ARTICLE · 02 FEBRUARY 2022

Tax Consequences Of Bitcoin Mining

Rotfleisch & Samulovitch P.C.

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Bitcoin is a decentralized cryptocurrency that records transactions in a distributed ledger system called a blockchain. The Bitcoin blockchain records the entire history of Bitcoin exchanges that takes place in its network.

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David Rotfleisch

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What is Bitcoin and Bitcoin Mining?

Bitcoin is a decentralized cryptocurrency that records transactions in a distributed ledger system called a blockchain. The Bitcoin blockchain records the entire history of Bitcoin exchanges that takes place in its network. In this system, coins are distributed and shared among "nodes" or "peers." The nodes or peers in this network collectively verify the legitimacy of the transactions. For example, if two parties want to transfer a certain amount of Bitcoin, the network of nodes, which contain the exact same history of transactions, must verify the transaction. If the transactions are verified, then the transfer will be recorded in the public ledger, thereby authenticating the transaction.

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