[2021-11-07] House passes $1T infrastructure bill with crypto tax for Biden's

[waybesuricata]

The infrastructure bill was first proposed by the Biden administration aimed at primarily improving the national transport network and internet coverage.

The United States House of Representatives passed the $1.2 trillion bipartisan infrastructure bill which, if signed into law by President Joe Biden, would enforce new provisions in relation to crypto-tax reporting for all citizens.

The infrastructure bill was first proposed by the Biden administration aimed at primarily improving the national transport network and internet coverage. However, the bill mandated stringent reporting requirements for the crypto community, requiring all digital asset transactions worth more than $10,000 to be reported to the IRS.

As Cointelegraph reported, the bill was first approved by the Senate on Aug. 10 with a 69-30 vote, which was met with a proposal to compromise amendment by a group of six senators — Pat Toomey, Cynthia Lummis, Rob Portman, Mark Warner, Kyrsten Sinema and Ron Wyden. According to Toomey:

“This legislation imposes a badly flawed, and in some cases unworkable, cryptocurrency tax reporting mandate that threatens future technological innovation.”

Source and continuation of news: https://cointelegraph.com/news/house-passes-1t-infrastructure-bill-with-crypto-tax-for-biden-s-approval

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[Woodie]

Has much as this gives cryptocurrencies the needed recognition .....the bill still has lots of gaps which should have been addresses before passing this for presidential veto, because this seems to have less of the good stuff than expected.

Also just looking at this line it certainly raises eyebrow's

“This legislation imposes a badly flawed, and in some cases unworkable, cryptocurrency tax reporting mandate that threatens future technological innovation.”

i guess time wasnt on their side to have certain flawed parts of the bill rectified before going for the last stage to become law.

[bbc.reporter]

Can anyone who is following this news more closely list which parts of the bill concern the cryptospace and list what these news policies are when it is signed into law?

@waybesuricata. You appear to be reading much of the news presently hehe. Can you do this?

[o_e_l_e_o]

Can anyone who is following this news more closely list which parts of the bill concern the cryptospace and list what these news policies are when it is signed into law?

You can view the text of the bill here: https://www.congress.gov/bill/117th-congress/house-bill/3684/text

Here is the section of the bill regarding cryptocurrencies:

Code:

SEC. 80603. INFORMATION REPORTING FOR BROKERS AND DIGITAL ASSETS.

    (a) Clarification of Definition of Broker.--Section 6045(c)(1) of 
the Internal Revenue Code of 1986 is amended--
            (1) by striking ``and'' at the end of subparagraph (B),
            (2) in subparagraph (C)--
                    (A) by striking ``any other person who (for a 
                consideration)'' and inserting ``any person who (for 
                consideration)'', and
                    (B) by striking the period at the end and inserting 
                ``, and'', and
            (3) by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) any person who (for consideration) is 
                responsible for regularly providing any service 
                effectuating transfers of digital assets on behalf of 
                another person.''.
    (b) Reporting of Digital Assets.--
            (1) Brokers.--
                    (A) Treatment as specified security.--Section 
                6045(g)(3)(B) of the Internal Revenue Code of 1986 is 
                amended by striking ``and'' at the end of clause (iii), 
                by redesignating clause (iv) as clause (v), and by 
                inserting after clause (iii) the following new clause:
                            ``(iv) any digital asset, and''.
                    (B) Definition of digital asset.--Section 
                6045(g)(3) of such Code is amended by adding at the end 
                the following new subparagraph:
                    ``(D) Digital asset.--Except as otherwise provided 
                by the Secretary, the term `digital asset' means any 
                digital representation of value which is recorded on a 
                cryptographically secured distributed ledger or any 
                similar technology as specified by the Secretary.''.
                    (C) Applicable date.--Section 6045(g)(3)(C) of such 
                Code is amended--
                            (i) in clause (ii), by striking ``and'' at 
                        the end,
                            (ii) by redesignating clause (iii) as 
                        clause (iv), and
                            (iii) by inserting after clause (ii) the 
                        following:
                            ``(iii) January 1, 2023, in the case of any 
                        specified security which is a digital asset, 
                        and''.
            (2) Furnishing of information.--
                    (A) In general.--Section 6045A of such Code is 
                amended--
                            (i) in subsection (a), by striking ``a 
                        security which is'', and
                            (ii) by adding at the end the following:
    ``(d) Return Requirement for Certain Transfers of Digital Assets 
Not Otherwise Subject to Reporting.--Any broker, with respect to any 
transfer (which is not part of a sale or exchange executed by such 
broker) during a calendar year of a covered security which is a digital 
asset from an account maintained by such broker to an account which is 
not maintained by, or an address not associated with, a person that 
such broker knows or has reason to know is also a broker, shall make a 
return for such calendar year, in such form as determined by the 
Secretary, showing the information otherwise required to be furnished 
with respect to transfers subject to subsection (a).''.
                    (B) Reporting penalties.--Section 6724(d)(1)(B) of 
                such Code is amended by striking ``or'' at the end of 
                clause (xxv), by striking ``and'' at the end of clause 
                (xxvi), and by inserting after clause (xxvi) the 
                following new clause:
                            ``(xxvii) section 6045A(d) (relating to 
                        returns for certain digital assets),''.
            (3) Treatment as cash for purposes of section 6050i.--
        Section 6050I(d) of such Code is amended by striking ``and'' at 
        the end of paragraph (1), by striking the period at the end of 
        paragraph (2) and inserting ``, and'', and by inserting after 
        paragraph (2) the following new paragraph:
            ``(3) any digital asset (as defined in section 
        6045(g)(3)(D)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to returns required to be filed, and statements required to be 
furnished, after December 31, 2023.
    (d) Rule of Construction.--Nothing in this section or the 
amendments made by this section shall be construed to create any 
inference, for any period prior to the effective date of such 
amendments, with respect to--
            (1) whether any person is a broker under section 6045(c)(1) 
        of the Internal Revenue Code of 1986, or
            (2) whether any digital asset is property which is a 
        specified security under section 6045(g)(3)(B) of such Code.

The important parts are as follows:

Code:

any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.

Code:

Treatment as cash for purposes of section 6050i.

Code:

The amendments made by this section shall apply to returns required to be filed, and statements required to be furnished, after December 31, 2023.

The first line I've quoted there is too ambiguous. There have been ongoing debates in various committees and the chambers themselves about this wording, with some legislators reaching the conclusion that it includes anyone who helps to make transactions, which would include people like node operators and miners, and make them responsible for collecting the tax information of the owners of the transactions they are processing, which would obviously be impossible. There have been multiple amendments to try to fix this, but none of them passed for various reasons.

The second line means that any time you transact over $10,000 of crypto with a single party (even over multiple trades), then it is a felony if you do not collect their personal information and social security number and report it on your tax form. This obviously has huge implications for things like peer to peer trading and DEXs, but also for things like DeFi, staking, yield farming, etc., which essentially become illegal since it would be impossible to comply with these requirements.

None of this takes effect until 2024. There are already some legislators making moves to introduce new laws to counteract all this nonsense. Let's hope they are successful.

[bbc.reporter]

It appears that the policy makers in Washington have not studied well the cryptospace and the corresponding policies that they have created to control the cryptospace. It is quite certain that enforcement of these policies will be a problem and making criminals out of innocent people based on these policies will be unconstitutional.

[PrimeNumber7]

The first line I've quoted there is too ambiguous. There have been ongoing debates in various committees and the chambers themselves about this wording, with some legislators reaching the conclusion that it includes anyone who helps to make transactions, which would include people like node operators and miners, and make them responsible for collecting the tax information of the owners of the transactions they are processing, which would obviously be impossible. There have been multiple amendments to try to fix this, but none of them passed for various reasons.

To me, it appears that anyone mining would be covered. I don't think it would apply to node operators because although node operators facilitate the relaying of transactions, they do not receive compensation for doing so. Here is the law that is being amended by your first quote.

The law would take effect in 2023 for tax returns filed in 2024. IMO, it would effectively ban mining in the US. If the law is still in effect in its current form as of 2023, it would be reckless for a miner to continue to operate because there would be no guarantee the lunatics currently running our government would fix this provision.

The second line means that any time you transact over $10,000 of crypto with a single party (even over multiple trades), then it is a felony if you do not collect their personal information and social security number and report it on your tax form. This obviously has huge implications for things like peer to peer trading and DEXs, but also for things like DeFi, staking, yield farming, etc., which essentially become illegal since it would be impossible to comply with these requirements.

Here is the law being changed. My reading of the law is that the threshold is measured by related transactions. So receiving $9000 by the same person twice via unrelated transactions would not be reportable. The term "related transaction" is not defined in the law, and would likely be subject to litigation.

I am not sure this would apply to DEXs, DeFi, staking, and yield farming (and similar) would be subjected to this reporting requirement as this law only applies to a person who "who is engaged in a trade or business", as I don't think someone is engaged in a "trade or business" would apply to someone just because they are engaging in one of the above types of transactions. Again, the term "trade or business" isn't defined in the law. The IRS asserts what a "trade or business is here.

[o_e_l_e_o]

The law would take effect in 2023 for tax returns filed in 2024. IMO, it would effectively ban mining in the US.

I agree, and certainly the rumblings I've heard coming from Washington seem to confirm this. Can only hope a new bill or an amendment to another bill fixes this before the end of 2023. Senator Lummis has already signaled that she might attempt to do so: https://twitter.com/CynthiaMLummis/status/1457021220118016006

So receiving $9000 by the same person twice via unrelated transactions would not be reportable. The term "related transaction" is not defined in the law, and would likely be subject to litigation.

Unrelated transactions, maybe not, but if you are simply trading with the same person (say USD to bitcoin) over a period of time, then I'm fairly certainly that would be classified as related transactions.

I am not sure this would apply to DEXs, DeFi, staking, and yield farming (and similar) would be subjected to this reporting requirement as this law only applies to a person who "who is engaged in a trade or business"

The link you share defines it as an activity carried out to make a profit, which absolutely applies to things like staking and yield farming. But I agree, this whole thing will probably need to be tested in the courts before we actually get any sort of clarity regarding what it does and does not apply to.

[PrimeNumber7]

The law would take effect in 2023 for tax returns filed in 2024. IMO, it would effectively ban mining in the US.

I agree, and certainly the rumblings I've heard coming from Washington seem to confirm this. Can only hope a new bill or an amendment to another bill fixes this before the end of 2023. Senator Lummis has already signaled that she might attempt to do so: https://twitter.com/CynthiaMLummis/status/1457021220118016006

Damage will be done if something is not done by the end of 2022, but realistically something will need to be done by the end of the 3rd quarter 2022, or else miners will start to move their equipment out of the US.

Bitcoin mining consumes a lot of electricity, and this additional electricity demand is going to prevent green new deal nonsense from being possible. I suspect the provision was intentional on the part of Democrat leadership.

Neither party especially supports bitcoin, although free-market republicans are probably more likely to support bitcoin. Due to the procedure to take bills to the floor for a vote, it will take more than a simple majority to pass something that addresses the issue. Given the Biden administration's hostility towards bitcoin, I would suspect Biden would be told to veto any such fix, so a 2/3 majority would be needed to pass any fix.

So receiving $9000 by the same person twice via unrelated transactions would not be reportable. The term "related transaction" is not defined in the law, and would likely be subject to litigation.

Unrelated transactions, maybe not, but if you are simply trading with the same person (say USD to bitcoin) over a period of time, then I'm fairly certainly that would be classified as related transactions.

This might be true if there is an agreement to exchange USD for bitcoin over a period of time. However, if on November 15 two people exchange USD and bitcoin valued at $9,000 and on November 25, the same two people again exchange USD and bitcoin at the then market price, also valued at $9000, I think there is a strong argument to say these are two unrelated transactions.

If you were to sell me $12,000 worth of bitcoin in person that involves me giving you $12,000 (or perhaps, me personally sending you 12,000 USDC) and you personally sending me 0.186BTC, we could exchange information required to file the tax forms. However, if we trade similar amounts of USDC and BTC on a DEX, I am not really sure it would be accurate to say that I received any coin from you. I would make the argument that I actually received the coin from the DEX. The law says I need to provide the "name, address, and TIN" of the person from who I received the cash. When a restaurant for example buys $11,000 worth of liquor in cash, one of their employees will exchange the cash for the alcohol, and that employee's information could be used. The same is not true for a DEX, or any other type of transaction you mentioned, except an entirely P2P transaction.

I am not sure this would apply to DEXs, DeFi, staking, and yield farming (and similar) would be subjected to this reporting requirement as this law only applies to a person who "who is engaged in a trade or business"

The link you share defines it as an activity carried out to make a profit, which absolutely applies to things like staking and yield farming. But I agree, this whole thing will probably need to be tested in the courts before we actually get any sort of clarity regarding what it does and does not apply to.

The biggest impact to something being a "trade or business" is that it subjects the person to self-employment taxes (the employer's share of social security and medicare taxes).

The definition of a person engaging in a trade or business is not changing with this law. If someone is presently staking their coin, and earning income, if the IRS has not challenged their tax status, I don't see why this would change.

[o_e_l_e_o]

Bitcoin mining consumes a lot of electricity, and this additional electricity demand is going to prevent green new deal nonsense from being possible.

I think measuring raw electricity consumption is misleading. We know that miners use far higher proportions of renewable energy than state/national/global averages, and we also know that in many cases bitcoin mining acts as a buyer of last resort and subsidizes the development of such renewable projects, which would otherwise be unprofitable and not exist at all. It also glosses over the fact that bitcoin's contribution to climate change is absolutely tiny when compared to the activities of companies such as Exxon and Chevron, but since they buy our politicians they get away with far worse than bitcoin ever will. To just say "mining uses too much electricity" is to miss the bigger picture.

Neither party especially supports bitcoin, although free-market republicans are probably more likely to support bitcoin.

Agreed. In addition to Senator Lummis as I pointed out above, I've since stumbled across similar statements from Senator Toomey: https://finance.yahoo.com/news/toomey-vows-fix-to-badly-flawed-cryptocurrency-broker-plan-in-infrastructure-bill-102711919.html

However, if on November 15 two people exchange USD and bitcoin valued at $9,000 and on November 25, the same two people again exchange USD and bitcoin at the then market price, also valued at $9000, I think there is a strong argument to say these are two unrelated transactions.

Maybe, but conversely it could also be argued that you specifically bought that amount of bitcoin on each occasion to purposefully avoid the reporting requirements, which would lead to investigation of structuring.

I would make the argument that I actually received the coin from the DEX.

I suppose that this would probably depend on if the DEX is truly peer to peer or not. If using a DEX like Bisq, then the coins are held in a 2-of-2 multi-sig escrow between buyer and seller, and Bisq never has ownership or a share in the ownership at any time. Could you argue you received the coins from the DEX in that case? The DEX might have created the escrow address, but the escrow address is owned and controlled only by the buyer and seller.

[stompix]

The law would take effect in 2023 for tax returns filed in 2024. IMO, it would effectively ban mining in the US. If the law is still in effect in its current form as of 2023, it would be reckless for a miner to continue to operate because there would be no guarantee the lunatics currently running our government would fix this provision.

Simple solution, empty blocks! 
The current reward for fees is 10BTC compared to 981 BTC, at 1% is far cheaper for them to mine like that than to move out. Of course, for us, it's going to be a nightmare.
There could be a bit of tweaking by allowing certain tx from designated addresses that would be only used by exchanges and pools might be able to take the burden from miners by claiming they are not receiving payments for solving blocks but they are renting the hash power for the pool, so they are not taking part directly, they're just renting the means for doing so.

Either way, it's a fucked up situation!

[PrimeNumber7]

Bitcoin mining consumes a lot of electricity, and this additional electricity demand is going to prevent green new deal nonsense from being possible.

I think measuring raw electricity consumption is misleading. We know that miners use far higher proportions of renewable energy than state/national/global averages, and we also know that in many cases bitcoin mining acts as a buyer of last resort and subsidizes the development of such renewable projects, which would otherwise be unprofitable and not exist at all. It also glosses over the fact that bitcoin's contribution to climate change is absolutely tiny when compared to the activities of companies such as Exxon and Chevron, but since they buy our politicians they get away with far worse than bitcoin ever will. To just say "mining uses too much electricity" is to miss the bigger picture.

For clarity, I am not making the argument that bitcoin mining is doing harm. I am saying that bitcoin mining interferes with crazy energy policies (that TBH are probably intended to reduce the West's economic and military power). BTW, the Biden Administration would like to bankrupt Exxon and Chevron, and those companies are merely serving a market need. Those (and other) gas companies contribute very little to emissions directly.

Bitcoin/PoW mining needs reliable energy available 24/7. Green energy does not support that. If there are not enough hours of sunlight, or if it is not windy enough, "green" energy will be insufficient to power bitcoin miners relying on green energy.

However, if on November 15 two people exchange USD and bitcoin valued at $9,000 and on November 25, the same two people again exchange USD and bitcoin at the then market price, also valued at $9000, I think there is a strong argument to say these are two unrelated transactions.

Maybe, but conversely it could also be argued that you specifically bought that amount of bitcoin on each occasion to purposefully avoid the reporting requirements, which would lead to investigation of structuring.

Someone exchanging under $10k multiple times may lead to a structuring accusation, and that accusation may or may not be valid, depending on the circumstances. For example, someone may be selling $5000 worth of coin every month in order to pay for living expenses, and the other person is simply responding to offers received from the first party. Or, someone may be exchanging their coin based on changes to the price. 

I would make the argument that I actually received the coin from the DEX.

I suppose that this would probably depend on if the DEX is truly peer to peer or not. If using a DEX like Bisq, then the coins are held in a 2-of-2 multi-sig escrow between buyer and seller, and Bisq never has ownership or a share in the ownership at any time. Could you argue you received the coins from the DEX in that case? The DEX might have created the escrow address, but the escrow address is owned and controlled only by the buyer and seller.

In the case of a 2-of-2 multisig address, as in your example, it would probably not be accurate to say the coin was received from the DEX. I was thinking of someone sending a token to some kind of smart contract that allows market participants to place orders, and withdraw from the smart contract.

The law would take effect in 2023 for tax returns filed in 2024. IMO, it would effectively ban mining in the US. If the law is still in effect in its current form as of 2023, it would be reckless for a miner to continue to operate because there would be no guarantee the lunatics currently running our government would fix this provision.

Simple solution, empty blocks! 
The current reward for fees is 10BTC compared to 981 BTC, at 1% is far cheaper for them to mine like that than to move out. Of course, for us, it's going to be a nightmare.
There could be a bit of tweaking by allowing certain tx from designated addresses that would be only used by exchanges and pools might be able to take the burden from miners by claiming they are not receiving payments for solving blocks but they are renting the hash power for the pool, so they are not taking part directly, they're just renting the means for doing so.

Either way, it's a fucked up situation!

Miners could mine empty blocks, or only confirm transactions from whitelisted addresses.

The argument that miners are actually receiving payment from the pool may be valid, but I don't think many miners will try to make this argument. The reason for this is that mining is a business that has very low margins, and it is very expensive to put on a criminal defense (I am not talking about the potential fines, I am talking about the cost to win a criminal trial as a defendant). It would be far less risky for miners to move their equipment overseas or to sell it.

[o_e_l_e_o]

at 1% is far cheaper for them to mine like that than to move out. Of course, for us, it's going to be a nightmare.

For now. When the mempool is empty as it is now, the fees contribute between 1-1.5% of the total block reward. But it doesn't take much for fees to go from 1 sat/vbyte to 10 sats/vbyte, and suddenly fees contribute 10% or more of the block reward. Shortly after this law actually comes in to effect we will hit the next halving, and that 10% becomes 20%. Is 20% enough to entice miners to move elsewhere? I suspect it is, and if not, then 40% in another 4 years definitely will be.

For clarity, I am not making the argument that bitcoin mining is doing harm.

No, I got that. For clarity, I wasn't referring to you specifically but just in generalities to people who make the claim that bitcoin is killing the planet or similar.

Miners could mine empty blocks, or only confirm transactions from whitelisted addresses.

This is another concern. We have already had a mining pool - MARA Pool - try this in the past, and only mine blocks which they called "OFAC Compliant". In June of this year they mined 10 such blocks, before abandoning their censorship citing their desire to make as much money as possible support for decentralization and censorship resistance.

[DaveF]

...For example, someone may be selling $5000 worth of coin every month in order to pay for living expenses, and the other person is simply responding to offers received from the first party. Or, someone may be exchanging their coin based on changes to the price....

Once a month, not a big deal. Once a day probably not either. 3x a day that is where they get you for the 10K limit.
If you follow casino news (physical ones not online) that is where they used to keep getting with violations. Which is why now many of them will take information on any transaction over $3000.

Which let me tell you is a PITA when at the end of the trip everyone hands you chips instead of cash to cover what they owe you and you are standing at the cage getting an anal probe as to where you got all of them.

That is actually when got really interested in all of this. Some of the procedures that they use to track the money of big players are so very automated. Others involve someone standing behind them with a clipboard taking notes. What I also found interesting is the fact that a lot of them don't share notes between the player tracking system and the people following the money because it's 2 different departments with 2 different sets of rules.

The scrap metal / e-waste dealer I used to go to was worse. He tracked everything over $3999 and if you broke $10k in any rolling 14 day period he reported it. Didn't have to, but as he used to say "I don't like you enough to have to deal with the feds for you" But, since he gave the best prices by far in the area I tolerated it.

-Dave

[stompix]

The reason for this is that mining is a business that has very low margins, and it is very expensive to put on a criminal defense (I am not talking about the potential fines, I am talking about the cost to win a criminal trial as a defendant).

Low margins?  
At this (current?) dip numbers we're talking about 30 cents income per TH with costs in power ~10 cents (at 10cents/kwh). If you're Mara and you have cheap (coal) energy at 2 cents you're burning 6$ of power for every 100$ in revenue!
If that's a tight margin I don't know how to call my parent's farm which is having a good year when we manage to get 10% margin.

For now. When the mempool is empty as it is now, the fees contribute between 1-1.5% of the total block reward. But it doesn't take much for fees to go from 1 sat/vbyte to 10 sats/vbyte, and suddenly fees contribute 10% or more of the block reward. Shortly after this law actually comes in to effect we will hit the next halving, and that 10% becomes 20%. Is 20% enough to entice miners to move elsewhere? I suspect it is, and if not, then 40% in another 4 years definitely will be.

It's not that simple anymore.
Small operation, maybe. Large companies that are waiting for millions worth of gear to be delivered, that have invested millions in their power generating plans, that have signed contracts with town halls, with providers, with everyone, nope!

Since you mentioned MARA which for me is the best example of hypocrisy, from their censoring pool to their commitment to going green when they have poured millions into an old coal power plant. Do you think they will manage to sell it to anyone if they flee the US?  Especially after this stunt they just did yesterday?

The big guys will stay, after all, it's not their money, 99% comes from investors, it's easy to take a 20% loss when you're not paying out of your pocket and far riskier to be caught in this web of inconsistent and vague laws that might turn you into the leader of international money laundering terrorist group.

It's pretty simple at this point, this stupid law needs to be changed, I don't know how this works in the US when something has been voted in a package of laws if it could be amended with a simple majority amendment as we have here but still, stuff needs to be done. Because, leaving implications aside, this is just STUPID!

[o_e_l_e_o]

It's not that simple anymore.
Small operation, maybe. Large companies that are waiting for millions worth of gear to be delivered, that have invested millions in their power generating plans, that have signed contracts with town halls, with providers, with everyone, nope!

I'm certain there is still plenty of mining going on in China, but size didn't stop some of the huge Chinese miners from upping their base of operations and moving their equipment half way around the world recently. And big companies like this aren't only looking at the next 4 years - they are considering the next 10 or 20 years. If this is the way things are going in the US, then there is no point to them staying here and pouring more money in to more gear, more infrastructure, more contracts, etc., knowing that in 10 to 20 years they will be collecting a fraction of the total block reward when compared to miners in other countries with less stupid politicians.

It's pretty simple at this point, this stupid law needs to be changed, I don't know how this works in the US when something has been voted in a package of laws if it could be amended with a simple majority amendment as we have here but still, stuff needs to be done. Because, leaving implications aside, this is just STUPID!

Most likely with our stupid system any amendment will be bundled in to some other law with a bunch of other stuff too. It could be amended with a simply majority provided Biden doesn't veto it, which would probably depend more on what else was included in the amendment other than the wording regarding brokers. If Biden did veto it, then it needs to get a two thirds majority in both the House and the Senate.

[PrimeNumber7]

The reason for this is that mining is a business that has very low margins, and it is very expensive to put on a criminal defense (I am not talking about the potential fines, I am talking about the cost to win a criminal trial as a defendant).

Low margins? 
At this (current?) dip numbers we're talking about 30 cents income per TH with costs in power ~10 cents (at 10cents/kwh). If you're Mara and you have cheap (coal) energy at 2 cents you're burning 6$ of power for every 100$ in revenue!
If that's a tight margin I don't know how to call my parent's farm which is having a good year when we manage to get 10% margin.

You forgot to factor in the depreciation of your mining equipment. Obviously, current costs will depend on what specific manufacturer/model of equipment you are using.

It will only be profitable to use any specific equipment for so long, and that equipment needs to be paid for. The chip shortage has effectively prolonged the useful life of miners currently running, but the chip shortage will not last forever and is something that probably shouldn't be assumed will happen again when forecasting profits.

I don't know your parents' specific situation, however, I think it is probably fair to assume that their farm's equipment has a longer useful life than most mining equipment historically has had.

...For example, someone may be selling $5000 worth of coin every month in order to pay for living expenses, and the other person is simply responding to offers received from the first party. Or, someone may be exchanging their coin based on changes to the price....

Once a month, not a big deal. Once a day probably not either. 3x a day that is where they get you for the 10K limit.
If you follow casino news (physical ones not online) that is where they used to keep getting with violations. Which is why now many of them will take information on any transaction over $3000.

Which let me tell you is a PITA when at the end of the trip everyone hands you chips instead of cash to cover what they owe you and you are standing at the cage getting an anal probe as to where you got all of them.

That is actually when got really interested in all of this. Some of the procedures that they use to track the money of big players are so very automated. Others involve someone standing behind them with a clipboard taking notes. What I also found interesting is the fact that a lot of them don't share notes between the player tracking system and the people following the money because it's 2 different departments with 2 different sets of rules.

The scrap metal / e-waste dealer I used to go to was worse. He tracked everything over $3999 and if you broke $10k in any rolling 14 day period he reported it. Didn't have to, but as he used to say "I don't like you enough to have to deal with the feds for you" But, since he gave the best prices by far in the area I tolerated it.

-Dave

It sounds like those businesses don't want to be used by money launders. They want to avoid any investigation of them not complying with reporting requirements.

I don't doubt that some people in the crypto world will engage in similar procedures out of an abundance of caution. That doesn't mean that someone not following the above types of procedures would be violating the law.

Miners could mine empty blocks, or only confirm transactions from whitelisted addresses.

This is another concern. We have already had a mining pool - MARA Pool - try this in the past, and only mine blocks which they called "OFAC Compliant". In June of this year they mined 10 such blocks, before abandoning their censorship citing their desire to make as much money as possible support for decentralization and censorship resistance.

I think it would probably be better to try to stop people on the OFAC list at the on/off ramps that convert bitcoin to/from fiat (or even goods/services) than at the mining level.

When sending a wire or opening a bank account, in order for the bank to be in compliance with OFAC regulations, they need to compare the person's name (and the receivers name for wires) with all names on the OFAC list (and if there is a match, to confirm if they are actually the same person).

[stompix]

I don't know your parents' specific situation, however, I think it is probably fair to assume that their farm's equipment has a longer useful life than most mining equipment historically has had.

Sorry for that, shouldn't have thrown that without pointing out, it's a real farm, as in agricultural business. The margins around here are 5-10% in this field, you won't go above unless you have some fairy or elf patrolling the fields at night. That's a small margin.

You forgot to factor in the depreciation of your mining equipment. Obviously, current costs will depend on what specific manufacturer/model of equipment you are using.

First, big guys get really big discounts, second, they bought the newer gear, it will take a lot of time for real gear depreciation to take place, miners are still using S9 at low electricity rates and they still make a profit. By the time an S19 would be rendered obsolete probably we're talking about the next president ending his mandate
At low power rates, these guys get even with standard pricing ROI is around 10 months, you still have a 10% margin even in the first year and Bitmain isn't going to act like a cheapskate and will offer repair for these as it will cost them pennies compared to the profits.

I'm in the same situation, my gear is nearly paid out if we do a bit of trick on the math and the exchange rate when purchased and the income when exchanged and so one and there's been only half a year.

[PrimeNumber7]

I don't know your parents' specific situation, however, I think it is probably fair to assume that their farm's equipment has a longer useful life than most mining equipment historically has had.

Sorry for that, shouldn't have thrown that without pointing out, it's a real farm, as in agricultural business. The margins around here are 5-10% in this field, you won't go above unless you have some fairy or elf patrolling the fields at night. That's a small margin.

Yea, I figured you were referring to an agricultural farm.

Tractors, for example, can have a useful life of 20-30 years. So the cost of buying a tractor can be spread over that time.

You forgot to factor in the depreciation of your mining equipment. Obviously, current costs will depend on what specific manufacturer/model of equipment you are using.

First, big guys get really big discounts, second, they bought the newer gear, it will take a lot of time for real gear depreciation to take place, miners are still using S9 at low electricity rates and they still make a profit. By the time an S19 would be rendered obsolete probably we're talking about the next president ending his mandate
At low power rates, these guys get even with standard pricing ROI is around 10 months, you still have a 10% margin even in the first year and Bitmain isn't going to act like a cheapskate and will offer repair for these as it will cost them pennies compared to the profits.

I'm in the same situation, my gear is nearly paid out if we do a bit of trick on the math and the exchange rate when purchased and the income when exchanged and so one and there's been only half a year.

I think you are probably overestimating the useful life of a miner purchased today (by understanding future difficulty increases). Production of new (including next gen) gear is being slowed by the chip shortage. Once the chip shortage is resolved, difficulty will start to go up at a faster pace. China banning mining in their country gave miners mining elsewhere a big boost via a difficultly decline that has still not recovered.

[bbc.reporter]

It appears Joe Biden’s signing of this bill into law had the investors in the cryptospace afraid on what kind of policy making might come next. Also, Elon Musk has been selling his Tesla stock options for tax reasons, let us observe what he would decide to do to the bitcoin in Tesla’s treasury.



President Joe Biden on Monday signed into law a $1.2 trillion bipartisan infrastructure package and marked the major legislative victory at a White House event with lawmakers from both parties.

Source https://edition.cnn.com/2021/11/15/politics/biden-signing-ceremony-infrastructure-bill-white-house/index.html

[o_e_l_e_o]

Once a month, not a big deal. Once a day probably not either. 3x a day that is where they get you for the 10K limit.

Transactions which occur in the same 24 hour rolling period (i.e. not necessarily a calendar day) are automatically consider related. But if I trade with the same person once a day, every day (or close to it, say 5x/week), for a period of multiple weeks or months, then I think you would have a very hard time convincing the IRS that these are not related transactions. It would seem your scrap metal dealer has a similar thought process.

I think it would probably be better to try to stop people on the OFAC list at the on/off ramps that convert bitcoin to/from fiat (or even goods/services) than at the mining level.

No reason they won't try to do both. They can regulate all the centralized exchanges, but they can't possibly regulate every decentralized or peer-to-peer on/off ramp or every merchant who accepts bitcoin for goods or services, just like they can't clamp down on every worker across the country who takes cash for small jobs and doesn't declare it. I don't think we've seen anywhere near the last of miners like MARA trying to censor transactions.