Crypto Mining Opportunity Coming Soon — 82 Comments

  1. Excellent timing. I was just looking at bitclub but it was feeling a little to MLM for me. I am very familiar with the concept and mechanics but I am interested to see if this is going to be done off shore. Looking forward to learning more; subscribed!

    • It won’t be “off shore” unless you feel that the Austin Texas area is off shore. LOL

    • Hey Mark,

      As Jack says I’m based in Austin, TX. (Hill country, no flooding, 4 hydro dams, and coal powered electricity.)

  2. Possibly a question for the show but I’ll ask here first.

    Thoughts on setting this up as a business? The crypto mined is the revenue and then the fees to Crypto Gulch are business expenses. You could depreciate the cost of the equipment since I would own it.

    Jack what are your thoughts on that approach? Or would you recommend just keeping the crypto in crypto?

    • Essentially you could set it up as a business, then yes you absolutely can depreciate the equipment.

    • Jack gave you a pretty good answer already 🙂

      Yes, you could set it up as a business and you can deduct the hardware. We have an accountant looking at the asset management tool I’m writing to make sure all the correct info is in place. That way we can generate whatever reports you’ll need for taxes.

      Keep in mind if you create a business out of it you’ll need to show some income from mining. You cannot hide all your mining income. They’ll catch on to that 😉

      • Honestly I don’t think I’m smart enough to hide things so I probably won’t even try.

        I was thinking about how you recognize income. Are you reports smart enough to show the exact price at which you mined the crypto so that you have an revenue estimate in US dollars?

        Although, I still would love to understand if you are claiming the mining as revenue what happens when you sell appreciated gains on the crypto? Are you paying taxes twice?

      • You pay taxes based on the price you sell at, not the price you mine at. If you hold it, then you don’t pay taxes on it.

        At the end of the year you’d go to the exchange you use, like Bittrex, and print out a history if your trades. It will show the amount of coin you sold, and at what price. Or you can use Coinbase and see the trades where you sold for cash to your bank account.

        Personally, I keep a simple excel spreadsheet of my trades.

        It’s a bit of a pain at the moment. I’m sure the tools for this will get better as the industry matures.

        • But how do you determine your basis? Are you being taxed on capital appreciation or as revenue/income?

          I know it’s getting technical but I spent a lot of time on your website and pretty excited about this.

        • Some questions are really for an accountant, but this is how I see it.

          Since you are mining the crypto, you have no basis, you are mining not buying. If you do the good boy thing and report it as earnings, your earnings will be

          Total mined at value when mined less all expenses you can expense against this income.

          I don’t know that I agree with Ben that you don’t report income on mined crypto. Perhaps he is right but it will change everything I say if so.

          Directly this would be the cost of the equipment depreciated over time. If your equipment investment is low enough you may be able to just write it off, not likely here but in some instances. Ben’s fees etc are not a deduction because you never realize the revenue. Also the equipment may meet the criteria for “accelerated depreciation” meaning you can take most of it in the first year.

          Keep in mind depreciation is a two edged sword, say you depreciate 6000 dollars in gear, to 1000 dollars over 3 years (this is illustrative only I have no idea the deprecation schedule) but at this point you have expensed 5K off the equipment, reducing earnings or may be even creating a loss. Say now you sell that equipment for 3500, the results will be a “profit” on it of 2500 dollars. Price sold for less depreciation and remaining cost basis is the formula for that.

          You can create other deductions but since I have not done this before I am not sure what fits and for me it will be safer to expense it to my main business.

          But some ideas are any memberships, subscriptions, etc that provide education or information on crypto or any investing, etc. If you have an existing company you can then do your mining as part of what your company does, like a division, etc.

          Then when you sell or spend crypto you will declare a loss or profit based on the value when mined, vs the value when sold. I hope this makes sense.

          So what if Ben is right, what if you do not report the income as mined and only when sold or spent?

          Okay from my knowledge of tax law, this would be like farming in a way. Say I spend 2500 dollars on trees for my farm in year one, you would think I can write that off in year one, I CAN’T, why? I have yet to realize any revenue from them. So in say year 5 I start selling apples, in that tax year I can write off the expense of the trees. This even applies to annuals, say I sow wheat for spring in fall of 17 but harvest the wheat in 18. I don’t get to write off the seed expense until I sell the crop in 18.

          So if Ben is right and you mine and pay nothing, you’d not write off any expenses at all until you began selling or spending the profits. I don’t think it works this way but tax law on crypto is VERY MURKY at this point. They need to be more clear with guidance on it.

          Here is what most miners do though, not saying you should. They do NOTHING! They expense nothing and pay tax on nothing. How?

          Okay where is the paper trail? Unless you move it to like coinbase and sell it for cash there, how would anyone know what you did? That it was you that did it?

          Again that isn’t advice, that is what is being done.

          Personally I pay tax on every penny I make in any form, I am a big fucking target with what I do. On crypto I do what my accountant advises based on the situation at the time.

          Ben, on what do you base not being required to pay tax until you sell or spend it? I agree in premise, because you have not realized the gain, but I am not sure the IRS sees it that way. In any event I can say absolutely that if that is the case and say in tax year 2018 you mine but do not spend or sell any, you also could not deduct any expenses, because you can only charge expenses against revenue. You can absolutely lose money, but there has to be revenue to expense against.

          Man we need a CPA that knows cutting edge crypto law for the Expert Council.

        • Hey Jack,

          I dunno. I’m not a tax professional. 🙂 Easiest answer.

          I thought crypto was handled like a stock. You pay when you sell.

          Now mining is totally different so maybe you’re right. I dunno.

          You’re right we need an accountant to chime in on this. I’ll see if I can find one that would be willing to do some webinars or training for our members.

          This all changes based on where you live among other things. In Japan crypto is a legal currency. In US it isn’t a currency yet so it’s handled differently. Keep in mind also that laws on this change regularly.

          Heck the IRS sued to seize the records of EVERYONE on Coinbase. Coinbase fought back.

          I’m also going to the Texas Bitcoin Conference next month. I’m sure I can find out more information there.

        • My other thought is if you don’t pay based on when you sell… you are double taxed.

          Meaning you’re taxed when the coin is mined AND when you sell it.

          I think to be able to deduct it for your taxes you just need to sell SOME coin that year. Not all of it.

          But again I’ll see if I can find us a good accountant. My accountant that is helping isn’t knowledgeable enough in crypto to answer these questions.

        • Okay so it would not be double tax, follow this.

          I mine coins at say 300 dollars for Ether, now here is the key, would you report the revenue as earned? Quarterly? Annually?

          My gut is you’d do it quarterly with the value of the crypto at the end of the quarter, IF you report as mined, which again I am not sure about.

          Okay but say you have to, how is it not double tax?

          Two scenarios,

          1. I mine ether at 300, I pay tax on that less expenses, say ONE Ether to make it simple. Regardless of my expenses my revenue is 300 which makes sense. Now in the next tax year, I sell it at 350, I report it with a basis of 300, so now I only pay tax on the 50 not 350. The first is realized revenue, the second event is a capital gain.

          2. I mine ether at 300, I pay tax on that less expenses, say ONE Ether to make it simple. Regardless of my expenses my revenue is 300 which makes sense. Now in the next tax year, I sell it at 250, I report it with a basis of 300, so now I take a 50 dollar loss. The first is realized revenue, the second event is a capital loss.

          As you can see in those two examples it is not double taxation. Once the tax is paid on the mined crypto, it is not taxed again, it becomes the basis cost of commodity (the IRS says crypto is a commodity not a currency).

          Again in principle I agree with you, you should not pay tax until you sell or spend it on principle due to the fact that you have yet to realize the gain. Say I find a pile of silver coins buried in a jar in my back yard. I take possession of them, this is NOT A TAXABLE EVENT. But if I sell them, it becomes one.

          But does that apply to crypto? IDK

          On the second part if you sell some, can you deduct the expenses? As I was typing the last reply I had the same thought, the answer should be yes! But you may not want to strategy wise.

          Back to my tree example, I spend 20k planting trees, in year 5 I sell 5K in apples finally! Yay me. Now I can say I lost 15K, but I do I want to? Depends on all my revenue and what I am paying that year.

          Because say in year 7 I am going to sell 20K in apples, I can wait until then to declare that planting expense and I may very well be better off doing so.

        • Jack,

          A friend of mine who is very involved in mining and also leading one of the new coins says he thinks you’re right about taxation/accounting.

        • Can you restate what Jack was right about? Is it about claiming the revenue as it mined or the apple tree example of not claiming income until sold?

        • Let me state I’m not an accountant.

          So let’s not get into tax advice because if I say it’s one thing you could blame me 😉

        • What my friend says is…

          You pay taxes on the amount the coin is worth when you mine it. Then you pay the difference between what you sell it at and what you mined it at.

          I don’t know if he’s right or not. Again I’m not an accountant 😉

        • Spoke to an attorney with some tax law experience and crypto experience. He agrees about how it is taxed.

          You pay based on what the price of the coin is at the time you mine it… then based on when you sell it and the price then. Is it a gain or a loss? Was it less than 1 year from when it was mined (short term gain) or over a year (long term gain.)

    • I would assume crytpo mining would work exactly like real Gold or Silver or any other precious metal mining works. It’s almost the exact same principle. You “mine” physical gold and then sell it into the open market.

      Perhaps if we can get an accountant on the expert council they could address how gold miners operate- in a simplified form.

    • We will accept payments in Crypto. Right now Bitcoin, Litecoin, and Dash too.

      We also accept credit card and apple pay through Stripe.

      I probably won’t do PayPal. My other business selling parts for miners just had $7,000 worth of items on hold from PayPal simply because our business was growing too fast and PayPal’s fraud department was worried we weren’t legitimate.

      • One your site you have listed 1, 6, or 25 GPUs.

        Are those the standard packages or can you buy 10 for example?

      • The homepage just has the main packages but you’ll be able to mix and match and order any quantity. I need to add that to the homepage. If you look at the shop page it’s probably more clear. Thanks for reminding me I need to add that to the homepage.

  3. Hi Jack;
    Please let me know when Crypto Gulch is up and running, and include a price list if you can.
    I’m in the UK; is this offer open to other countries? I realise there would be extra fees for USD/GBP exchange and for shipping/handling if I were to take delivery.
    Also, will the pool be open to others to mine as well?

    Thanks for all you do

    • My guess is Ben won’t care what nation you are in, the equipment is yours, he is just running it for you and the crypto just goes to an address. Not much red tape with that. To be notified again just fill out the form.

    • Hey Keith,

      You can pay by crypto without any exchange rate. We use Stripe for credit card processing so they’d just handle the exchange rate directly in their system for you if you paid by credit card.

      We probably won’t use our own pool initially. Ethereum is so BIG now with so much hash power it will be hard to have our own pool. We’d go for extended times without finding a block and it would probably frustrate people that are new to mining.

      For Ethereum we’ll probably use the major pools like Dwarfpool. That’s my preferred pool. Ethermine has had a few problems lately.

      For Zcash either Dwarfpool or Flypool (also part of Ethermine).

      If we start mining other coins we might use Suprnova or even run our own pool. I have setup pools before. I also have friends who write pool software.

    • Weeks. Last week I was working on the asset manager to track the assets you own, where they are located, what products, serial numbers etc.

      This week I’m working on the functionality of the wallets and connecting your changes to your “rigs”. I am working on automating all changes and also tracking/logging all changes.

  4. I really don’t have the time, knowledge nor equipment to do it so this would be a great way get started. I appreciate the heads up. Love the show.

    • Hi Aaron,

      I hope this is a good solution for you!

      Mining is a heck of a lot of fun. It’s addictive!

  5. I’m sure it will be covered somewhere, but I’m curious to see ROI on the different rigs. I know about crypto buying, but less about the mining. I signed up, and not expecting an answer till it’s ready, but that’s my big question. Everything else stems from that.

    • Hey Andrew,

      I have an earnings estimator on the site. Investing directly in crypto is certainly a way to make money faster. However, it is also riskier. You don’t own anything. Your exchange where your funds are could be hacked and lose all your money. (MTGOX for example.) Exchanges are huge targets for hackers.

      Mining is less risky because you own the equipment. You also may be able to resell the equipment and or amortize it for taxes. We just had a phase of really high demand. Equipment I bought new in February I was able to sell used in July for more than I paid for it in February. This is unusual of course. Usually, used equipment is worth less than new.

      Mining is slower. It’s more like residual income. It is actually a really important service. No crypto exists without the miners (or people staking nodes or whatever) to actually run the network.

      Mining is fun. You see income coming in to your wallets daily (if you have enough equipment) or weekly. You can also experiment with mining new coins. (This will be added to our service over time.)

      • Question on the ability to resell old equipment? How will that work?

        Who find the buyer… seller… transfers the equipment?

        Do we have to put the items up for sale or if someone comes to you looking to buy will you advertise if we have what the buyer wants?

      • Hi Jared,

        That needs to be figured out but I’ll probably just make a section of your “my account” page where you can put an item up for sale and specify a price. Then that item would show on the other member’s my account page or maybe it will actually show in the “shop” for anyone to purchase. Hmm. I’ll have to put some thought into that.

        This is a closed community. No need to go outside the community and pay extra fees to eBay or whatever if we don’t have too!

        I already have 400-500 customers of my “MinerParts” business. Many of them are potential customers as well. They’re already on a mailing list so it’s easy for me to just shoot them out an email.

        I want it to be as simple as possible for people like Jack that have business interests already. They want to mine but they don’t have the time. I have the knowledge and the community contacts already to help facilitate transactions like the sale of used equipment.

        Does that make sense?

        • It makes sense to me and I think in time this is going to be an amazing opportunity! Think of the power we will have as a group if Ben ends up with say 200 customers he is treating as partners.

          Say 18 months in better equipment is available sure some will sell to upgrade BUT, many would do well to say, hey let me buy some new stuff and keep my old stuff, direct my old stuff to easier things to mine.

          Now since Ben is basically working on commission, the better he does for the better he does for himself. They are always going to be optimizing things because it only makes sense for him to do that. If he is charging a fee of 25% and he makes you 10% more, he makes 2.5% more for himself at the same time.

          I am going into this with a partner mindset even though I don’t have any say on how things are run or any authority. I see it as a partnership not just with Ben but with all the customers. Long term we are going to have a shit ton of hashing power as a group.

    • How is that different for anyone mining crypto in any fashion at all?

      Also what is your definition of obsolete?

    • No different. I still need to know what will happen within the terms of the agreement with the mining pool.

      Obsolete – no longer profitable to use for mining. GPUs I purchased 36 months ago can still technically mine but don’t generate enough to cover the electricity running them.

      Stated a little differently I’d rather a service that takes an additional amount in fees per month to continuously upgrade equipment. I don’t know if such a plan even exists in the pool/mining space but that would be an attractive option for me.

      • It is not a mining pool, you own the equipment, it mines for you, if this isn’t a good service for your needs, seek something else. Perhaps try running a company the way you think one should be run?

    • Good question. If you lease shares at a leasing company it’s pretty much the same. You lease at Genesis for 2 years. In the fine print it says only while that is profitable. Meaning if the 30 MH becomes not profitable your lease terminates.

      The good news is that since you own the GPU you can decide to do with it what you wish. You could sell it and upgrade every 6 months. You could hold it until it becomes unprofitable. That’s up to you.

      At that point we can do 2 things for you:
      1. We can offer the GPU for sale to another one of our clients. That way you don’t do anything. We could help facilitate that transaction for a small fee and simply transfer the assets within our system for you.

      2. We package up the GPU and send it to you to sell yourself. You pay the cost of shipping plus a small amount for us to package it up. I haven’t figured out the pricing but there will be a per GPU or per RIG cost depending on the level your at and we’ll cap it so the fees aren’t crazy. Just cover our time of packing everything up.

      We also try to keep all the original boxes for you. Although there could be issues where a box is lost/damaged our goal is to keep all the originals so when /if you resell it is more valuable.

      We could offer to sell it for you on eBay but I think that would be cost prohibitive. We’d probably need to take 35-40% of the sale to make it worth our time.

  6. I’m interested, Jack. Would like to know if there are fees for the mined ethereum being transferred to a wallet and if there is a preferred ethereum wallet out there I should be looking into.

    • It doesn’t really matter that is up to you. Personally I like Jaxx for something like that as it includes shapeshift so you can convert to anything before moving to something more secure long term.

    • Oh missed the fee question there should be no fee because they are mining strait to your wallet. The fee is the mining and maintenance fee. They charge that simply by mining to their own wallet for a portion of the time.

    • Hey Jake,

      The way our fee works is we just reset the miner to mine to our wallet for X amount of time. The rest of the time it mines direct to your wallet.

      If the pool has a fee (usually 1%) that is taken out by the pool. For coins like Ethereum it is hard for us to have our own pool so we have to use the existing pools because there is just so much competition. If we had our own pool we’d go for long periods without finding a block. We may eventually have our own pools though. I have run pools before.

      There is no other fee. So what you see in your wallet at the pool is yours. We mine directly to your wallet address for you.

      I personally have a Trezor hardware wallet I store my coins in. But it isn’t recommended to mine directly to the Trezor. So I either mine to an exchange or I mine to a software wallet. For Ethereum I use the browser based MyEtherWallet.

      Believe it or not Jack, I haven’t setup the Jaxx wallet yet. I really should!

      • Jaxx is the greatest thing for a miner or someone receiving crypto EVER.

        You constantly can set up new addresses, you can shapeshift in seconds to all major coins, then move off to something like Trezor as you see fit.

        In other words it is an easy way to make crypto noneya as in none ya damn business!

        • Thanks, Gents. Ill couple Jaxx with my Nano S and be good to go once Crypto Gulch up available. Pretty excited as this will be my first venture into mining. Still learning the lingo and pretty much everything else. Node Investor on Youtube has been a pretty good source for me, along with Reddit.

          Hoping a 3 GPU pricing tier is available when this gets up and running. Thanks again!

        • Hi Steel,

          I appreciate you bringing up the article.

          Let me quote something from that article:

          “Even when your Jaxx has a security PIN configured, anyone with 20 seconds of (network) access to your PC can extract your 12 word backup phrase and copy it down. Jaxx does not have to be running for this to happen.”

          “Users who only use Jaxx on their smartphones are reportedly safe”

          That’s someone getting access to your PC. If they can get access to your PC they can get access to your wallet software anyway. It doesn’t matter if you use JAXX or a local Ethereum wallet client or whatever.

          They also mention only keeping small amounts in Jaxx. I agree. I have a “hardware” wallet which has a rotating pin pad combination on it and has to be plugged in to the computer to use. That is what I suggest for long term saving your currency and protecting it.

          We also have to figure out ways to tell novices how to easily setup a wallet without making it too difficult. Setting up a hardware wallet is complex for a newbie who has never used crypto before.

  7. Just getting ready to start mining. This is perfect timing. I hope he can find decent GPUs. They are hard to find. Please put me on the list.

    • Hi Ed,

      Yes, we already have a reseller account setup with a distributor. It takes awhile to get GPUs but we can order them in bulk.

      I’m trying to standardize on only a couple different models of GPU so we can get one optimized BIOS for each model. If we have a dozen different models of GPU each with different BIOS it makes it more complicated. Plus I can pay a real guru / friend to make a more optimized BIOS than what is publicly available. He uses a hex editor to make detailed changes not simply swap out timings.

      • As a former support tech, standardization makes a helluva lot of sense. One optimization tweak that can work for every identical piece of equipment. Also, you know which pieces will need to retire when the time comes. And, it keeps the spare parts inventory at a reasonable level. Speaking of that, what happens if my particular unit (or a sub-component) dies the silicon death? Anyway, I’m looking forward to seeing the Price List.

        • Great question Lee,

          Units will die. Or we will get “flaky” units that just don’t perform well as the rest. We call it the silicon lottery. Out of 10 identical units 1 will perform better than the rest. 1 will perform worse than the rest. It might not be able to be optimized at all.

          This is one reason why you pay me a fee. I can swap out a card with another card. That way we can simply transfer that “bad” asset out of your account to our account. I can then take care of sending that card back for warranty replacement / repair and you don’t have to worry about anything. You mine as normal. I am trying to figure out with the accountant the best way to handle that in the asset management tool for your account.

          Another advantage of the fee is I can simply “give up” my fee for awhile. If there is an outage for example due to a bad card, or hardware problem that takes let’s say 6 hours… I can just give up my fee for a day to make back the downtime to you. That way you are guaranteed 100% of your allotted time per month.

  8. If I have multiple GPU cards , NVIDIA M60 , already can I send them and have them used in the mining rig?

    Why are you going with GPU based instead of ASIC?


    • Hi Tim,

      I’m sorry but I think trying to support everyone’s hardware from home is too time-consuming. We’re trying to standardize on a few platforms rather than support a ton of different platforms.

      As to why we don’t support ASICs… They’re too limited in scope and too hard to get. Maybe as we grow we can go to China and make some deals direct with the ASIC manufacturers and try them out.

      GPUs give us flexibility to mine a lot of variety of coins. ASICs are limited in scope. They’re also hard to come by. They’re so hard to come by that they resell for 2x to 3x value on eBay.

      GPU is just all around better for us to start with than ASICs.

      I tried to buy some ASICs last week but they sold out so fast I couldn’t even order them in time.

  9. Are we all mining the same currency at the same time?

    Or can you mix-and-match? For example, if you have 10 GPUs can you aim 5 at ETC and 5 at Dash?

    Thoughts? And what makes the best overall strategy? To concentrate power on one or to diversify?

    • Hi Jared,

      Initially, it is one option only in your dashboard.

      However, I do plan to allow you to “group” rigs and choose other coins for certain groups.

      I think most users are probably low level. They don’t want a lot of options. So we’ll start with that and add more options over time.

  10. I signed up for the notification list. A 30% hosting fee seems kind of high. As prices go up, the difference from 20-30% could be very noticeable. I may still get on board at 30 but if you lower it to 20-25% for 1 GPU then I’ll be a guaranteed sale.

    Good luck Ben regardless. This is a great idea for people who don’t want to spend the time necessary to understand and setup something like this.

    • I know he is thinking of moving to a minimum 2 GPUs to make it practical and he said if he gets enough people he can reduce the fee quite a bit.

      By the way the higher the price goes, the better not worse it is for you no matter what the fee is. Percent is percent.

    • The easiest way to explain the hosting fee. It’s better to start out higher and reduce the fees than to start out lower and end up having to raise the fees.

  11. An idea for the future. Once things are up and running it would be great if you could create a course/product to show the step by step process on how to do this on our own.

    That way you cater to DIYers and those interested in using you directly.

    • Actually, I have some stuff already for that. I just don’t have it all put together. I took some photos/videos. I realize part of the fun for some people is to do it themselves.

      Plus I can still get paid a little by people buying parts from our parts business. We sell the specialty parts like PCIe risers, cables to run dual power supplies, etc.

    • No it will be some time in Oct. If you are on the list I promise you will get an email when we are close and when we are ready.

    • We opened for a couple of test customers. At this time we’re closed to new customers while I continue working on the “software” side of things.

  12. BTW that lazy bum Jack Spirko is on vacation… So we have to wait for him to get back anyway!

  13. Updated pricing:

    Buy a $2000 starter rig (required) A large portion of this initial cost is with the setup of the base rig. Including:

    6 GPU Mining rig motherboard.
    Intel or AMD CPU
    Power Supply(s)
    USB Stick or SSD
    Operating System
    Mining Software
    Mining Rig Frame
    2 PCIe risers
    Your first 2 GPUS

    — Now this makes the starter cost higher BUT makes upgrade costs significantly less. We were talking about $750 per GPU. Now it’s only $600 GPU!

    When we get to your 7th GPU you won’t have to buy another starter rig. I’ll cover the costs from my own pocket.

    In essence your first 6 GPU rig costs $4400
    But your second (and all future 6 GPU rigs) only run $3600!

    PLUS you own everything. Not just the GPUs. If you want I can literally package it all up and send it to you and it will be plug and play. (It will be disassembled a bit because of shipping.)

    • Hey Ben,

      Excited to see you opening the store on Tuesday, but I’m just not sure I can be at my computer at noon as I will be doing something equally as exciting as hunting ducks in a North Dakota field at that time.

      When do you plan on opening it up to more than the first 20, just in case you are sold out by the time I get back to home base?