I recommend you don't pay taxes. Frankly I cannot condone paying taxes on any crypto until the conversion to fiat. I am not saying what I suggest is defacto legal. The problem is while you could probably win in court, you can't afford to fight the battle in court. The future is unwritten in this realm.
I agree, it's a ridiculous, unnatural law. According to the government when you're mining you're running a business. When the coins get into your wallet you owe taxes at going rate and should report income. If the coins drop in value the next day, you have to report a loss on your investment and can potentially get get a tax return on that loss (at least in the EU you can). So, they are taking money from you hoping that you will make more money this year and keep paying, and if you don't you'll have to fill all those forms and requests, so that they'll give you back some of it.
For countless reasons it's not practical at all to impose these taxes.
That's true. The taxes are not paid in BTC, they are paid in fiat, so you should only paid after selling your coins. How can you owe USD to the government if all you have is BTC, that you're not willing to convert to fiat for some reason? Somebody should point out to them that by doing this they're forcing you to sell your assets to pay tax, which can result in a financial loss and possibly bankruptcy. Either they tax crypto with the ability to pay in crypto or they only tax selling for fiat.
