Monday Mining Metrics: Turning Taxes Into Bitcoin (Time is Running Out)
“There are Two Systems of Taxation in our Country: One for the Informed and One for the Uninformed.”
“There are Two Systems of Taxation in our Country: One for the Informed and One for the Uninformed.”
This quote from 20th Century U.S. District Court Judge, Billings Learned Hand, accurately describes the bifurcated system of taxation in the United States; as well as the financial system as a whole.
There are three “levels” to the game of money and wealth creation; the only barrier to between each level is education.
Level 1: Saving in Dollars
Level 2: Saving in Hard Assets (BTC, Real Estate, Stocks, Gold, etc.)
Level 3: Having a Tax Mitigation Strategy
Most of our audience in likely stuck in Level 2. Here’s how you can you can ascend to level 3…
Taxes are About Creating Incentives, Not Generating Revenue
The United States has the ability to print currency through the Federal Reserve (and they’re not hesitant to do so). Therefore, it’s logical to assume that the primary function of taxation is not to generate revenue, rather, its to incentivize or disincentivize certain behaviors.
Reward vs Penalty
Pain vs Gain
Write-offs vs Taxation
This is the ethos of Trump’s “One Big Beautiful Bill.” Simply put, the bill is designed to incentivize the re-industrialization of in the United States. By putting more capital in the hands of business owners (through write-off incentives), the administration is optimistic that economic growth will accelerate and the United States can “grow out of the debt.” So far, every major policy from the Trump Administration has been geared towards addressing the $38 Trillion (and growing) debt:
DOGE: Cut wasteful spending
Tariffs: Immediate revenue cash grab (and incentivize companies to on-shore production)
Interest Rate Cuts: Pressure the Federal Reserve into lowering interest rates to make the debt more serviceable
One Big Beautiful Bill: Accelerate economic growth by incentivizing business owners to re-invest capital into tax-efficient assets.
Among the assets that qualify for 100% bonus depreciation, Bitcoin Mining is the most interesting opportunity. Everyone can benefit from an asset class generating ~25 to 50% annualized returns that simultaneously builds a Bitcoin treasury.
The graphic below provides a simplified comparison of “Bonus” vs “Straight Line” depreciation. Real Estate is the asset that most often comes to mind first when thinking of depreciation. However, Real Estate does not qualify for 100% bonus depreciation. Real Estate must be depreciated using a “straight line” method. The graphic below shows a 20-year straight line depreciation schedule, which actually overstates the potential tax savings for real estate, as most real estate is going to have a 27.5 to 39 year depreciation schedule.
This is a stark contrast to 100% Bonus Depreciation (applicable for Bitcoin Mining ASICs). A business owner (or W2 earner) facing a tax rate of 40% on $1,000,0000 in taxable income could save $400,000 on their taxes by investing into Bitcoin Mining hardware.
You don’t have to depreciate your income down to zero for this strategy to make sense. Purchasing enough miners to lower your taxable income into a lower tax bracket is still a highly capital efficient strategy.
The graphic below shows how a $50,000 miner purchase (with 100% bonus depreciation) could immediately save someone ~$16,000 in taxes.
Purchase ASIC Miners and Use 100% Bonus Depreciation
Lower Your Taxable Income to the Next Bracket
Lower Tax Rate on a Lower Taxable Base Income
There’s two major jumps in the tax rate which could be good strategic targets:
12% to 22% at $96,951 in taxable income
24 to 32% at $394,600 in taxable income
Blockware does not offer official tax advice. Consult with a CPA or Tax professional for more information on your individual circumstances. To get connected with one of our recommended tax partners, fill out the form here: https://mining.blockwaresolutions.com/tax
Live Webinar Recording
For an in-depth breakdown of everything discussed in this newsletter, check out the recording below of Blockware’s live webinar.
To learn more about how you can use Bitcoin Mining and 100% Bonus Depreciation to jump from “level 2” to “level 3” of wealth creation, fill out the form here: https://mining.blockwaresolutions.com/tax