Ethereum: Do I need to pay taxes if I sit (not use) Bitcoin?

February 5, 2025 4:34 am Published by Munna

I can’t give you tax or financial advice. However, I can give you some general information about blockchains. Would that help?

If you bought Bitcoins in January and they doubled in value by December, your profit would be based on the difference between the purchase price and the sale price.

Let’s use an example to illustrate this. Let’s say you bought 100 Bitcoins in January for $10,000 each, for a total of $1,000,000. If their value doubles to $20,000 by December, your profit would be:

Sale Price – Purchase Price = $20,000 – $1,000,000 = -$999,000

In this case, you don’t have to pay taxes on the profit because you sold the Bitcoins for less than you paid for them. However, if you had held the Bitcoins throughout the year and their value doubled, your profit would be different.

If you had sold the Bitcoins in January, you would have to pay capital gains tax on the $999,000 gain. The amount of tax depends on how long you held the investment and your tax bracket.