The IRS treats cryptocurrencies as property for tax purposes. This means:

• When you sell your cryptocurrency or use it in a transaction, you pay taxes on your cryptocurrency and your cryptocurrency is worth more than when you bought it. This is because changes in market value result in capital gains or losses.
• If you receive virtual currency as payment for business purposes, it will be taxed as business income.
• If you are successfully mine cryptocurrency or receive cryptocurrency for work on the blockchain, it will be taxed as ordinary income.