Cryptocurrencies are all the rage these days, and no digital coin has captured the imagination of investors more than Bitcoin. But one question still lingers in many people’s minds: Is Bitcoin mining legal in the USA? Though it’s not immediately obvious, the answer to this question is pretty simple. That’s why you should read our guide, which will tell you everything you need to know about the legality of Bitcoin mining in the USA.
While Bitcoin might seem like a niche product today, its future looks promising. Various predictions say that Bitcoin will one day take over paper money and completely replace all other modes of payment. Whether or not that will happen remains to be seen. What is certain, however, is that Bitcoin and other cryptocurrencies are here to stay for good. As such, it’s important to understand how they work so you can make informed decisions about your finances.
Mine Bitcoin in the US
There are two primary ways of mining Bitcoin, through a cloud service or by setting up your equipment. Both have their pros and cons. With cloud mining, you’re not getting any physical hardware or having to configure any settings; however, it means that someone else is responsible for taking care of all of that as well as keeping track of all transactions (difficult since Bitcoin transactions are anonymous). It also means that you don’t get voting rights on how they keep your Bitcoins safe (which can be problematic if they’re kept on a central server). On the other hand, by setting up your equipment and keeping it at home, you take responsibility for its safety and make sure no one can access your account without physically entering your location.
Taxes on Cryptocurrency
The IRS treats digital currencies as property for tax purposes, so every time you buy or sell Bitcoin you have a taxable event. This means you must keep careful track of your purchases and sales. Most sites like Coinbase make it easy to track your transactions. From a tax perspective, cryptocurrencies are treated very similarly by various countries. But there are some differences: In Australia, Canada, Germany, Finland, and Norway cryptocurrency is legal tender (like money) while it’s not legal tender in most of Asia (China & Japan being notable exceptions). Cryptocurrency mining itself has been declared illegal by some governments such as Sweden and China. Make sure you are aware of your local government laws and regulations before using cryptocurrency! Don’t fall victim to taxes on cryptocurrency exchange!
US Government Cryptocurrency
Since 2013, Bitcoin mining has been legal within US territory. However, Congress and regulatory agencies have taken a keen interest in regulating cryptocurrency transactions. The Commodity Futures Trading Commission (CFTC) is pushing to regulate Bitcoin as a commodity. Meanwhile, Federal Reserve Chair Janet Yellen announced that the Fed doesn’t have authority to supervise or regulate Bitcoin [and other cryptocurrencies], and it’s not something we’ve looked at. Her statement shows that no direct government regulation of cryptocurrency exists yet, although members of Congress continue to introduce various bills on the subject.