Congratulations. You have made your first purchase of Bitcoin on your favorite Exchange and have sent it to your hardware wallet. But the job isn’t over yet.
Before we jump in, click HERE to download your free copy of my Bitcoin Net Worth Tracking spreadsheet today!
One of the most important steps of buying Bitcoin is to record the details of your Bitcoin purchase in a spreadsheet which keeps track of how much bitcoin you have bought, at what price and then calculates your average cost basis.
Download Your Free Copy of The Bitcoin Basics Purchase Tracker Here
This article is for entertainment purposes only and should not be taken as financial advice. Consult a registered financial advisor or accountant.
Sure, your Bitcoin wallet may be keeping track of your account and showing you your gains (or losses). But it isn’t telling you the whole story. As Bitcoiners, it is common for us to be buying Bitcoin across multiple exchanges, sending to various hot and cold wallets, paying transaction fees, mining, etc. Your digital wallet simply is not able to keep track of your Adjusted Cost Basis (ACB). All it can tell you is how much Bitcoin you have, and how much that Bitcoin is worth. Snooze, boring.
Keeping track of your bitcoin purchases, sells, mining cost basis and transaction fees is crucial for two reasons: to calculate your ACB and to keep detailed records for tax season.
Your adjusted cost basis is the average price you paid for your bitcoin, including transaction fees and mined bitcoin. This number determines how much profit or loss you make when you sell any amount of Bitcoin. Keeping track of your gains over time helps you understand how your investment is performing and plan your future strategies.
You will also need to know your cost basis to report to Tax Authorities when you eventually sell your Bitcoin (for massive profits) years down the road. If you are unaware of your average cost basis you may be in for a larger tax bill than necessary.
By tracking your bitcoin transactions, you can also avoid tax issues and optimize your returns. Tracking your bitcoin activity is not hard, but it requires some discipline and organization. You can use various tools and apps to help you record and analyze your data. The benefits of doing so are well worth the effort. You will be able to make smarter decisions, save money on taxes, and enjoy the thrill of watching your bitcoins grow in value.
Lucky for you, over my last 3 years in Bitcoin, I estimate that I have spent over 30 hours creating the perfect Bitcoin Net Worth Tracking spreadsheet which tracks so many important metrics and will give you great insight into the performance of your investment.
Click HERE to download your free copy today.
Simply input your bitcoin purchasese, the date, fee, transaction fees, and let the spreadsheet do the work. I have coded in formulas which automatically plot the graphs and pull the new price of Bitcoin from Google Finance every day.
Hope you are able to gain value from this tool!
Cheers,
Bitcoin Basics