GIMPS and bitcoin

[retina]

All this discussion and no sign that anyone actually has any coins to give out. Have you considered the source of the coins? And how they are to be sourced? Should we be shutting down P95 to mine for coins that are to be given to others that run P95? Seems rather self defeating to shut down P95 and mine so as to pay someone else to run P95.

[Mini-Geek]

Originally Posted by retina

All this discussion and no sign that anyone actually has any coins to give out. Have you considered the source of the coins? And how they are to be sourced? Should we be shutting down P95 to mine for coins that are to be given to others that run P95? Seems rather self defeating to shut down P95 and mine so as to pay someone else to run P95.

The idea that we were primarily discussing here (I thought...but I could be wrong ) is MersenneCoins; that is, the coins earned aren't bitcoins, but are their own generated currency, which would have real-world value just like other cryptocoins do. How much value is not really predictable.
Yes, I know the first post and title say "bitcoins", but it looks to me like when the topic shifted from "primes" to "factors", it shifted coins as well.

[cheesehead]

Originally Posted by Mini-Geek

MersenneCoins < snip > would have real-world value just like other cryptocoins do.

(* snort *)

[kladner]

To reiterate, I feel that the hazards are independent of actual value. It is my feeling that even the perception of value enhanced beyond the current score-keeping and ranking, would encourage all sorts of undesirable behavior. These could range from acrimonious arguments as to who owns an assignment, to submitting fraudulent results. Tainted results would be the worst, as they could call Project status into question. But most people here have seen how deep-seated disagreements can poison the atmosphere and crowd out normal conversation on the forum.

I just think that adding some kind of potential remuneration, beyond the existing prizes, would engender more combative relations, to the detriment of the community.

[BudgieJane]

Originally Posted by Rodrigo

GIMPS recently got a little plug in a totally unrelated forum.

Aside from that, how about the idea of awarding bitcoin for finding a Mersenne prime? (Assuming that the digital currency concept doesn't collapse as a result of bitcoin's recent troubles.) It would somehow be fitting to award bits for processing bits. TBH, though, I'm not sure that in the end I wouldn't rather have cold, hard cash (OK, a check) in my hands.

Rodrigo

Alternatively, how about awarding a threepenny-bit coin for finding a Mersenne prime?

[science_man_88]

I just thought the following articles title was relevant

I.R.S. says bitcoin should be considered property, not currency

[Rodrigo]

Thanks, that was interesting reading.

This IRS ruling presents some intriguing possibilities. For instance, given that income is to be based on the dollar value of the bitcoin when payment is made, an employer who offered his employees the choice to be paid in bitcoin could seek to make the payments during dips in the value, thus tending to decrease his costs and at the same time to increase the value of the employees' compensation (assuming they held onto the bitcoin until the value rose back up).

And if mined bitcoin is to be treated as business income, then presumably all the expenses incurred in bitcoin mining, such as dedicated computers and electricity, should be deductible.

Rodrigo

[Rodrigo]

Originally Posted by BudgieJane

Alternatively, how about awarding a threepenny-bit coin for finding a Mersenne prime?

Never heard of it! How much is one of those worth?

Rodrigo

[MattcAnderson]

Currently 1 bitcoin is worth over $500 U.S. Dollars.

http://www.bitcoinexchangerate.org/
http://bitcoincharts.com/markets/currency/USD.html

Bitcoins are volatile and their value fluctuate.

Too bad we do not have a benevolent benefactor who would pay us for this volunteer effort in computational number theory.

[cheesehead]

Originally Posted by science_man_88

I just thought the following articles title was relevant

I.R.S. says bitcoin should be considered property, not currency

Note the Q-and-A section of the article.

In particular,

. . .

Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate bitcoin transactions and maintain the public bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities?

A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.

Q-9: Is an individual who “mines” virtual currency as a trade or business subject to self-employment tax on the income derived from those activities?

A-9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute self-employment income and are subject to the self-employment tax. See Chapter 10 of Publication 334, Tax Guide for Small Business, for more information on self-employment tax and Publication 535, Business Expenses, for more information on determining whether expenses are from a business activity carried on to make a profit.

. . .

Q-16: Will taxpayers be subject to penalties for having treated a virtual currency transaction in a manner that is inconsistent with this notice prior to March 25, 2014?

A-16: Taxpayers may be subject to penalties for failure to comply with tax laws. For example, underpayments attributable to virtual currency transactions may be subject to penalties, such as accuracy-related penalties under section 6662. In addition, failure to timely or correctly report virtual currency transactions when required to do so may be subject to information reporting penalties under section 6721 and 6722. However, penalty relief may be available to taxpayers and persons required to file an information return who are able to establish that the underpayment or failure to properly file information returns is due to reasonable cause.

So, if I understand correctly:

a) "miners" (who are not doing it as employees) need to report their creation of bitcoin "property" as income for the year in which it was "mined", with a value as of the date on which the bitcoin becomes owned by the "miner", and pay tax on such income

and

b) failure by "miners" to have reported income and/or paid tax as in a) could be subject to penalties unless the "miner" can establish that the underpayment or failure to properly file information returns is due to reasonable cause.

(It was a little too good to be a free lunch.)

- -

Originally Posted by Rodrigo

Thanks, that was interesting reading.

Yes, it was. Thanks, science-man-88!

This IRS ruling presents some intriguing possibilities. For instance, given that income is to be based on the dollar value of the bitcoin when payment is made, an employer who offered his employees the choice to be paid in bitcoin could seek to make the payments during dips in the value, thus tending to decrease his costs

I agree that seems reasonable, assuming it's acceptable to the employees.

and at the same time to increase the value of the employees' compensation (assuming they held onto the bitcoin until the value rose back up).

I'd amend that to:

... and at the same time both (a) minimize the current income of employees, for income tax withholding and reporting purposes, and (b) increase the potential future rise in value of the employees' compensation (assuming they held onto the bitcoin until the value rose back up).

And if mined bitcoin is to be treated as business income, then presumably all the expenses incurred in bitcoin mining, such as dedicated computers and electricity, should be deductible.

Seems that way to me, too.

Suppose an individual "mines" bitcoin for himself (not as part of the duties of an employee). Then I think he would need to consult the IRS (or his country's equivalent) rules and regulations as to whether that constituted self-employment income, business income, or could be treated as just incidental profitable outcome of a hobby (e.g., like collecting postage stamps from received envelopes, then later selling them -- except that the bitcoin would have to have been reported, and tax (if any) paid, as of the year in which it was created/received, not just later when the bitcoin were sold or used as payment).

[BudgieJane]

Originally Posted by Rodrigo

Never heard of it! How much is one of those worth?

Rodrigo

The thing that I posted a picture of hasn't been minted yet, so doesn't have a value at present. When it is minted in a couple of years' time, it will be the new £1 (GBP 1.00) coin of the United Kingdom. Daily exchange rates between GBP and your national currency should be available in your country's financial newspapers (such as the Financial Times in the UK and the Wall Street Journal in the USA)