Mining cryptocurrencies triggers multiple taxable events.
1. Income Tax- The cryptocurrency you received through mining and/or staking rewards received by holding proof of stake coins is treated as ordinary income per IRS guidelines. You are taxed for income at the market rate of the coin when you mine it.
2. Capital Gain Tax- You will be taxed on any capital gains you make between when the coin was mined and sold.
How to report mining taxes?
Mining taxes are a bit tricky. First of all, it is important to consider whether you were mining cryptocurrencies as a hobby or as a business.
If you mine cryptocurrency as a hobby, then you will need to report the value of the currency or currencies that you earned as "Other Income" on Line 8 of Schedule 1.
If you choose to treat your mining as a business, earned bitcoin is reported as income on your Form 1040 Schedule C.