Introduction

Cryptocurrency’s boom has created a fresh avenue for passive income, and leasing mining rigs is a leading method. Instead of buying and running a mining operation yourself, 法人 税金対策 問い合わせ investors can lease their rigs to other miners and collect a steady stream of rental income. While this can be an attractive investment, it comes with a set of tax rules that can be confusing if you’re not familiar with them. In this piece we examine the main tax consequences for those renting out mining rigs, including income recognition, depreciation, Section 179, passive activity rules, and beyond.

What Is a Rental Mining Rig?

A mining rig available for rent is a hardware component—commonly a robust graphics card or ASIC miner—held by an owner and leased to a third party for a specified term. The tenant runs the rig, paying the owner a fee (commonly daily, weekly, or monthly) for the right to use the machinery. Electricity and maintenance are not supplied by the owner; the renter manages those operational aspects. Tax‑wise, the owner’s link to the rig parallels any other rental property: ownership of the asset, receipt of rental income, and eligibility for related deductions.

Income Recognition

Rental earnings from mining rigs are classified as ordinary income for tax purposes. According to Section 469, the IRS views it as rental income and demands the gross receipts be reported on your tax return. If you rent a rig for $50 per day and lease it for 30 days, you must report $1,500 of rental income for that month. This income is reported on Schedule E (Supplemental Income and Loss) if you file as an individual, or on the appropriate line of your business return (e.g., Form 1120 if you operate through a corporation).

Deductible Expenses

As with any rental venture, you may deduct ordinary and essential costs directly tied to the rig’s upkeep and operation. Typical deductible items include:

The cost of electricity used by the lessee (often passed through to the owner as a separate charge).

Costs for maintaining or repairing the rig (e.g., replacing a faulty fan).

Insurance premiums protecting the rig against loss or damage.

Interest on a loan used to purchase the rig.

Depreciation or amortization of the rig’s cost basis.

Depreciation of Mining Rigs

Mining rigs are considered depreciable property because they have a finite useful life and lose value over time. Depreciation lets you recover the rig’s cost and cut taxable income, per IRS rules. Tangible property typically uses the Modified Accelerated Cost Recovery System (MACRS) for depreciation. Computer gear usually has a 5‑year recovery period, allowing straight‑line or declining balance methods.

Section 179 Expensing

Buying a mining rig in the year you activate it allows you to expense the full cost via Section 179, capped at $1.16 million in 2024. This means you can deduct the full purchase price in the year of acquisition, rather than spreading it over a 5‑year period. However, the amount expensed is subject to a phase‑out if your total equipment purchases exceed a threshold ($2.89 million in 2024).

Bonus Depreciation

The Tax Cuts and Jobs Act permits claiming 100 % bonus depreciation on qualifying property in its service year. You can take a full write‑off of the rig’s cost immediately, if you opt for it. Choosing bonus depreciation locks you into it; you can’t later elect MACRS depreciation for that asset.

Self‑Employment Tax Considerations

Rental income usually escapes self‑employment tax, being treated as passive income. But should you actively oversee the mining operation—offering electricity, maintenance, or additional services beyond leasing—the income could be classified as self‑employment income. The main test is whether those services are integral to the mining operation. If the lessee takes care of all operation, the income stays passive. If you supply substantial operational aid, some income may fall under self‑employment tax.

Passive Activity Rules

Rental real estate and equipment fall under passive activities per the passive activity loss rules. This means you can only deduct passive losses against passive income. When passive losses exceed passive income in a year, the surplus gets suspended and rolled forward. However, there is a special rule for real estate professionals and active participants. Should you materially participate—working at least 500 hours a year—you might deduct losses against other income.

Reporting on a Partnership or LLC

A common strategy is to create a partnership or LLC to hold the rigs and share rental income among members. Each member then reports their portion of income and deductions on Schedule K‑1. The partnership files Form 1065, and assets are usually depreciated on its books. The partnership can also choose Section 179 or bonus depreciation at the entity level.

Tax Planning Strategies

1. Maximize Immediate Deductions – Planning to sell the rig in the next few years? Bonus depreciation or Section 179 offers instant tax relief.

2. Consider a C‑Corporation – Anticipating retained earnings and reinvestment? A C‑corp can defer personal tax until dividends are paid.

3. Track All Expenses – Maintain detailed logs of maintenance, insurance, and other costs. This helps lower taxable rental income.

4. Separate Operational Costs – If the lessee handles electricity, record those expenses separately so they can be passed through and preserve passive status.

5. Use Lease Agreements – Drafting a written lease clarifies the rental arrangement and supports passive status with the IRS.

Common Pitfalls

Misclassifying Income – If mining rewards are treated as rental income, a different tax outcome may ensue.

Forgetting Depreciation – Neglecting depreciation or Section 179 can raise your taxable income.

Overlooking Passive Losses – Failing to carry forward losses may cause you to miss tax benefits.

Ignoring Self‑Employment Rules – Excessive operational assistance may move income into the self‑employment tax bracket.

Conclusion

Leasing mining rigs provides investors a powerful method to earn passive income, yet the tax terrain is complex. By understanding how rental income is reported, maximizing depreciation and expensing options, and staying aware of passive activity and self‑employment rules, you can keep more of your earnings in your pocket. As always, consult a tax professional familiar with cryptocurrency and equipment leasing to tailor a strategy that fits your specific situation.