Can you make money bitcoin mining 2013 ford focus

Tax Day Advice From A Bitcoin Expert

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Electricity in JakartaIndonesia costs three cents per kilowatt hour. Instead, Triyanto has created a very precise and complex mining platform using his own — secret — configurations.

To keep things from burning up Triyanto aims his machines in different configurations and maintains air conditioners that run in his home all night and day. When I started I was too eager to get it working and missed a lot of testing. In short, this complex, expensive, and seemingly profitable mining rig is about to be eclipsed by newer and better technologies at a pace far faster than the average user can match.

Bitcoin mining is like making money out of thin air. Bitcoin is a mix of three monetary processes. First, it handles its own transaction processing think credit card companies, fraud prevention the SEC and security firmsand currency issuance the treasury. In a real world these things are very complex systems with many moving parts. The beauty of Bitcoin is that each of these systems are reduced to very simple, very powerful cryptographic methods that ensures that each step in the chain verifies the next.

These blocks are sent out every ten minutes as a package of cryptographically verified transactions — the buys and sells of the system. And then the boulder rolls down again. Groups can get together and mine concurrently, sharing in the proceeds, but the resulting payouts are minuscule — perhaps a few dollars per day at the very most.

The goal of processing is to find a hash that has a sufficient numbers of zeroes at the beginning. This signals the completion of the block and pays out the reward from the coinbase — an imaginary mine containing all possible Bitcoins. Bitcoin appeared on January 3, and slowly ramped up in popularity over the next few years. Because these GPU units were inexpensive and good at handling complex equations, you could squeeze a few hundred megahashes per second out of them resulting in a few Bitcoins a week.

For a while miners were tooling along, pumping out Bitcoins and sharing tips and tricks for maximizing their setups. Bitcoin mining was a hobby. In April Satoshi was gone. Two years after pressing the start button, Bitcoin was steaming along under its own power. Exchanges rose and fell — the most famous one being Mt. Gox in Tokyo, Japan. Gox was originally a Magic: The Gathering Online Exchange M. Gox deals in about a million Bitcoin a month.

GPU mining worked well for a while but, thanks to the natural inclination of the miner to add more and more power, the average gain from a few more megahashes fell exponentially.

As single GPU mining fell to parallel mining the speeds seemed to explode — along with energy usage. Rigs that could mine a few Bitcoins a month were now mining a few Satoshis — the miniscule parts of the Bitcoin after the decimal point and the electricity need by GPUs was frighteningly wasteful.

In the end you spent more on the hardware and energy than you could ever sanely mine. First users tried field-programmable gate array machines — chips that could be specially programmed after manufacture to do nearly anything.

Then, inFPGAs were outpaced. Bitcoin rose in notoriety thanks to the rise of Silk Road and the Cyprus economic crash. Accounts that once were worth a few dollars exploded and early users cashed out. A number of folks I talked to described selling their Bitcoin and buying gold bars, cars, and fancy watches. They were either further compressing their wealth into relatively non-volatile investments or just having fun.

It was an arms race. Heavier iron pops up on the forums and Bitcoin fan sites with alarming regularity. Other manufacturers opened up shop offering massive speeds and close up almost immediately — taking preoders with them. One company, Terrahash closed up suddenly in Septemberwriting: We are trying to return as many components as we can, and as soon as we get more money back, we will send additional pro-rated payments to each order.

Customers are not responsible for the risks you took. The instant a new batch of mining tools hits the streets the total processing power of the Bitcoin hive mind rises. When KNC released its product the total power of the network went from 1 petahash per second to 2 petahashes per second. Many expect the network to hit 3 petahashes in the next month. As a measure of pure computing power the Bitcoin mining system — the actual number of machines blasting away at each block — has exploded… over and over again.

Click to enlarge [Image via Spectrum. But Bitcoin is now a big business. With Valley investment and worldwide interest — especially as a medium of exchange — many users are moving towards hosted solutions. You own the machines outright in 59 months. Rowan Alter, VP of sales at Leasebit, sees the hosted model as the only way to fly. Where can mining go next? All indications point to large farms where users lease out powerful machines or, barring that, the entrance of large, well-heeled banks that simply continue the ASIC race at a much higher scale.

As the difficulty increases the resulting firepower needed to squeeze out a single Bitcoin will raise exponentially. After years of easy returns and rising prices, Bitcoin mining has hit a point where it is all but futile to try to mine at home. Funds like Coinlab are busy building Bitcoin data centers like Alydian where massive banks of ASICs run 24 hours a day, seven days a week.

Not unlike the early Internet, Bitcoin is growing slowly and then all at once. About as far as you can get from Jakarta, another miner was blasting away at the block chain.

After overclocking it, the fans ran on full blast at all times, and there was a constant hum in my room. The box, a nondescript metal enclosure with three massive fans containing some of the fastest, single-purpose computing circuitry available to consumers, is a strange thing. But he was amazed at the power the Avalon afforded him. Bryce Durbin ; Infographic: Welcome to the Bitcoin arms race. Things are just getting warmed up. And so the arms race began.

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As we approach tax day, many bitcoin fans may be wondering how to handle all of their newfound wealth. Given the recent ruling that BTC are property, not currency , things can get kind of hairy when mining, buying, or trading your BTC.

Thankfully, folks like Tyson P. Cross are around to help. The owner of BitcoinTaxSolutions , Cross handles tax returns and offers tax planning with a focus on cryptocurrency. I asked Cross to walk us through the recent ruling and what it means for Satoshi-ites. I first learned about cryptocurrencies in early when I came across a law review article discussing their legal uncertainties.

I spent the next ten months exhaustively researching the proper tax treatment of bitcoins and ended up developing a real passion for this area of the tax law. As a general rule, the IRS only knows what it is told.

This means that it has no knowledge of your bitcoin unless someone tells them. First, your bitcoin exchange may report your transactions to the IRS. However, it does not appear that bitcoin exchanges are currently subject to the reporting requirements although that will probably change in the future. Thus, unless the exchange voluntarily files a against you, it is unlikely that the IRS will receive a report of your bitcoin transactions. Note that they would need your Social Security number to file a in your name, so a request from your bitcoin exchange to provide your Social Security number may be indicative of a filing.

Third, someone can report you to the IRS, which happens far more often than you might think. Fourth, you voluntarily and accurately report your gains on your tax return. That might sound ridiculous to some people given the inherent anonymity of bitcoin, but there are some very rich people in prison right now who used to think the same thing about their Swiss bank accounts.

The fact is that penalties for failing to report income are significant. This includes the possibility of criminal prosecution. You can also add to this the additional penalties for failing to report foreign financial accounts, which can be even more severe. At the end of the day, you have a decision to make.

You can comply with the law and pay taxes just like everyone else, which is admittedly unpleasant. IRS Notice clarifies the tax treatment of bitcoin miners. Specifically, the Notice provides that miners must recognize income for each bitcoin mined during the taxable year. The amount of income is equal to the market price of bitcoin on the day it is awarded on the blockchain. For example, assume someone mines 1 bitcoin in Mining expenses, such as electricity, would be deductible in the taxable year as an expense.

This determination also has additional consequences in the form of self-employment taxes, which the IRS notice also confirmed are applicable to miners engaged in a trade or business.

Surprisingly, the IRS Notice was silent with regard to bitcoin exchanges although it did address companies that provide bitcoin settlement services to merchants.

However, as bitcoin exchanges continue to open in the U. At some point, the IRS will have to address bitcoin exchanges. For now, though, the greatest burden on bitcoin exchanges remains compliance with federal and state anti-money laundering laws. However, for those who plan to use bitcoin as a medium of exchange, the IRS Notice will create some difficulty because of its position that every bitcoin transaction is a taxable event.

This means that bitcoin users will have to determine their taxable gain or loss each time they use bitcoin to purchase goods or services. That creates a serious burden that will need to be addressed before bitcoin can achieve widespread adoption. The solution might be as simple as a software program that tracks bitcoin transactions automatically. Preferably, though, it would be a recognition by the IRS that bitcoin needs to be classified as a foreign currency for tax purposes which would render personal transactions non-taxable.

The Treasury Department is accepting public comment and I would expect groups like the Bitcoin Foundation to participate in this process.

As the saying goes, the power to tax is the power to destroy, and this is no exception. Tell us about yourself. How did you get involved in bitcoin? How will the IRS find out about our bitcoin? What do these new laws mean for miners? What do these new laws mean for exchanges?

What do these laws mean for the average Josephine with a few BTC? Is there anything special to watch out for? Anything we may miss? You can contact Tyson here.

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