Thinking about mining bitcoin in Australia? Great! Glad to have another bitcoin denizen helping to secure the network. So you’ve ordered your ASIC miner, and you’re ready to plug it in and connect to a mining pool, is there anything else to know? Perhaps you’ve heard of bans and restrictions from governments around the world like in China, Kazakhstan and Kosovo. Is that going to happen to you? Unlikely (although never impossible). Here’s what to know.
Most information here can be explored in more depth in the Gilbert and Tobin report.
For all tax intents and purposes in the eyes of the ATO, bitcoin is a Capital Gains Tax (CGT) Asset. However, when mining bitcoin and using it to reinvest in, say, more miners, it may be regarded as a personal use asset. This can change on a case by case basis, I recommend you speak to an accountant about this come tax time. Bitcoin miners would be required to register for GST if annual GST turnover is A$75,000 or more. If you are looking to hold your bitcoin as part of a managed investment scheme, you should know that bitcoin and ether have been proposed by ASIC as their own distinct asset class on Australian Financial Service Licence authorisations.
Bitcoin’s use is being monitored by ASIC and the ATO, as well as with AML/CTF from AUSTRAC. For the most part, regulators are receptive to blockchain technology (referred to as Distributed Ledger Technology (DLT)), and have taken a non interventionist approach to regulating it. In an attempt to stay abreast of the growth of cryptocurrency, as well as educate business owners on the technology, ASIC has established an ‘Innovation Hub’ to help guide you through any uncertainty. Expect there to be further regulations and tax implications further down the line.
As a bitcoin mining business, you are required to have systems in place to mitigate the many operational risks associated with bitcoin mining. You should be aptly prepared to handle cyber attacks and data breaches, as well as hardware faults and system outages. This kind of management is overlooked by CERT Australia.
With a largely positive attitude towards cryptocurrency and distributed ledger technology, we hope that bitcoin mining in Australia will flourish. With a bitcoin spot ETF being approved and Federal Treasurer Josh Frydenberg taking initiative in addressing a myriad of prospective cryptocurrency regulations, it seems likely that the mining in Australia will continue to grow towards matching the computational power of other nations around the world.
