One thing that keeps me from going all-in with Bitcoin, or any crypto, is the whole Cost Basis / Capital Gain/Loss thing on each and every single purchase or swap or mining of coins.
-For DCA setups, you need to keep track of the price of the coins at the moment you buy them, every single time you buy them, because BTC value is constantly changing in price. Then when you sell, you gotta break down every single buy you made at the time you bought them to compare with the current BTC value. Then there’s the HODL peeps – yea you been hanging onto your coins – but when you decide to cash out, you still gotta keep track of what you originally paid for them to determine your Net Profit Gain or Loss. And if you’re a long term DCA HODLer, you’re going to have a ginormous log to keep track of.
-For mining, it’s the same thing. You have track the value of your coins when you mine them and hit a block (or someone else hits a block and you get a share), and pay taxes on their value at the exact times you receive your coin shares. And that’s just when you hit a block or get a share. THEN, if you decide to cash out, you gotta do the same thing all over again.
Then there’s the short-term capital gain rates vs. long-term capital gains rates.
It seems like the easiest way to deal with this is to make one single large purchase during a down period and just hold it until you’re ready to cash it all out at once, so you only need to track a single Net calculation.
Doesn’t this stuff drive you guys batty?
(I’m speaking from the US, with the annoying IRS rules, but I imagine this is the same thing in other countries tax systems?)
It makes me want to just stick to a Roth IRA and Bitcoin ETFs to skip ALL the tax nonsense.
submitted by /u/Steel-Tempered
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