CRA treats bitcoin mining as a barter exchange of services for bitcoin
After finding that “Bitcoin received by a miner to validate transactions is consideration for services rendered by the miner,” and that “As cryptocurrencies are not legal tender, it follows that when a cryptocurrency is used to pay for, or is received as payment for, goods or services, this is treated as a barter transaction,” CRA stated:
[W]here a taxpayer who is in the business of Bitcoin mining receives Bitcoin as a result of their mining activities, they must bring into income the value of the services rendered or the value of the Bitcoin received, whichever is more readily valued. In most cases, we expect the value of the Bitcoin received to be more readily valued and, accordingly, this is the amount to be brought into income.
This Interpretation is interesting because inter alia CRA characterized the mining as a services business rather than a property-production business, and tried to shoe-horn its analysis into its Bulletin on barter transactions. It is difficult to envisage examples where the revenue of a services business that generates property is anything other than the value of the property received (rather than the value of the services performed) even where there may be difficulties in valuing the property received, e.g., where a lawyer who bills her services at $500 per hour does 10 hours of work for an impoverished farmer and agrees to receive therefor all the hazelnuts she can eat (5 bushels of unprocessed hazelnuts).
Neal Armstrong. Summary of 8 August 2019 Internal T.I. 2018-0776661I7 under s. 9 – computation of profit.