Accounting for Cryptocurrency Mining Operations

[Adrien Monteleone]

Ironic that you refer to Bitcoin as coming from ‘thin-air’ in the same discussion claiming no ‘fiat currency’ was involved.

You might have just exposed cryptocurrency as not having any clothes.

At least for now, I’d posit the answer has to lie in the accounting equation.

Have you decreased some other asset?

Have you increased a liability or equity?

Have you earned revenue?

I doubt you want to recognize it as ‘revenue’ which raises income and taxation questions, though that may be your only option.

I can’t see any equal value asset being reduced.

Does it constitute a liability owed to someone else?

It may increase your equity I suppose, perhaps as an ‘opening’ type entry. But as an ongoing operation, this would be suspect.

You might find some guidance in journal entries with respect to mining physical elements. (like precious metals, oil, timber, etc.) I tried a cursory search but came up empty.

Regards,
Adrien


> On Oct 25, 2017, at 11:21 PM, Rodney Elliott <rodney.elliott at rbendeavours.com> wrote:
> 
> Hi All.
> 
> 
> If I were to purchase a cryptocurrency (say Bitcoin) with a fiat currency recognised by gnucash (say USD), then the procedure to record the transaction is clear - create an asset account of the type 'stock', associate it with a new security that uses the coin ticker (BTC) and the maximum number of significant figures supported by gnucash, etc.
> 
> 
> 
> What to do in the case of mining a cryptocurrency is less clear. The BTC asset account would need to be credited with the amount of coins mined, but then what? How do you balance this transaction, given that no fiat currency was involved? The cryptocurrency was effectively created out of thin air. I feel like the answer is an equity account of some description, but I do not think that it would be appropriate to have an equity account of the type 'stock'. Is there a tractable solution to this problem?
> 
> 
> 
> 
> 
> - Rodney
> 
> 
> 
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.