The fact that you’re using a cryptocurrency doesn’t mean you’re immune to taxes, as this WaPo / AP report notes:
The new [Bitcoin mining] industry’s relatively sudden growth prompted lawmaker Smari McCarthy of Iceland’s Pirate Party to suggest taxing the profits of bitcoin mines. The initiative is likely to be well received by Icelanders, who are skeptical of speculative financial ventures after the country’s catastrophic 2008 banking crash.
“Under normal circumstances, companies that are creating value in Iceland pay a certain amount of tax to the government,” McCarthy told The Associated Press. “These companies are not doing that, and we might want to ask ourselves whether they should.”
But even more interesting is this:
Iceland is expected to use more energy “mining” bitcoins and other virtual currencies this year than it uses to power its homes. …
The serene coastal town of Keflavik on Iceland’s desolate southern peninsula has over the past months boomed as an international hub for mining bitcoins and other virtual currencies.
Local fishermen, chatting over steaming cups of coffee at the harbor gas station, are puzzled by the phenomenon, which has spawned oversize construction sites on the outskirts of town.
Among the main attractions of setting up bitcoin mines at the edge of the Arctic Circle is the natural cooling for computer servers and the competitive prices for Iceland’s abundance of renewable energy from geothermal and hydroelectric power plants.
And if the countries of the world decide to outlaw cryptocurrencies – or they go under for some other, more organic reason? Do those new energy generators become abandoned buildings, monuments to a failed experiment?
Oh, and I must say I wish they hadn’t used the word ‘mining.’ They should have made something up, rather than piggybacking.
