Spain plans to tax cryptocurrency mining operations, saying goodbye to "free" mining

The Spanish tax authorities have defined cryptocurrency mining operations as a taxable economic activity.

Regulation of cryptocurrency mining is gradually coming into effect. While many countries have not yet implemented these regulations, the Spanish tax authorities have labeled Bitcoin and altcoin mining operations as economic activities. This new classification puts cryptocurrency mining within the scope of taxable activities.

According to a recent notice, the Spanish National Tax Agency requires Bitcoin and altcoin mining companies and individuals to register. Although this move seems to be an attempt to legalize cryptocurrency mining operations, it will also affect the interests of mining operations; of course, this policy will also force some miners to choose to leave.

According to Spanish economist and tax consultant Jose Antonio Bravo Mateu, cryptocurrency mining operations could be subject to a 10%-47% profit tax. A Spanish online cryptocurrency magazine quoted Mateu on the potential benefits of the new tax system:

“With new regulations classifying cryptocurrency mining as a wealth-creating economic activity, the mining community should take advantage of any tax breaks on electricity consumption and mining equipment.”

In order for miners to continue to make a profit from mining operations, they will have to constantly upgrade their equipment. The increase in mining difficulty will also lead to an increase in electricity consumption. In this case, these tax relief regulations may favor profitable mining operations.

The Spanish government has argued that the regulations were introduced to curb illegal activities related to digital currencies. The laws have not yet been implemented, and the Spanish cryptocurrency community has expressed concerns that taxation could have a negative impact on innovation and development of blockchain technology.

At the same time, the implementation of this new tax law in Spain may cause other EU countries and Latin American countries to follow suit. Spain has a friendly attitude towards the emergence of the cryptocurrency economy. It is also the first European country to exempt cryptocurrency transactions from VAT. It is not yet known whether the new tax will have a similar impact.