Why This Strategy Exists

Many high-income taxpayers eventually exhaust traditional planning tools:

• S-Corp optimization
• Retirement maximization
• Accountable plans
• Cost segregation
• Standard business deductions

When taxable income remains high, scalable depreciation-based strategies become limited.

Bitcoin mining may provide:

• Section 168(k) bonus depreciation
• Ongoing deductible operating expenses
• Structured business income treatment
• Long-term digital asset exposure

But only when properly structured and documented.

How We Evaluate Mining Within Your Broader Tax Strategy

Bitcoin mining may provide depreciation and operating deductions — but whether it makes sense depends entirely on the client’s total tax profile.

OnChain’s role is not to sell mining.

Our role is to determine whether mining integrates properly into a client’s overall tax architecture.

Before any implementation, we review:

1. Income Composition Analysis

• Active vs passive income breakdown
• W-2 vs business income mix
• State tax exposure
• Marginal rate positioning

We determine whether depreciation can actually offset the income in question.

2. Strategy Stacking Review

• Have traditional strategies been maximized?
• Is this additive or redundant?
• Does this interfere with other planning (S-Corp payroll, real estate, etc.)?

Mining should complement, not conflict with, existing strategies.

3. Risk & Suitability Assessment

• Is the client prepared to operate a business activity?
• Are they comfortable with operational risk?
• Does the cash flow impact align with liquidity needs?

We evaluate whether the strategy fits the client — not just the tax code.

Case Scenario Example

Profile:

High-earning medical professional

AGI: $1,000,000+

Already maximizing retirement accounts and standard deductions

Problem:

Limited remaining scalable deductions. High marginal tax rate.

Structured Approach:

• Establish mining activity within proper entity structure
• Deploy capital into IRS-compliant equipment purchase
• Apply bonus depreciation under Section 168(k) (subject to eligibility)
• Deduct operating costs annually
• Report mined Bitcoin as business income

Potential Outcome:

• Year 1 depreciation reduces taxable income
• Ongoing operating expenses generate annual deductions
• Gradual accumulation of Bitcoin exposure

Actual results vary based on income level, tax bracket, and operational performance.

All participation requires suitability review.

Division of Responsibility

OnChain Accounting

• Tax eligibility screening
• Deduction modeling
• Entity structuring
• Depreciation schedules
• Ongoing reporting & compliance

Leveraged Mining

• Hardware sales
• Hosting & infrastructure
• Deployment & maintenance
• Operational documentation

OnChain does not sell mining hardware.

Leveraged Mining does not provide tax advice.

Joint Client Advantages

Clients engaging both firms receive:

Coordinated Pre-Purchase Review

No capital deployed without tax modeling.

Structured Documentation

Clean depreciation schedules and expense tracking alignment.

Ongoing Strategy Alignment

Annual reassessment of tax impact and structure.

Compliance-First Execution

Avoiding “buy first, figure out tax later” mistakes.

Who This Strategy Is Not Suitable For

• Passive-only investors
• Individuals without active income
• Clients seeking guaranteed tax outcomes
• Taxpayers in low marginal brackets

Suitability review is required.

Important Disclosure

Leveraged Mining operates independently and provides mining hardware and hosting pursuant to its own agreements.

Mining involves operational, regulatory, market, and tax risks.

Tax outcomes depend entirely on individual facts and circumstances.

OnChain Accounting evaluates tax strategy suitability but does not guarantee specific results.

Contact Information

Tax Advisory & Strategy Review

OnChain Accounting

Website: https://onchainaccounting.com

Email: david@onchainaccounting.com

Book a Call or Book a Free Consultation

Schedule a Tax Strategy Call to evaluate suitability before any mining purchase.

Mining Infrastructure & Deployment

Leveraged Mining

Website: https://www.leveragedmining.com

Email: jack@leveragedmining.com

Phone: (201) 527-7459

If you are already working with OnChain Accounting, request a coordinated introduction.