You are doing it wrong then and could possibly end up paying taxes on something you took a loss on. You are only taxed when you convert to fiat. Just to illustrate my point, lets say last March I somehow solo mined a bitcoin block and received 12.5 bitcoins. And this was when it was at $1250. By your reasoning I take a capitol gains taxation for $15,625. Now lets say I hold the bitcoin and decide to sell it all this month netting $137,500. You think the IRS will let this slide since I paid tax on it last year? No. Its really no different than buying a stock. You pay capital gains when you sell it, not when you receive it.
The only problem with your logic is that buy a share of stock is not the same as mining crypto. Let me explain.
If you were my employee and I paid you for your work in company stock it would be taxed at the price I gave it to you as income and when you sold it would be taxed again on the difference either as a either a capital gain or capital loss (assuming you held it for more than 12 months).
Now, if you buy crypto you only pay capital gains on the difference, again assuming you held it for 12 months.
Trust me.
Small miscommunication here. NSUMMY is saying the same exact thing, but looking at it from an investor's standpoint rather than a miner's.
WHOISMOSES, you are correct in that cryptocurrency is recognized as revenue, and as a result taxed, when it is earned. So lets say that on a pool I mine $1,000 worth of bitcoin on the 1st and I also mine $1,000 worth of bitcoin on the 15th. As of the 30th of that month, I've mined $2,000 worth of bitcoin. If my electricity expense was $200 for the whole month, I will owe taxes on $1,800 (assuming that there are no other expenses I can deduct). Now, lets say that I decide on the 30th to cash out that $2,000 in BTC. But I run into a problem because the BTC price has dropped. So now that same $2,000 of BTC is only worth $1,500 but I still decide to cash it out. Then I get to list a capital loss of $500, meaning my taxable income has dropped by that much ($500 in addition to the $200 from expenses). I would only pay taxes on $1,300.
Sources:
http://theminersunion.com/2017/09/11/what-you-need-to-know-about-bitcoin-mining-taxes/https://www.irs.gov/pub/irs-drop/n-14-21.pdfhttps://www.irs.gov/newsroom/irs-virtual-currency-guidance
