Bitcoin Holders facing hefty tax bills have a new option to ease the burden – by converting what they owe into income-producing mining hardware.
Crypto lending firm Ark is launching TaxShield, which uses bonus depreciation under IRS §168(k) – a specific provision of the US tax code – that allows investors to write off the cost of mining equipment against taxable income.
It works like this: Users post Bitcoin as collateral for a highly collateralized loan from Ark, then use the loan proceeds to purchase and host a mining rig through Blockware. The investor gets the chance to deduct the entire purchase in the first year, potentially saving hundreds of thousands in taxes while earning monthly mining rewards in BTC.
The offering, developed with prominent Bitcoin educator Mark Moss and Blockware, primarily targets high-income BTC holders, Ark co-founders Himanshu Sahay and Dhruv Patel said in an interview with CoinDesk. He explained that a client with $1 million of taxable income could reduce their federal tax bill by approximately $400,000 while maintaining BTC exposure and earning mining income.
It’s part of a broader effort by Ark, known for crypto-backed loans, to create a suite of unique offerings typically available in traditional finance but targeted at high-net-worth digital asset holders.
“Many people who have built significant wealth in digital assets over the last 12 to 15 years have not been able to access the same level of high-quality financial services that you can get in the real world,” Sahay told CoinDesk.
The company’s long-term goal, the founders said, is to evolve into a private bank-like service for crypto holders: a next-generation wealth management platform that handles lending, income, custody and tax planning.
TaxShield follows the recent launch of “Perpetual Income,” another product built with Mark Moss that lets Bitcoin holders receive recurring, tax-advantaged income without having to sell their assets.
Last year, Arc raised $70 million in debt financing from Galaxy and a $5 million equity round led by Morgan Creek Digital and Castle Island Ventures to expand its platform.
The co-founders said that in the next few months, Ark plans to launch trading and is considering introducing a card product beyond that.
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