Should your company mine bitcoin?

Sources checked 10 November 2026. This page is education for a UK or US company considering whether to mine bitcoin. It is not legal, tax, accounting, engineering or investment advice, and it does not say whether to mine. Mining is an operating activity with its own risks. Nothing here predicts profit, hash price, difficulty or the price of bitcoin.

Mining is not a treasury reserve

A treasury holding is bitcoin the company buys (or receives as payment) and keeps under a board policy. Mining is industrial work: machines, power contracts, premises, people and continuous uptime. The bitcoin that arrives is a by product of that work. Treat the two decisions separately in the board paper:

• Treasury question: how much bitcoin, if any, should the company hold, in what custody, and under which sell triggers? See sizing, custody and treasury policy.
• Mining question: should the company operate, or contract for, hashing capacity as a business line, and what happens to any rewards?

Rewards that the company keeps still need the same custody discipline as purchased bitcoin. Prefer company multisig. Do not use single signature custody for company funds.

Own site or hosted: the first fork in the road

A company that decides to look at mining usually chooses between running machines on premises it controls and paying a hosting provider to run machines it owns. The questions differ:

Hosting moves operational work to someone else but adds counterparty risk. Cloud mining contracts, where the company buys a share of hash rate and never owns a machine, add more. See hosted mining and cloud mining claims below.

Capital, power, cooling, noise and maintenance

A feasibility study usually starts with costs that are mostly fixed once machines are ordered:

• Machines: application specific integrated circuit (ASIC) miners, power supplies, racks, networking and spare parts. Hardware ages as more efficient models arrive.
• Power: the tariff, capacity charges, connection costs and whether the supply can be interrupted. Mining economics are sensitive to small changes in pence or cents per kilowatt hour.
• Cooling and premises: heat removal, airflow, fire detection, insurance conditions and landlord consent. Residential or ordinary office space is rarely suitable.
• Noise and neighbours: fans are loud. Planning, lease and nuisance rules can stop a project that looked fine on a spreadsheet.
• People and downtime: someone has to replace failed units, clear dust, update firmware and respond when a rack goes offline. Hash rate that is not online earns nothing.

Electricity contracts

Power is usually the largest running cost, so read the contract as carefully as the machine specification. Points to check before signing, in either country:

• Fixed or variable unit price, and for how long. A fixed price protects the model only for the term of the contract.
• Standing, capacity or demand charges that apply whether or not machines run.
• Minimum term, exit fees and what happens if the company stops mining early.
• Who pays for a connection or capacity upgrade, and how long the network operator says it will take.
• Whether the supplier offers interruptible or flexible terms, and the penalty for not reducing load when asked.

Noise and planning

In the UK, section 79 of the Environmental Protection Act 1990 makes noise emitted from premises so as to be prejudicial to health or a nuisance a statutory nuisance, which councils can act on. Check that the planned use fits the premises' planning position and the lease before buying machines, and ask the local planning authority if in doubt. In the US, local zoning and noise rules vary by county and city. Check them, and the lease, before committing to a site.

Source: legislation.gov.uk: Environmental Protection Act 1990, section 79: statutory nuisances, including noise emitted from premises.

Example only (labelled assumptions, not a forecast). Suppose a company models one rack at an all in power price of 8 pence per kilowatt hour, including capacity charges, with 95 percent uptime, and a pool fee of 2 percent. Change any one assumption (power up 2 pence, uptime 80 percent, a difficulty rise, or a lower fee market) and the same rack can move from a modelled surplus to a modelled loss. The illustration shows sensitivity. It is not a profit promise and it is not a recommendation to buy hardware.

Pools, payouts and network uncertainty

Most small operators join a mining pool so rewards arrive more evenly. That introduces counterparty and operational risk:

• The pool sets payout methods, minimum payout thresholds and fee schedules. Read how it calculates what you are owed, when it pays, and what happens to unpaid balances if the pool closes.
• The payout address is the single most important setting. A compromised pool account or a diverted payout address can send rewards elsewhere. Protect the account with strong two factor sign in, limit who can change the address, and ask whether the pool can delay or alert on an address change.
• Reconcile every pool statement against the transactions that actually arrive on chain. A gap is either a timing difference you can explain or a problem to escalate.
• Newly mined coins in a block's coinbase transaction cannot be spent until 100 more blocks have been added, under Bitcoin Core's coinbase maturity rule. That applies to a company that finds a block on its own, and to any pool that pays members directly in the coinbase transaction. Ask your pool which method it uses.
• Bitcoin's proof of work retargets difficulty so that blocks stay near a ten minute average as hash rate rises or falls. Individual operators do not set difficulty.
• The block subsidy halves on a fixed schedule of 210,000 blocks (BIP 42 discusses the finite supply design). Fee income varies with demand for block space. Neither path is a forecast of company revenue. See the halving guide for what a halving does to miner revenue.

Source: Bitcoin Core: src/consensus/consensus.h: COINBASE_MATURITY is 100 blocks, Bitcoin developer documentation: Mining: proof of work, difficulty and the block reward, Bitcoin BIPs: BIP 42: A finite monetary supply for Bitcoin, Bitcoin developer documentation: P2P network guide: transaction relay and the memory pool.

Custody of mined coins

Decide where rewards go before the first payout, not after:

• Pay straight into company multisig. Where the pool allows it, set the payout address to a receive address from the company's multisig wallet, and confirm that address on the signing devices before saving it. That avoids a single key holding rewards on the way in. See company multisig and the key ceremony.
• Do not leave rewards on a hot wallet or a single signature address while waiting to move them. If a provider forces an intermediate account, keep the balance small and sweep on a written schedule, with two people involved.
• Many small payouts cost more to spend later. Each payout becomes a separate coin. Plan consolidation at quiet fee times, and weigh the privacy trade off. See fees and consolidation.
• Write the sale rule down. Mined coins are not automatically a treasury holding. The policy should say what share, if any, is kept, what is sold to cover power and tax, and who approves each sale. See selling and rebalancing.

Hosted mining and cloud mining claims

Buying a machine that sits in someone else's data centre, or buying a contract that promises a share of hash rate, is not the same as receiving bitcoin into company custody after a purchase:

• Ask who owns the machines, who holds the keys to payout addresses, what happens in insolvency, and how uptime and maintenance are evidenced.
• Be wary of contracts that guarantee a return, lock in a bitcoin price, or make it hard to verify that hashing is real. See scams aimed at companies.
• A hosted arrangement can still be money transmission, a securities style offer, or a consumer credit issue under local law. Classification is fact specific.

When usable heat or power might justify a study

Mining converts almost all electrical input into heat. In a few settings that heat, or a stranded power source, can change the numbers:

• Industrial sites that already need process heat, or greenhouses and district heat loops that can take stable low grade heat.
• Sites with curtailable or otherwise hard to sell power, where mining is a flexible load rather than the reason the power exists.

Even then, treat heat and power benefits as engineering inputs with measurement, not as marketing. Planning, grid connection, insurance and exit costs still apply. A study can conclude that buying bitcoin under a treasury policy is still simpler.

Records to keep from day one

The same evidence serves tax, accounts and audit in both countries. For each payout, keep:

• date and time received, amount of bitcoin and the transaction identifier;
• the value in pounds or dollars at receipt, the price source and the method, applied consistently;
• the pool statement covering that payout, and the payout address it went to;
• power invoices and meter readings, hosting invoices and uptime reports;
• machine purchase invoices, serial numbers, installation dates and disposals;
• every later movement of the coins, including sweeps into multisig and any sale.

GOV.UK says company records should be kept for 6 years from the end of the last financial year they relate to, or longer, for example where the company bought equipment or machinery expected to last more than 6 years. The IRS says to keep records relating to property until the period of limitations expires for the year in which the property is disposed of, because they are needed for depreciation and for working out gain or loss. See bookkeeping examples.

Source: HMRC: CRYPTO10400: Introduction to cryptoassets, record keeping, GOV.UK: Running a limited company: company and accounting records, IRS: How long should I keep records?.

Country rules differ on tax, VAT, capital allowances, depreciation, accounting and whether mining alone makes the company a money services business. Choose your country.

UK: is it a trade, and how is the income taxed?

HMRC's CRYPTO40200 says cryptoassets can be awarded to miners for verifying additions to the distributed ledger. Whether that activity is a taxable trade, with the cryptoassets as trade receipts, depends on the facts, including degree of activity, organisation, risk and commerciality. HMRC's own contrast: using a home computer in spare capacity would not normally be a trade; buying a bank of dedicated computers to mine for an expected net profit, taking equipment and electricity into account, would probably be trading.

Source: HMRC: CRYPTO40200: Cryptoassets for businesses, mining transactions, HMRC: CRYPTO40050: Cryptoassets for businesses, which taxes apply.

If mining is not a trade, HMRC says the pound sterling value at the time of receipt is generally taxable as miscellaneous income, with appropriate expenses reducing the amount chargeable. If the company keeps the awarded assets, Corporation Tax on chargeable gains may arise on a later disposal. If mining is a trade, CRYPTO41300 says the tokens initially form part of trading stock. If they are later transferred out of trading stock, the company is treated as having acquired them at the value used in the trading accounts, and uses that value as the cost when it disposes of them.

Source: HMRC: CRYPTO40200: Cryptoassets for businesses, mining transactions, HMRC: CRYPTO41300: Corporation Tax on chargeable gains, allowable costs (mining costs and trading stock).

See company tax on bitcoin (UK) and the accountant's corner.

UK: VAT on mining

HMRC's CRYPTO45000 says exchange tokens received by miners for their mining activities will generally be outside the scope of VAT, because there is an insufficient link between any services provided and any consideration, and there is no customer for the mining service. HMRC describes its VAT treatment of cryptoassets as provisional. Two practical consequences to discuss with an adviser before buying machines: whether VAT charged on machines, hosting and electricity can be recovered when the activity it supports is outside the scope, and how VAT applies if the company also sells hosting or other services to customers, which is a separate supply.

Source: HMRC: CRYPTO45000: Cryptoassets for businesses, VAT (mining generally outside the scope).

UK: capital allowances on machines

Accounts depreciation on mining machines is not deductible for Corporation Tax. Capital allowances on plant and machinery are given instead, if the company is carrying on a qualifying activity and incurs qualifying capital expenditure. HMRC's manual says the range of qualifying activities broadly covers all taxable activities other than passive investment, including a trade. Whether a company's mining is a trade (above) therefore matters here too. Ask your adviser how allowances work if HMRC would treat the activity as non-trading.

Source: HMRC: CA20006: Plant and machinery allowances, outline (qualifying activity and qualifying expenditure).

The allowances GOV.UK lists for plant and machinery include:

Source: GOV.UK: Claim capital allowances: annual investment allowance, full expensing and the 40% first-year allowance, GOV.UK: Work out your writing down allowances: rates and pools (main rate 14% from 1 April 2026 for Corporation Tax).

GOV.UK warns that if you sell an item after claiming the annual investment allowance, you may need to pay tax, so record disposals and sale prices. CRYPTO41300 also notes that the cost of mining equipment may be deductible when that equipment is itself disposed of, subject to rules such as the chattels and wasting assets exemptions.

Source: GOV.UK: Claim capital allowances: annual investment allowance, full expensing and the 40% first-year allowance, HMRC: CRYPTO41300: Corporation Tax on chargeable gains, allowable costs (mining costs and trading stock).

UK: electricity and other running costs

CRYPTO41300 says costs for mining activities, for example equipment and electricity, are not allowable costs of the tokens for chargeable gains, because they are not wholly and exclusively incurred to acquire the tokens. HMRC adds that it may be possible to deduct some of these costs against profits for Income Tax or Corporation Tax. In practice, that means power, hosting fees and maintenance are considered against trading profits if mining is a trade, or as expenses reducing miscellaneous income if it is not. Keep power invoices and meter readings so the share used by mining can be shown, especially on a site that also runs other business activity.

Source: HMRC: CRYPTO41300: Corporation Tax on chargeable gains, allowable costs (mining costs and trading stock), HMRC: CRYPTO40200: Cryptoassets for businesses, mining transactions.

UK: records and accounting

HMRC puts the onus on the taxpayer to keep cryptoasset records, including the type of cryptoasset, date, units, sterling value at the date of the transaction and wallet addresses. Moving rewards from a pool payout address into company multisig is not itself a disposal when beneficial ownership stays with the company, but it still needs an audit trail. Use a consistent valuation method for sterling values at receipt and record it.

Source: HMRC: CRYPTO10400: Introduction to cryptoassets, record keeping, HMRC: CRYPTO40100: Conversion to sterling and accountancy.

Accounting under FRS 102 or FRS 105 is a separate question from tax. Mined coins held as trading stock, or held as intangible assets, are accounted for differently. Coordinate the mining ledger with the bitcoin register your accountant already uses for purchases. See UK accounting under FRS 102 and FRS 102 or FRS 105.

UK: registration perimeter

Mining for the company's own account is not, by itself, the same as offering cryptoasset exchange or custody services to others. If the company starts hosting machines for customers, paying out third party rewards, or advertising mining as a service, the Money Laundering Regulations analysis can change. See the UK crypto regime from October 2027 and US and UK rules compared.

US: IRS treatment of mining income

Notice 2014-21 Q-8 asks whether a taxpayer who mines virtual currency realises gross income on receipt. The IRS answer is yes: "when a taxpayer successfully 'mines' virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income." The IRS digital assets page tells individuals to report mining income on Form 1040, Schedule 1. Dollar fair market value at receipt generally becomes basis. A later sale or exchange is a separate recognition event, with gain or loss measured from that basis.

Source: IRS: Notice 2014-21: virtual currency (Q-8 and Q-9 on mining), IRS: Digital assets (page reviewed or updated 2 September 2026).

US: self-employment or a corporation

Notice 2014-21 Q-9 says that if a taxpayer's mining is a trade or business, not undertaken as an employee, net earnings from self-employment from it are subject to self-employment tax. That matters to sole proprietors and to partners in a partnership. A C corporation instead pays federal corporate income tax, at 21% of taxable income under 26 U.S.C. 11(b), on mining income less deductible expenses such as power, hosting and depreciation. LLCs and S corporations follow the rules for how they are taxed. State income and franchise taxes are extra. Agree the entity treatment with the return preparer before the first payout, because it decides which forms record the income. See C corporations, S corporations and LLCs.

Source: IRS: Notice 2014-21: virtual currency (Q-8 and Q-9 on mining), U.S. Code (Cornell LII): 26 U.S.C. 11(b): corporate income tax of 21 percent of taxable income.

US: depreciation of machines

Mining machines used in a business are depreciable property. The figures below are federal and are taken from IRS pages opened on 10 November 2026:

Source: IRS: Topic no. 704, Depreciation (special depreciation allowance 100% for qualified property acquired and placed in service after 19 January 2025), IRS: Instructions for Form 4562 (2025): section 179 limit $2,500,000, reduced above $4,000,000, IRS: Working Families Tax Cuts, businesses: sections 70301 and 70306 (page reviewed or updated 23 October 2026).

Expensing a machine in the year it is bought does not change its economics. Mining machines can lose value quickly as more efficient models arrive, and a later sale can bring some of the deduction back into taxable income, so ask your preparer about recapture and record disposal dates and prices. State rules on bonus depreciation can differ from federal rules, and some locations levy sales, use or property tax on equipment.

US: accounting for mined coins under ASU 2023-08

ASU 2023-08 applies to crypto assets that meet all six scope criteria in 350-60-15-1, including that they are not created or issued by the reporting entity or its related parties. In the basis for conclusions (BC17), FASB clarified that an entity that mines and receives newly created crypto assets is not the creator of those assets, if mining is its only involvement in creating them. In-scope holdings are measured at fair value with changes in net income, for fiscal years beginning after 15 December 2024. The disclosure rules ask for a description of activities that add to holdings, and name mining activities as an example.

Source: FASB: ASU 2023-08, scope criteria (350-60-15-1), mining additions disclosure (350-60-50-4) and BC17 on miners, FASB: ASU 2023-08, Intangibles: Goodwill and Other, Crypto Assets (Subtopic 350-60).

How mining revenue is recognised and presented, and how power and depreciation run through the income statement, are questions for the auditor. See US accounting under ASU 2023-08.

US: FinCEN mining ruling

FIN-2014-R001 addresses a corporation that mines bitcoin and uses it solely for its own purposes. FinCEN states that a user who obtains convertible virtual currency to purchase goods or services, or who mines and uses the bitcoin solely for its own purposes including converting it to dollars for the company's own purposes, is not a money transmitter and need not register as an MSB on those facts alone. The same ruling warns that transmitting value for others can still be money transmission.

Source: FinCEN: FIN-2014-R001: application of FinCEN regulations to virtual currency mining operations, FinCEN: FIN-2013-G001: persons administering, exchanging or using virtual currencies, FinCEN: Money services business definition and registration.

Hosted mining for customers, paying rewards to third parties, or running a pool as a business needs a fresh analysis, including state money transmitter and virtual currency laws. See rules and insurance.

US: records

For each payout, keep the dollar fair market value at receipt and the price source, because that value is both income and basis. Keep machine invoices and placed in service dates for depreciation, and keep property records until the period of limitations expires for the year the property is disposed of. See company tax on bitcoin (US) and Form 1099-DA.

Source: IRS: How long should I keep records?, IRS: Digital assets (page reviewed or updated 2 September 2026).

A practical board checklist

1. Separate the treasury allocation decision from any mining proposal.
2. Choose own site or hosted, and read the power or hosting contract for price, term, exit fees and capacity charges.
3. Check noise, planning or zoning, lease terms and insurance before ordering machines.
4. Model power, uptime, cooling, maintenance and exit costs with labelled assumptions. Stress difficulty and fee income.
5. Decide payout custody before the first reward: a company multisig receive address, verified on the signing devices, and strict control of who can change it.
6. Read pool or host contracts for insolvency, diversion, audit rights and who can change the payout address.
7. Agree tax and accounting treatment with advisers before go live: income at receipt, trade or not (UK), entity and self-employment tax (US), VAT (UK), capital allowances or depreciation, and fair value accounting (US).
8. Set up the records list above and reconcile pool statements to on chain receipts every month.
9. If usable heat is part of the case, measure it and write who is liable when heat demand falls.
10. Record a clear no go path: selling machines, cancelling power, and how remaining bitcoin is handled under policy.

Common questions

Is mined bitcoin taxed when it arrives or when it is sold?

Both, in different ways. In the UK, the sterling value at receipt is generally income (trading or miscellaneous), and a later disposal can create a chargeable gain or a trading profit. In the US, fair market value at receipt is gross income and becomes basis, and a later sale is a separate event.

Can the company reclaim VAT on mining machines?

HMRC says mining rewards are generally outside the scope of VAT. Whether VAT on costs that support an outside the scope activity can be recovered is a question for a VAT adviser, before purchase.

Do electricity costs reduce the gain when mined bitcoin is sold?

In the UK, no: HMRC says equipment and electricity are not allowable costs of the tokens for chargeable gains, though some may be deductible against income. In the US, the basis of a mined coin generally starts at its fair market value at receipt. How power and other running costs are deducted is a question for your return preparer.

Should pool payouts go to an exchange account?

This page does not recommend that. An exchange account is a custodial balance with its own risks. If the company keeps mined coins, the safer pattern is a company multisig receive address. If it sells some to pay costs, move only that amount, under the written policy.

Is hosted mining simpler?

It removes noise, premises and maintenance from your site, but adds counterparty risk. Check ownership of the machines, control of the payout address, insolvency terms and evidence of uptime.

Does mining make the company a regulated crypto business?

Not on its own, on the facts FinCEN describes for own account mining, and not simply by mining for its own account in the UK. Hosting machines for customers, paying rewards to others or running a pool can change that. Take advice.

Common mistakes

• Treating a mining proposal as a treasury allocation, so neither gets a proper board decision.
• Modelling one power price and one difficulty level, with no stress test and no exit cost.
• Signing a power or hosting contract without reading minimum terms, capacity charges and exit fees.
• Ordering machines before checking noise, planning or zoning, the lease and insurance.
• Leaving the pool payout address on a single signature wallet or an exchange, or letting one person change it.
• Recording mined coins at zero cost, or with no value at receipt, so income and basis are wrong.
• Assuming VAT on costs can be reclaimed, or that capital allowances apply, without checking whether mining is a trade.
• Counting a halving or a fee spike as revenue the company can rely on.

Open points to check with advisers

• UK: whether the company's planned scale is a Corporation Tax trade under CRYPTO40200; how capital allowances and electricity costs apply to trading versus miscellaneous income; VAT recovery on costs; whether any hosting of third party machines needs FCA registration under the Money Laundering Regulations.
• US: federal and state tax detail for the entity type; recovery period and bonus or section 179 elections for the machines; whether any customer facing hosting or payout feature is money transmission or a state licensable virtual currency business; presentation of mining revenue and fair value changes under ASU 2023-08; sales and use tax or property tax on equipment where the site is located.

Read next

• Buying bitcoin as a company, often the simpler path to a treasury holding.
• The halving and the four-year cycle, what a halving does to miner revenue.
• Company multisig, where kept rewards should live.
• Sizing an allocation, cash first, then a capped reserve.
• Company tax on bitcoin, UK and US rules for holdings and disposals.
• US accounting under ASU 2023-08, fair value after receipt.
• Scams aimed at companies, including fake yield and hosting offers.
• Bitcoin's future: what to watch, including the long-term fee and security question.

Sources

Primary sources only. Each link was checked on 10 November 2026. Rules change, so confirm the current version with your adviser.

1. legislation.gov.ukEnvironmental Protection Act 1990, section 79: statutory nuisances, including noise emitted from premises
2. Bitcoin Coresrc/consensus/consensus.h: COINBASE_MATURITY is 100 blocks
3. Bitcoin developer documentationMining: proof of work, difficulty and the block reward
4. Bitcoin BIPsBIP 42: A finite monetary supply for Bitcoin
5. Bitcoin developer documentationP2P network guide: transaction relay and the memory pool
6. HMRCCRYPTO10400: Introduction to cryptoassets, record keeping
7. GOV.UKRunning a limited company: company and accounting records
8. IRSHow long should I keep records?
9. HMRCCRYPTO40200: Cryptoassets for businesses, mining transactions
10. HMRCCRYPTO40050: Cryptoassets for businesses, which taxes apply
11. HMRCCRYPTO41300: Corporation Tax on chargeable gains, allowable costs (mining costs and trading stock)
12. HMRCCRYPTO45000: Cryptoassets for businesses, VAT (mining generally outside the scope)
13. HMRCCA20006: Plant and machinery allowances, outline (qualifying activity and qualifying expenditure)
14. GOV.UKClaim capital allowances: annual investment allowance, full expensing and the 40% first-year allowance
15. GOV.UKWork out your writing down allowances: rates and pools (main rate 14% from 1 April 2026 for Corporation Tax)
16. HMRCCRYPTO40100: Conversion to sterling and accountancy
17. IRSNotice 2014-21: virtual currency (Q-8 and Q-9 on mining)
18. IRSDigital assets (page reviewed or updated 2 September 2026)
19. U.S. Code (Cornell LII)26 U.S.C. 11(b): corporate income tax of 21 percent of taxable income
20. IRSTopic no. 704, Depreciation (special depreciation allowance 100% for qualified property acquired and placed in service after 19 January 2025)
21. IRSInstructions for Form 4562 (2025): section 179 limit $2,500,000, reduced above $4,000,000
22. IRSWorking Families Tax Cuts, businesses: sections 70301 and 70306 (page reviewed or updated 23 October 2026)
23. FASBASU 2023-08, scope criteria (350-60-15-1), mining additions disclosure (350-60-50-4) and BC17 on miners
24. FASBASU 2023-08, Intangibles: Goodwill and Other, Crypto Assets (Subtopic 350-60)
25. FinCENFIN-2014-R001: application of FinCEN regulations to virtual currency mining operations
26. FinCENFIN-2013-G001: persons administering, exchanging or using virtual currencies
27. FinCENMoney services business definition and registration