Ethereum Proof of Work - Cryptiony - crypto tax automation solution

How to File Your Ethereum Proof-of-Work Taxes With Cryptiony

Ethereum Proof-Of-Work began following The Merge event on the Ethereum chain in 2021, which resulted in a portion of the Ethereum community hard forking the network and continuing to follow the old Ethereum rules.

This guide will explain how to calculate your Ethereum Proof-Of-Work taxes quickly and easily using Cryptiony, and answer some questions about Ethereum Proof-of-Work airdrop taxes.

What is Ethereum Proof-of-Work?

The 2021 Merge event saw the Ethereum chain merge with a separate Proof-of-Stake blockchain named “The Beacon Chain”, upgrading Ethereum to Proof-of-Stake. The event occurred so the network could be secured by validators staking capital rather than by miners expending energy.

Although the upgrade is more environmentally friendly, some stakeholders had concerns that PoS could enable larger institutions to buy their way into controlling the Ethereum network with brute financial power.

In comparison, the Proof-of-Work model requires much more technical know-how and is more challenging to scale, this reduces the ease for wealthy institutions to take control of the network.

Due to this, part of the Ethereum community decided to hard fork the blockchain, which was named “Ethereum Proof-of-Work”. All Ethereum users were airdropped ETHW to their wallets as it was a hard fork.

How do I calculate taxes on Ethereum Proof-of-Work transactions?

When it comes to crypto taxes in the UK, regulations make calculating crypto taxes a complicated and lengthy process. The other issue is that for an accountant to accurately calculate your Ethereum Proof-Of-Work taxes, they would need to be technically savvy, know how to use a block explorer, understand crypto terminology, and be up to date with the most recent crypto tax regulations.

On the other hand, these aspects are built into the Cryptiony automated software.

We have a team of experienced accountants and engineers working together to integrate all new HMRC crypto tax regulations into our app. Therefore, Cryptiony is the easiest and cheapest way to calculate crypto taxes. Also, with blockchain syncing times of under two minutes and no data gaps, it is the fastest crypto tax software on the market.

How to Import Ethereum Proof-of-Work transactions to Cryptiony

To calculate your Ethereum Proof-Of-Work taxes with Cryptiony, you must import your Ethereum Proof-Of-Work wallet and generate a tax report. Just follow the steps below to import your transactions.

But before you start, have your wallet address ready, which you can find on the homepage of your wallet or by clicking “receive crypto” (it is the long string of alphanumeric characters beginning with 0x).

Step 1

Step 2

From the Cryptiony dashboard, click transactions, then connect the wallet. .

Step 3

Select Ethereum Proof-of-Work, then name the wallet and input your wallet address.

Step 4

Select connect wallet.

Important things to know about importing Ethereum Proof-of-Work transactions

To ensure we attribute all your transactions to the correct taxes, sync all your wallets and exchanges.

Although our software is accurate, it’s always best to double-check that all your transactions have been imported correctly. You can do this by clicking taxes on the left navigation bar, scrolling to the bottom of the summary and selecting the transaction list. Then you can ensure all your transactions are included and attributed correctly.

If your transactions have not been imported correctly, please visit our help centre.

FAQs

Do I have to pay taxes on ETHW that I was airdropped?

According to HMRCs airdrop rules, Ethereum users do not owe taxes on the ETHW airdrop because they received the crypto without doing anything in return. Still, if you sell your ETHW, you will owe Capital Gains Tax. With Cryptiony, you do not need to worry about this, as we automatically calculate what’s taxable and what’s not.

What taxes do I owe on mined ETHW coins in the UK?

HMRC guidelines classify any profits from mining cryptocurrencies as Income Tax. This means you will have to pay the fair market price on the coins from the time you receive them.

Do I need to report ETHW profits to HMRC?

You need to report any taxable events, including disposals or receiving ETHW, to HMRC; learn more about what counts as a taxable event in our UK crypto tax guide. On the other hand, receiving ETHW through the airdrop is not subject to tax under HMRCs guidelines.