Bitcoin Mining Accounting

Commercial mining is generally taxed as business income, with the value of rewards brought into income and a second tax event when the coins are eventually sold. The valuation and timing positions deserve care and documentation, because they drive both the tax bill and the cost base going forward. US corporate miners add their own layer, including digital asset disclosure on the federal return. We document the position rather than assuming one.

Self-mining rewards and pool payouts are recognized on receipt at fair market value from a consistent, documented price source. Hosting revenue follows the contract, not the coin: monthly hosting fees, pass-through power, deposits, and SLA credits each recognized on their own terms. Mixing the two models in one revenue line is the most common error we clean up.

Yes. Miners are depreciable equipment, and the class and useful-life choices materially change taxable income and reported earnings. Hash-price decay is faster than most default schedules assume, so impairment review belongs on the standing agenda, not just at year-end. We set a written capitalization and depreciation policy so the treatment is consistent across the fleet.

Generally no. The crypto-asset mining rules in section 188.2 of the Excise Tax Act place most mining activity outside the commercial activity definition, which denies input tax credits on hardware, hosting, and power. That makes sales tax a real cost to model into every contract and purchase decision, and Quebec operations add a QST layer with its own analysis.

It is the all-in cost to produce one BTC, by site and by period: power, hosting, labour, pool fees, and depreciation allocated per facility and per megawatt. Lenders underwrite equipment financing against it, and boards use it to time curtailment, treasury sales, and expansion. If you cannot produce the number monthly, you are negotiating blind.

Yes. Hosting is a services business with its own accounting: customer deposits, pass-through energy billing, SLA credits, and capacity contracts. We advise hosting facilities from contract review to cost-per-megawatt reporting, alongside the self-miners and hybrid operators whose books we run monthly.