user1878: Assuming that more than half of the Bitcoin miners pay taxes on revenue gained, could a increase in income tax laws (or similar) cause those ethical miners to go out of business? ... and the Bitcoin network to be more vulnerable to attack?

user153: Bitcoin mining flows the path of least resistance.
So if taxes on mining proceeds are high in one area, mining operators that are fully compliant with the tax laws (reporting as income all of their profits -- a big if), then those miners may not be able to compete against a mining operator that isn't burdened with the high taxes or those who don't report the income.
Thus mining capacity will always grow to the level afforded by the block reward subsidy plus the transaction fees.  If that capacity is forced to leave one jurisdiction it will pop up in another, less-restrictive jurisdiction.
Even if the mining pools were to start reporting mining income to the state, there are options such as solo mining, or P2Pool which generate mining revenues directly to the miner.
So even in highly taxed jurisdictions it is unlikely tax laws targeting bitcoin mining revenues would have much of an effect.

user575: Taxes are paid on profits, not revenues. If their mining operation was profitable before, it will remain so even after the tax increase. Also, depending on the kind of tax it could increase equally to any alternative occupation they might have, so there would be no reason it should make any miner operation go out of business; definitely not enough to warrant concerns about the network security.

1878: <p>Assuming that more than half of the Bitcoin miners pay taxes on revenue gained, could a increase in income tax laws (or similar) cause those ethical miners to go out of business? ... and the Bitcoin network to be more vulnerable to attack?</p>
 153: <p>Bitcoin mining flows the path of least resistance.</p>

<p>So if taxes on mining proceeds are high in one area, mining operators that are fully compliant with the tax laws (reporting as income all of their profits -- a big if), then those miners may not be able to compete against a mining operator that isn't burdened with the high taxes or those who don't report the income.</p>

<p>Thus mining capacity will always grow to the level afforded by the block reward subsidy plus the transaction fees.  If that capacity is forced to leave one jurisdiction it will pop up in another, less-restrictive jurisdiction.</p>

<p>Even if the mining pools were to start reporting mining income to the state, there are options such as solo mining, or P2Pool which generate mining revenues directly to the miner.</p>

<p>So even in highly taxed jurisdictions it is unlikely tax laws targeting bitcoin mining revenues would have much of an effect.</p>
 575: <p>Taxes are paid on profits, not revenues. If their mining operation was profitable before, it will remain so even after the tax increase. Also, depending on the kind of tax it could increase equally to any alternative occupation they might have, so there would be no reason it should make any miner operation go out of business; definitely not enough to warrant concerns about the network security.</p>
