Tax & Regulation
Is mining income taxed differently from buying crypto?
Mining triggers income tax at receipt plus CGT on sale. Buying triggers CGT only. But mining unlocks AIA and expense deductions that buyers cannot claim.
Yes — and this creates both advantages and considerations.
| Event | Mining | DCA Buying |
|---|---|---|
| Acquiring coins | Income Tax on value at receipt | No tax on purchase |
| Equipment cost | 100% AIA deduction (if trade) | No deduction |
| Electricity cost | Deductible expense | No deduction |
| Selling coins | CGT on gain ABOVE receipt value | CGT on gain above purchase price |
| Total loss scenario | Hardware resale + tax deductions preserved | Total financial loss |
| Annual allowances | £1,000 trading allowance + £3,000 CGT | £3,000 CGT only |
🎯 The mining tax advantage in practice: During bear markets, you mine coins worth very little — so income tax on receipt is near zero. Your cost basis for future CGT is also near zero. When you sell at cycle peaks, you pay CGT on the full gain. This is identical to DCA buying at the same bear prices. But mining ALSO gives you equipment write-offs and electricity deductions that DCA buyers never get.
Where mining loses on tax: If you mine coins during a bull market (high value at receipt), you pay income tax immediately — even before selling. DCA buyers don't face this. However, most mining accumulation happens during bear markets when receipt values are minimal.