I saw this thread got bumped, and it got me thinking. Well, if you buy & sell bitcoins, or if you trade for bitcoins, the tax implications should be fairly clear. I think in the former case, you declare capital gains when you realise the profit, and in the latter, you declare a dollar-equivalent income at the time of the trade. Right?

The interesting thing is mining. How do you tax wealth that comes "out of nowhere"? Well, let's examine more closely where it does actually come from.

Well, suppose I were to invent a new currency based on... peculiarly shaped stones that only I can find. Well, if no-one accepts my new currency the value is zero. If people start accepting them, then by their very acceptance, they ascribe a value to the stones. So, it's more like a gift than anything. So I might hold up a stone and shout to the masses: "what'll you give me for this?" and everyone shouts back "$100", and someone "gifts" me $100 for my (previously) worthless stone.

Of course, now that bitcoins are somewhat established, and mining is a big business, I suppose calling it a gift wouldn't cut any more. Yeah, it'd have to be income-taxed.