had to be recorded at their lowest intra-day value since acquisition (using impairment rules), which often mismatched a company’s economic realities. Now, miners must align their accounting reports more closely with market values, reflecting real-time gains or losses.
However, it’s important to note that these fair value rules do not apply to mining-specific assets such as ASIC hardware (the machines used for Bitcoin mining), which remain subject to older, more complex impairment rules. It’s critical to assess whether this shift impacts your operations based on your asset portfolio.
“Not all assets fit within the scope of this guidance. If you hold Bitcoin it’s well within the scope of the guidance. If you hold major market crypto assets it’s very likely going to be within the scope of the guidance. But make sure that you understand that.” – Aaron Jacob, VP and GM of Enterprise Accounting Business at Taxbit
Actionable Steps for Bitcoin Miners:
- Understand whether your holdings (e.g., mined Bitcoin) fall within the scope of the new accounting rules.
- Work with an accountant or financial professional to implement required processes by mandatory adoption deadlines (fiscal year 2025).
- Prepare stakeholders for transition-related disclosures.
“For the first time, companies have disclosure requirements – those didn’t exist previously, so there are a handful of disclosures that companies need to be prepared to provide to users of financial statements.” – Aaron Jacob, VP and GM of Enterprise Accounting Business at Taxbit
2. New U.S Broker Regulations and Corporate Tax Adjustments
The newly issued IRS and Treasury broker regulations add another layer of tax reporting obligations, especially aimed at cryptocurrency exchanges and platforms. For miners, an essential shift in these rules involves abandoning the commonly used universal cost-basis approach.
The Key Change
Now, miners must adopt wallet or account-based inventory tracking. This ensures bitcoin mined or sold by a specific wallet, exchange, or account is accurately reported, preventing the common practice of pooling inventory across multiple wallets.
“As part of these regulations the IRS and the Treasury came out and said companies need to move from a universal approach to an account based approach – where I’ve got to track inventory queues based on the wallet, based upon the exchange account, based upon my custodial account. That gets a little bit more complicated for companies to do” – Aaron Jacob, VP and GM of Enterprise Accounting Business at Taxbit
Reallocation Period
The new requirements go into effect January 1st 2025 and a grace period allows miners a small window of time to reallocate the cost-basis of their holdings across their relevant accounts and wallets.
“You have a period of time leading up to that where you can get your stuff in order. Let’s say I’ve been using a universal approach historically. I’ve got this finite window of time where I can redo that, I can reallocate my cost basis. I can move from a universal approach to a by-account, by-wallet, by-source approach and I can allocate or reallocate my cost bases to those different inventory queues” – Aaron Jacob, VP and GM of Enterprise Accounting Business at Taxbit
Takeaways for Miners:
- Consult tax professionals to ensure compliance with the new tax rules.
- Update inventory systems to enable account or wallet-based tracking.
- Review your existing cost-basis approach and consider reallocation (note, this is not required – or recommended – if you’re already using an account or wallet-based inventory queue).
3. Legal and Regulatory Shifts
Bitcoin mining continues to grapple with regulatory uncertainties, especially regarding energy consumption, emissions, and compliance with federal and state-level frameworks.
Energy and Grid Stability Discussions
Texas, home to a significant Bitcoin mining community, has gained attention for its interactions with electrical grids. Policy discussions for 2025 are expected to focus on positioning miners as assets for grid stability.
Regulatory Clarity
Panelists welcomed the Chevron Deference rollback by the U.S. Supreme Court, which historically gave agencies broad discretion in rule interpretation. This creates fresh opportunities to challenge unclear or overreaching regulations.
Implications for Miners:
- Stay informed about evolving energy-related policies.
- Monitor state-level discussions surrounding Bitcoin mining incentives and grid collaboration.
- Anticipate litigation that may set a precedent.
What’s Next for Miners – 2025 and Beyond
The insights shared at Texas Blockchain Week underscore the urgent need for Bitcoin miners to keep pace with regulatory and accounting changes. To ensure compliance in 2025 and beyond:
- Partner with accountants and lawyers experienced in digital assets taxation and accounting.
- Update internal processes for inventory tracking, reporting, and compliance.
- Advocate for fair and practical tax laws through well-established trade organizations.
- Align your operations with evolving environmental and energy policies to strengthen relationships with policymakers.
To watch the full panel discussion visit the Texas Blockchain Council YouTube Channel.
