From my years advising crypto miners in tax planning, I’ve seen how both Section 179 and bonus depreciation serve as real incentives for people and business owners to invest in their operations. Section 179 has long been a go-to for smaller operations or mid-sized operations, while bonus depreciation really shines for those bigger players who are scaling up quickly. I often remind my clients that this new bill doesn’t shake up the tax perks for buying equipment much for them, mainly because the bulk of the miners I work with are on the smaller side.

That said, when I’m sitting down with someone, I typically steer them toward Section 179 if their investment is under half a million and they’ve got income that outpaces what they’re putting into hardware that year.

But honestly, instead of just talking through the nuts and bolts of how they differ, I find walking through some real-world examples to outline the pros, cons, and overlaps.

Example 1: Small to Medium Size Miners

Scenario: You have $700,000 in taxable income for 2025, and you are looking to invest $500,000 in mining equipment.

Section 179 Method: You make an election to expense the full $500,000. Because your income is $700,000, you will get the full write off in year 1. Your taxable income drops to $200,000, saving $120,000 in taxes ($500,000 x 24%). Section 179 has a $3,130,000 threshold; there is no phase out at this income level.

100% Bonus Depreciation Method: Same result as the 179 method.

Key Differences: Not much, both provide year 1 tax relief.

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Example 2: Small to Medium Size Miners

Scenario: You have $300,000 in taxable income for 2025, and you are looking to invest $500,000 in mining equipment.

Section 179 Method: The deduction under this method is limited to your business income, so you are only able to expense $300,000 of your $500,000 investment in mining equipment. Taxable income will drop to $0, saving $72,000 in taxes, assuming again 24%. The remaining $200,000 carries forward indefinitely to following years. There is no operating loss.

100% Bonus Depreciation Method: There is no income limit, you can deduct the $500,000 in year 1 and reduce your taxable income to -$200,000 as a net operating loss. This method saves you $72,000 in taxes while creating a net operating loss that can be carried forward, potentially offsetting future taxes owed.

Key Differences: This one is a toss-up. You could 179 and then depreciate over 5 years the remaining $200,000 or you can do bonus depreciation and create a net operating loss. I’d swing on the side of bonus depreciation as it will offset the next year’s income to the full $200,000 assuming the next year has similar taxable income as 2025.

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Example 3: Large Scale Miners

Scenario: Your income is $2,000,000. You are expanding your mining farm by purchasing $4,000,000 in mining equipment.

Section 179 Method: Your total purchase of $4,000,000 will exceed the $3,130,000 phase out threshold by $870,000. Your max deduction dollar for dollar is now $380,000 ($1,250,000 – $870,000) per the 179 phase out threshold calculations. You are able to deduct $380,000 in year 1, with the rest of the $3,620,000 depreciated over 5 years via MACRS. Year 1 total deduction will be $1,104,000, income drops to $896,000, and your tax savings will be $265,000 assuming 24%.

100% Bonus Depreciation Method: You expense the full $4,000,000 year 1. You have a $2,000,000 operating loss. You save $480,000 in taxes year 1, assuming 24%. You can carry forward potentially saving another $480,000 in taxes in subsequent years.

Key Differences: The phase out hinders tax benefits from the phase out capping at $380,000, leaving the bulk of the $4,000,000 purchase to be depreciated gradually. Bonus depreciation delivers full relief and adds more liquidity to the business for other operations.

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At the end of the day, everyone’s situation is unique and there is no right answer, just the one that aligns best with your goals and situation. It is important to have a firm understanding of your financial and tax situation to properly use these tools for tax savings. Tax planning plays a vital role in how successful your business can be, and I highly suggest getting a head start on it prior to the end of the year.

Michael Moffa, Esq,
Terra Industry – COO