So back in 2018 I was getting into bitcoin and discovered what they called cloud mining. Essentially you would pay for a contract to get X amount of bitcoins from bitcoin miners. I think the operation was that they needed help with the electricity costs of running their computers 24/7 to mine the bitcoin and in turn you were given an X amount of bitcoin they mined per day. The contract was supposed to last for 1 year, but due to the crash lasted a little more than half a year.
I was doing some research and they said that mining bitcoin should be reported as income. I didn't realize this as I had assumed it was like stock where the tax event wouldn't be reported until it was sold. I recently was able to put together a list of bitcoin payouts I received each day as well as their fair market value.
I have a couple questions: Would cloud mining be considered income the same as regular bitcoin mining? Also, since I had already filed my 2018 taxes, will I need to file a 1040X to amend my 2018 taxes? Also, as I did pay for these contracts, is there anyway to offset those costs with the cloud mined bitcoin I received? Do you think I would incur any penalties from reporting this now as this was really just an honest mistake? Appreciate any help on this.
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