Taxes for NiceHash users

[jde]

I know that ProHashing sends 1099s to people who make over $600 a year.

If you're using NiceHash, you'll likely reach that easily and probably end up with tens of thousands in revenue. However, the actual profit will be only a small fraction of this. Very often NiceHash miners will even lose money if their timing is off or have high share rejections.

Is anyone here mining with NiceHash at a substantial volume? If so, how do you plan to manage this?

I really hope that NiceHash users could receive exemptions from being given 1099s from Prohashing. This is kind of like a casino reporting your revenue to the IRS and leaving you to figure out your expenses.

[Steve Sokolowski]

I know that ProHashing sends 1099s to people who make over $600 a year.

If you're using NiceHash, you'll likely reach that easily and probably end up with tens of thousands in revenue. However, the actual profit will be only a small fraction of this. Very often NiceHash miners will even lose money if their timing is off or have high share rejections.

Is anyone here mining with NiceHash at a substantial volume? If so, how do you plan to manage this?

I really hope that NiceHash could receive exemptions from being getting 1099s from Prohashing. This is kind of like a casino reporting your revenue to the IRS and leaving you to figure out your expenses.

NiceHash also operates in the United States because they have servers in the US, and therefore is mandated to submit the forms to the government. Since they do not, they are clearly in violation.

They are also in violation of another legal issue. They are insolvent but providing preferential treatment to certain creditors (instead of fairly treating all creditors in bankruptcy court.)

They may also have an issue with money transmission because they both receive and send money, in contrast to pools which only send money. The main problem is that the withdraw address can be different from the deposit address, which means that the money could be transmitted to a different person without their knowledge.

Even if you don't count their poor customer service, these legal issues should make anyone take pause, because it's only a matter of time before the IRS starts investigating cryptocurrency companies. After we were finished testing with NiceHash, we got all our money out of there, because the bankruptcy issue in particular could force them out of business at any moment should they be issued an injunction to freeze assets for distribution to creditors.

[jde]

I know that ProHashing sends 1099s to people who make over $600 a year.

If you're using NiceHash, you'll likely reach that easily and probably end up with tens of thousands in revenue. However, the actual profit will be only a small fraction of this. Very often NiceHash miners will even lose money if their timing is off or have high share rejections.

Is anyone here mining with NiceHash at a substantial volume? If so, how do you plan to manage this?

I really hope that NiceHash could receive exemptions from being getting 1099s from Prohashing. This is kind of like a casino reporting your revenue to the IRS and leaving you to figure out your expenses.

NiceHash also operates in the United States because they have servers in the US, and therefore is mandated to submit the forms to the government. Since they do not, they are clearly in violation.

They are also in violation of another legal issue. They are insolvent but providing preferential treatment to certain creditors (instead of fairly treating all creditors in bankruptcy court.)

They may also have an issue with money transmission because they both receive and send money, in contrast to pools which only send money. The main problem is that the withdraw address can be different from the deposit address, which means that the money could be transmitted to a different person without their knowledge.

Even if you don't count their poor customer service, these legal issues should make anyone take pause, because it's only a matter of time before the IRS starts investigating cryptocurrency companies. After we were finished testing with NiceHash, we got all our money out of there, because the bankruptcy issue in particular could force them out of business at any moment should they be issued an injunction to freeze assets for distribution to creditors.

Thanks for your quick reply.

I agree about the risk concerning NiceHash. I make sure to keep my balances there relatively low.

As for the tax issues, I'll make sure to document my expenses carefully.