Your income from mining cryptocurrency will be ordinary. Accordingly, you can invest this income into a qualified opportunity fund (QOF), but you will not obtain any of the associated tax benefits for your investment. When you sell or otherwise dispose of the mined cryptocurrency, you can invest any resulting capital gain into a QOF and the investment will qualify for the associated tax benefits.
People out there are doing this, but you have to establish the crypto mining as a trade or business, and the crypto needs to be treated as inventory rather than non-qualified financial property. This is a tougher road to hoe than people think. People are clearly motivated to give it a shot, but it is a difficult endeavor from a compliance perspective.
A new mining operation set up inside an Opportunity Zone might qualify, but the funding is always through rollover capital gains; so, you could sell cryptocurrency and roll gains into an OZ.
If you recognize capital gains in your crypto transactions, you may invest those gains in a Qualified Opportunity Fund (QOF) and defer the recognition and exclude certain part of the gain according to the provisions of Opportunity Zone sections.
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