What Are The Tax Advantages of Buying Mining Equipment?

The tax benefits that you can take advantage of will completely depend on the type of business you operate and the ecosystem you choose to account for the mining rig. Fundamentally there is a lot of very nice options for businesses, both physically and for tax reasons.

Firstly, what you’re buying is effectively a very posh computer. Although you wouldn’t, our mining rigs are capable of having a screen plugged in and going on YouTube, just like you would with any other computer. Our mining rigs aren’t just created for mining Cryptocurrency. They are incredibly powerful at processing computational data, which essentially makes them a very powerful server which can be used for a myriad of business use cases.

Due to the mining equipment being comprised of top end computer components, it holds its resale value a lot more than people think. So by investing in the mining hardware substantially reduces your financial exposure on any purchase because you have the value in the hardware.

So besides from Cryptocurrency mining, the mining rigs are also capable of processing artificial intelligence deep learning algorithms, which as we know with the world moving forward is going to play a vital part in our future. In simple terms, the mining rigs can crunch a lot of data insanely fast, so there will be a lot applications which the rigs can support moving forward, adding to the avenues in which you can generate revenue from.

Regarding the tax benefits, due to the nature of the equipment, mining rigs are eligible for VAT deductions when accounted for through a VAT registered business. All you’re effectively purchasing is computer hardware so it’s just a normal hardware purchase which the VAT can be claimed back on.

Following on from this, the computer hardware purchase can also be eligible to come under a business’s capital investment allowance. For those unware, this is an allowance which allows you to receive tax reductions based on purchases of hardware for your business. It’s ultimately for hardware purchases which depreciate in value over time. Understandably your business will need to be able to prove the purchase fits in with your use case. But capital investment allowances cover purchases for machinery and office hardware, so in most cases you’re purchasing a new computer server for your business, nothing more.

In some cases we have also had clients take tax advantage of R&D Tax Credits on purchases of mining equipment. Understandably you’re purchasing hardware which operates within the new and developing Blockchain sector. So some businesses have proposed use cases to explore this new sector which can then be accounted for under the R&D tax benefit.

So purchasing mining equipment can have some really nice tax benefits right here and now for your business. But also, having Cryptocurrency as an asset within the business can also have some great tax benefits too.

As far as tax goes in the UK currently, Cryptocurrency is classed as a capital asset so when you make money on the Cryptocurrency you are holding, you would pay capital gains tax upon crystallisation into your bank account. Alternatively, if you have any losses on your Cryptocurrency holdings, that can also be beneficial for your business as you can offset those losses against your business tax bill. For more information on this we do have our own specialist Crypto accountant who can help with all of your Crypto taxation needs.