Quote from: Iannn on March 04, 2018, 06:54:46 PM

I am treating it like a business. I was told to pay off the mining rig and then pull out at at least enough usd to cover electricity costs and then a little more on top of that so the business is not working at a loss. I don't know if its the right way but it seems reasonable to me. People who know more than I do please feel free to shred me to pieces.....

Most of us aren't here to shred you to pieces, my friend. Bucc5207 makes a great point: profit does not mean cash. My balance sheet shows my cash to have increased a LOT in the past 4 months, but my income statements show losses for most of those months.

It is important to recognize that when you began a business, legally there are only two sources of funding: equity and debt. Equity you don't have to pay back but you give control to whoever gave you the money (great if this is YOU investing the money). Debt you do have to pay back, but it is technically an expense (great if this is YOU loaning the money). So here are two scenarios:

***
Equity of 4000 to start the business with 3600 for a mining rig (depreciated over a year):
100 a month in electricity
800 a month in profits from mining
300 a month in depreciation of the rig
_________________________________
$700 cash in the company bank account monthly after paying electricity
Only $400 of that is taxable (after depreciation on your machine)

***

Debt of 4000 loan to start the business with 3600 for a mining rig (depreciated over a year):
100 a month in electricity
800 a month in profits from mining
300 a month to pay back the loan for the rig
300 a month in depreciation of the rig
_________________________________
$400 cash in the company bank account monthly after paying electricity
$300 back in your bank account after your loan being repaid
Only $100 of that is taxable (provided you didn't make interest on the loan)

***

Equity vs debt runs into issues when you start looking at your financial ratios (leverage, quick, current, etc.) but if you're not a huge corporation it has no importance. The importance for you should be in the tax liability. These scenarios are given no type of slack for appreciation or loss of value based on exchange rate. This is complex because of the exchange rates but you should always give yourself enough CASH slack to pay your operating expenses (rents, electricity, etc.). I started my business with 3k in cash. I used that for operating expenses until last month when I finally converted a lot of crypto into fiat (and took a huge loss on it due to realizing gains when BTC was above 19k).

In crypto, like anywhere else, your profits are listed when it is EARNED not when it is converted into CASH (although you may have another round of profits if BTC/USD has increased)