Paying a provider for mining capacity and receiving the mined coins, without owning the hardware.
Coins received are income at fair market value when received. The contract cost is a capital expenditure for a business, recovered over the contract term, and not deductible at all for a hobby. Many cloud mining offerings are structured so the contract never pays out its cost; that shortfall is a loss only if the activity is a business.
Yes, at the value of coins when received. Whether the contract cost is deductible depends on whether the activity is a business.
Source: IRS Notice 2014-21; IRC 183
Last reviewed September 18, 2026. Tax rules change; confirm current law before acting.
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