Cryptocurrency tax bases: investment, trade and mining

Cryptocurrencies such as Bitcoin and Ethereum have become an incredibly important part of the global financial world, which raises tax issues.

The application of tax rules to cryptocurrencies is still a challenge in many countries, as these instruments are very different from traditional currencies and securities.

The tax rules relating to cryptocurrencies are further complicated by the fact that the assets are used in a variety of ways, including investment, trading and mining.

Investment and trading are often similar for tax purposes.

If a person invests in a cryptocurrency and later sells it at a higher price, he or she is often taxed on the gains realised. However, the exact tax rules may vary from country to country and may also depend on how long the person has held the cryptocurrency.

Mining cryptocurrencies is also generally a taxable activity.

Mining involves the creation of "new" cryptocurrency, which miners often sell for a profit. Mining is generally a labour and energy intensive process, the costs of which are often tax deductible, but the value of the cryptocurrency mined is often taxable income.

The taxation of cryptocurrencies is complex and tax rules are constantly changing as authorities seek to keep pace with technological developments.

All investors, traders and miners are advised to seek expert advice to understand the current tax rules and avoid legal problems.