How Is Cryptocurrency Mining Taxed?

  • 23 July 2025
  • 5 min read
crypto tax article graphic

Cryptocurrency mining has become increasingly popular, but with this growth comes the need for clear understanding of the tax implications. The Australian Taxation Office (ATO) has established specific guidelines for taxing crypto mining, which vary depending on whether you mine as a hobby or as a business. Here’s what consumers need to know. 

Mining as a Hobby vs Mining as a Business

The ATO distinguishes between hobby miners and business miners, and your tax obligations differ significantly based on this classification. 

Hobby Miners

  • No Tax on Mining Rewards at Receipt: If you mine cryptocurrency as hobby, you do not pay tax when you recieve the mining rewards. These coins are considered a capital asset acquisition, not income. 
  • Capital Gains Tax (CGT) on Disposal: When you sell, swap, or gift your mined coins, you trigger a CGT event. Any profit made from disposing of the mined cryptocurrency is subject to CGT, calculated as the difference between the asset’s value at disposal and its value when mined. 
  • No Expense Deductions: Hobby miners cannot claim deductions for mining-related expenses such as electricity or hardware costs.
  • No Personal Use Asset Exemption: The personal use asset exemption does not apply to capital gains from mined cryptocurrency. 

Business Miners

  • Mining Rewards Are Income: If you mine cryptocurrency as part of a business, the value of the coins at the time they are mined is treated as ordinary income and taxed at your marginal tax rate. 
  • Expense Deductions Allowed: Business miners can claim deductions for expenses directly related to mining activites, including electricity, hardware, and software costs. This reduces your taxable income. 
  • Trading Stock Rules Apply: For business miners, mined coins are considered trading stock. When you sell or exchange them, you may also trigger additional tax obligations.
  • Record Keeping: Business miners must keep detailed records of all transactions, income, and expenses for at least 5 years. 

How to Determine Your Mining Status

The distinction between hobby and business mining is not always clear-cut. The ATO considers several factors, including:

  • The scale and regularity of your mining activities
  • The intention to make a profit
  • The level of organisation (e.g., business plan, record keeping)
  • The amount invested in mining equipment

If you are unsure, consult the ATO’s guidelines or seek professional tax advice to ensure correct classification.

Calculating Tax on Crypto Mining

For Hobby Miners:

  • No tax on receipt of coins

  • CGT applies when disposing of coins

  • No deductions for expenses

For Business Miners:

  • Income tax applies on the fair market value of coins when mined

  • Deductible expenses can be subtracted from mining income

  • Additional CGT may apply on disposal if the value has changed

Reporting and Compliance

  • Annual Tax Returns: All cryptocurrency transactions, including mining, must be reported in your annual tax return. The Australian financial year runs from 1 July to 30 June, with tax returns generally due by 31 October.
  • Record Keeping: Maintain detailed records of mining activities, including dates, amounts, values in AUD, and transaction types for at least five years.
  • ATO Data Matching: The ATO actively collects data from Australian crypto exchanges to identify unreported transactions and ensure compliance.

Recent and Upcoming Changes

As of June 2025, there are ongoing legal discussions regarding the classification of Bitcoin and other cryptocurrencies. A recent court ruling suggested Bitcoin could be classified as “Australian currency,” potentially altering its tax treatment. However, the ATO has not yet updated its official policy, and crypto is still taxed as property for now. Stay updated with ATO announcements for any changes that may affect your obligations.

Key Takeaways

  • Crypto mining is taxed differently in Australia depending on whether it is a hobby or a business.

  • Hobby miners face CGT on disposal, while business miners pay income tax on mining rewards and can claim deductions.

  • Accurate record keeping and compliance with ATO reporting requirements are essential.

  • The regulatory environment is evolving, so stay informed about updates from the ATO.

For the latest guidance, consult the ATO’s website or seek advice from a qualified tax professional familiar with cryptocurrency.