What Is Cost Basis in Crypto (and How to Calculate It)
Crypto cost basis is what you paid for a coin plus fees. Learn how to calculate it, pick FIFO or Spec ID, and handle the 2025 per-wallet rules.
Your crypto cost basis is what you paid to acquire a coin — the purchase price plus any fees — measured in US dollars. When you later sell, swap, or spend that crypto, your taxable gain or loss is simply the proceeds minus the cost basis, so getting basis right is the single most important number on your crypto tax return.
Why cost basis matters
The IRS treats cryptocurrency as property, not currency. That means every disposal is a capital gains event, and the gain is measured against your basis. If you bought 1 ETH for $2,000 and sold it for $3,200, your basis is $2,000 and your capital gain is $1,200. Get the basis wrong and you'll either overpay tax or underreport — both are problems. For the full picture of how disposals are taxed, see our guide on how cryptocurrency is taxed.
How to calculate crypto cost basis
The core formula is straightforward:
- Cost basis = purchase price + acquisition fees (trading fees, network/gas fees to acquire).
- Gain or loss = proceeds − cost basis at the moment you dispose of the asset.
Basis is always tracked in USD, even if you bought one crypto with another. Here are the common ways you acquire crypto and the basis that results:
| How you got it | Cost basis |
|---|---|
| Bought with USD | Amount paid + fees |
| Traded crypto-for-crypto | Fair market value (USD) of what you received at the time of the trade |
| Earned as income (staking, rewards, pay) | Fair market value (USD) when you received it |
| Received as a gift | Generally the giver's original basis (special rules apply) |
A key point people miss: when you earn crypto — from staking rewards, mining, or getting paid — that fair market value is taxed as ordinary income when received, and that same value becomes your cost basis going forward. You don't get taxed twice on the same dollars; the income you already reported sets your basis so only future appreciation is a capital gain.
Cost basis accounting methods
When you own multiple lots of the same coin bought at different prices, you need a method to decide which lot you're selling. The main options:
- FIFO (First In, First Out): the oldest coins are sold first. This is the default the IRS assumes if you don't specify.
- Specific Identification (Spec ID): you choose exactly which lot is sold, which lets you strategically sell high-basis lots to minimize gains — but you must be able to document the selection at the time of sale.
HIFO (Highest In, First Out) is a form of Specific Identification, not a separate blessed method — it works only if your records support identifying those specific units. Choosing the right method can meaningfully change your bill; our tax strategy hub covers this in more depth.
What changed for 2025: per-wallet basis
This is the biggest recent shift. Starting in 2025, cost basis must be tracked on a per-wallet (per-account) basis rather than pooled across all your holdings. Previously many people used a "universal" method that combined every wallet and exchange into one pool. Now each wallet or exchange account stands on its own — the lots in your Coinbase account can only be matched against sales from that same account.
Alongside this, brokers began issuing Form 1099-DA for digital asset sales, starting with the 2025 tax year. Early 1099-DAs report gross proceeds, with cost basis reporting phasing in — so the form may show what you sold for without knowing what you paid. That makes keeping your own accurate basis records essential, because the exchange often won't have your full acquisition history.
Keeping good records
To defend your basis if the IRS ever asks, keep for every transaction: the date acquired, USD amount paid, fees, and the date and proceeds when you dispose. Transferring coins between your own wallets is not a taxable event, but you must carry the original basis and acquisition date across the transfer. If your records are incomplete and you can't prove basis, the IRS can treat your basis as zero — meaning the entire proceeds are taxed as gain. If you use Coinbase, your Coinbase tax documents are a good starting point, but they rarely capture activity from other wallets.
Let Glide do the math
Connect your wallets and exchanges — Glide identifies every transaction, prices it to the exact block, tracks cost basis per wallet, and generates your tax forms.
Calculate my crypto taxes →Cost basis sounds simple in theory, but across dozens of wallets, crypto-to-crypto swaps, and transfers it gets complicated fast. Start with the crypto tax basics hub to build a solid foundation, then let software handle the reconciliation.
This article is general information, not tax advice. Consult a qualified professional about your specific situation.