Under U.S. tax law, bitcoin and other cryptocurrencies are classified as property and subject to capital gains taxes. But you only owe taxes when those gains are realized. Similar to trading stocks, you only need to list gains you earn from bitcoin as income when you decide to sell. A friend of mine, who is an Accountant, explained that, for example, the IRS requires that you report all sales of crypto, since cryptocurrencies are treated as property. You can use crypto losses to either offset capital losses or to deduct up to $3k from your income.