Hardware
Mining hardware qualifies as a productive business asset. Once placed in service, qualifying equipment can be deducted in full in year one through §179, §168(k) Bonus Depreciation, or a combination of both.
100% Deductible in the Year Placed in Service
Eligible hardware includes ASIC miners, cooling systems, electrical infrastructure and network equipment directly used in mining. To qualify, the equipment must be acquired and actively placed in service before year-end, and the activity must be operated as a profit-motivated trade or business, not as a hobby. Offsetting ordinary income such as W2 wages additionally requires material participation in the activity under Section 469, without material participation the loss is passive and offsets passive income only.
Section 179 allows immediate expensing of qualifying equipment up to $2.5 million per year, with phase-out above $4 million. Applied asset by asset and capped at taxable business income, it cannot create a Net Operating Loss on its own.
Under the One Big Beautiful Bill Act, §168(k) restores 100% first-year Bonus Depreciation for qualifying property placed in service after January 19, 2025. No dollar cap, no income limit and unlike §179, it can generate Net Operating Losses that carry forward.
An Example Calculation
In this illustrative scenario, a single-filer S-Corp or LLC owner generates $500,000 in pre-tax mining profit and purchases $300,000 of new qualifying mining hardware in tax year 2025. A 35% federal marginal tax bracket is assumed.
Assumptions and legal notes
Illustrative only. Figures assume single-filer status, 2025 federal income tax brackets, full § 179 and § 168(k) eligibility, equipment placed in service before year-end, qualification as a U.S. trade or business and material participation in the mining activity to offset ordinary income. State income tax, payroll/SE tax, AMT, NIIT, Excess Business Loss limitations, and other situation-specific factors are excluded. Actual results depend on entity classification, jurisdiction, and individual circumstance. Not personal tax advice.
Hardware Cost $300,000
Operating Costs
Mining does not end with hardware. Under IRC §162, ordinary and necessary expenses incurred to operate your mining business are fully deductible in the year they're paid.
Fully Deductible the Year They're Incurred
This covers hosting fees, electricity, internet, hardware maintenance and repairs, insurance, accounting and professional services. Every recurring cost required to keep your hardware online and productive. To qualify, the activity must be run as a regular, profit-motivated trade or business, and expenses must be documented in the tax year they are claimed.
Section 162 permits the deduction of any expense that is both ordinary (common in your business) and necessary (appropriate for operations). For mining, this covers the full operational stack.
WHAT BITKERN DELIVERS
You Own The Hardware. Bitkern Handles The Rest.
For the tax provisions above to apply, you need to own real, productive mining equipment that's placed in service during the tax year. Bitkern provides every layer of that: hardware, hosting, operations and an exit path, delivered end to end. Ownership, hardware selection and operating decisions stay with the client, which supports an active classification where material participation applies.
Hardware Sourcing & Procurement
Latest-generation ASICs sourced direct from manufacturer, purchased in your name or your LLC's name.
Deployment Worldwide
Placed in service in one of 20+ data centers across the U.S., Europe, Asia and beyond.
24/7 Monitoring
Continuous uptime management with a 98 % SLA. Issues identified and addressed before they impact hash rate.
Maintenance & Repairs
All hardware servicing, firmware updates and repair coordination handled by our technical team.
Monthly Statements & Reporting
Detailed reports on hash rate, earnings and operational metrics. Documentation ready for your CPA.
Optional Buyback Program
Want liquidity? We handle the secondary-market resale and provide depreciation-recapture data for clean exit.
Ready To Put Your Capital To Work?
Independent Tax Partner
Tax Questions? Commerce CPA, LLC Has The Answers
Our independent partner Commerce CPA, LLC has a dedicated team of accountants and tax advisors with profound experience in the crypto business, who can support you on entity structure, depreciation strategy, and other specifics of your situation.
LEGAL NOTICE
Bitkern is not a tax advisor, CPA, financial service provider, or law firm. References to IRC § 168(k), § 179, the One Big Beautiful Bill Act, NOLs, S-Corp elections, and tax-rate figures describe general U.S. tax-law concepts only; actual application depends on entity structure, individual circumstance, and other factors. Also, Bonus Depreciation offsets ordinary income only where the mining activity is active under Section 469; without material participation, losses are passive and offset passive income only. Tax law changes frequently and figures may not reflect the latest amendments. Before any tax-related decision, consult a qualified U.S. tax professional. Independent advisors in our partner network act on their own behalf and are not representatives of Bitkern.