Accounting for Cryptocurrency Mining Operations

[Adrien Monteleone]

Definitely one for both a CPA and lawyer for anyone doing any actual mining. I’m sure someone big somewhere is already blazing this trail, and it would be interesting to see how it is being handled on their books.

Regards,
Adrien

> On Oct 26, 2017, at 9:19 AM, John Ralls <jralls at ceridwen.us> wrote:
> 
> 
> 
>> On Oct 26, 2017, at 4:19 AM, Jean-David Beyer <jeandavid8 at verizon.net> wrote:
>> 
>> On 10/26/2017 12:21 AM, Rodney Elliott 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?
>>> 
>> 
>> If you found gold on your property and worked as a gold miner, and took
>> the gold as payment for your labors, how would you account for that?
>> Maybe it is just income paid in that alternate currency; gold in the
>> case of gold mining, BTC in the case of bitcoin. ???
> 
> I doubt any of us has any experience as either gold or crypto-currency miners. It’s likely that the law varies by jurisdiction—especially in the case of cryptocurrency where national laws now vary widely—so consult a local licensed accountant for the right way to do it in your jurisdiction. 
> 
> It would be wise also to consult a lawyer: You may need a business license. In the case of finding gold on your property you’ll also need to establish that you actually have the right to mine it, as some countries retain mineral rights as national assets and in those that don’t (including the USA) deeds may have separated the mineral rights from surface-use rights.
> 
> Regards,
> John Ralls
> 
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