TechFlow news, October 21 — According to CoinDesk, cryptocurrency lending firm Arch has launched a product called TaxShield, designed to help high-income BTC holders reduce their tax burden by investing in mining hardware.
The product leverages the bonus depreciation provision under IRS §168(k) of the U.S. tax code, allowing investors to deduct the cost of mining equipment against taxable income. The mechanism works as follows: users pledge bitcoin as collateral to obtain an overcollateralized loan from Arch, then use Blockware to purchase and host mining rigs. Investors can fully deduct the purchase cost in the first year while continuing to earn BTC mining rewards.
Arch co-founders Himanshu Sahay and Dhruv Patel said clients with $1 million in taxable income could reduce their federal tax liability by approximately $400,000.
