The first fork: hobby or business?
Details differ across the four countries, but every one of them starts mining analysis at the same junction: is this an occasional, small-scale hobby, or an organised, continuous, profit-seeking business? The answer cascades through everything after it — which income category the rewards join, whether electricity and hardware depreciation can be deducted, and whether self-employment or trade rules attach. Scale, continuity, investment and commercial organisation are the recurring criteria. What follows is direction; the classification itself is a facts-and-adviser question.
Four-country table
| Country | On receiving mined coins | On later disposal | Key detail |
|---|---|---|---|
| United Kingdom | Income (miscellaneous or trading, by scale) | Capital gains on the growth | Trading scale unlocks expense deductions. |
| Australia | Business → ordinary income; hobby → often CGT at disposal only | CGT; trading-stock rules for businesses | The hobby/business gap is wide here. |
| United States | Ordinary income at fair market value | Capital gains (short/long term) | Business mining can owe self-employment tax. |
| Germany | Occasional → other income; sustained → business income | Private holdings follow the one-year rule | Degree of commercial organisation decides. |
Country notes
- United Kingdom: hobby-scale mining income is usually miscellaneous income at market value; at trading scale it becomes trading income with expenses claimable. Disposals go through CGT either way. See the UK guide.
- Australia: run as a business, mined coins are ordinary income with trading-stock rules attached; as a hobby, tax often waits for the CGT event at disposal. See the Australia guide.
- United States: Notice 2014-21 puts mining income at fair market value on receipt into ordinary income; where it amounts to a trade or business, self-employment tax can follow. See the US guide.
- Germany: occasional mining tends toward other income; sustained operations toward business income (Gewerbe), with commercial organisation the deciding factor. See the Germany guide.
Recording it in practice
The record set mirrors staking: each payout’s date, token, quantity and fiat market value — serving as income evidence now and cost basis later. Run as a business, add electricity bills, hardware invoices and hosting costs to the archive, because deductions live or die on receipts. Disposals then follow each country’s capital rules. Organising high-frequency payout streams is covered in Keeping transaction records.
FAQ
Can I deduct electricity and hardware?
Do tiny, frequent pool payouts really need individual records?
Official sources
The watershed is hobby versus business, and each country draws it in a different document. The US notice from 2014 remains the primary text:
- US: IRS Notice 2014-21 (the original position on mining income and self-employment tax), original PDF — irs.gov/pub/irs-drop/n-14-21.pdf
- UK: HMRC, Tax on cryptoassets (incl. the trading-versus-miscellaneous mining question) — gov.uk/government/publications/tax-on-cryptoassets
- Australia: ATO, Crypto asset investments (hobby vs business) — ato.gov.au/…/crypto-asset-investments
- Germany: BMF letter on cryptoassets (updated 2025), incl. whether mining constitutes a commercial activity — bundesfinanzministerium.de
Checked against the official pages on 1 September 2026. Hobby/business determinations attract dispute; the authorities and professional advice govern.
What changes once you are a “business”
Crossing from hobby to business rewrites more than the rate: deductibility of power and hardware, self-employment-type levies, bookkeeping obligations, sometimes registration itself. Each country draws the line differently, on facts. This page is not advice for your situation — anyone mining continuously should have a licensed professional settle the classification early, because retrofitting the books costs more.