I ran across this blog post:
https://write.as/johndough/tax-free-passive-income-using-defi

It sounds like it might work as a safe (as in "probably will not be thrown in jail") way of getting some tax-free investment income. But it is pretty complicated (us dollars to DAI to Tornado.cash, then back to cash out). Is there a simpler or less risky way, preferably just using Bitcoin?

0% capital gains rate for adjusted gross income (I think that includes the money you get from selling coins but I am not an accountant) up to $40,000.

So if you're selling a couple coins and that will be most of your income: sell one this tax year (before Dec 31), and one next tax year, so your income is below 40k both years.

Declare the sales as capital gains; claim that you bought them on localbitcoins years ago at a low cost basis (e.g. $209 per coin).

You are extremely unlikely to get audited, and if you are audited, the IRS person is extremely unlikely to question your cost basis or care about exactly how you got the coins. They are looking for people who claim losses instead of gains, or who don't file returns at all.

The purpose of money laundering is to take some illegal income stream (drugs, prostitution, whatever) and make it look like legitimate, legal income.

Or to think about it a slightly different way: to figure out how to pay taxes on illegal income so the government doesn't throw you in jail (or look more deeply into how you are paying for all those lambos and vacation houses) for not paying your taxes.

So is Bitcoin useful for doing that? Well... maybe. You would have to first figure out how to convert the illegal income stream into Bitcoin. Then what? Use the Bitcoin to buy stuff... and your government is still gonna want to know how you can afford all that stuff when you paid almost nothing in taxes.

Best way to cover your tracks would be to claim you bought the Bitcoin way back in 2010, when it was really cheap. Declare a big capital gain, pay the 20% (or whatever capital gains taxes are in your country) and enjoy life.

You'll want to run your Bitcoin through a mixer (like Samourai Wallet's whirlpool) before spending them just in case the tax authorities try to trace where they came from.