It’s not really tax free. And it is a few thousand.
UBIT tax in the 30% range would have to be paid by the self directed ira, even a roth. That’s because mining is unrelated to the ira.
Here’s how to do it and pay minimal taxes.
IRA sets up an llc and funds it. Its a single entity llc. Held crypto sits in a wallet owned by the llc. Same way you set up an llc to own an apartment building.
Then the llc sets up a c corp. That’s what the llc owns.
The c corp is funded by the llc and buys miners and has all the mining expenses to deduct. It has its own wallet for mining proceeds.
BUT, the c corporation pays about 20% on any net mining income.
The c corporation then needs to immediately upon getting crypto to pass it to the llc. That’s so there’s no appreciation in coin value that happens in a taxable company.
Once crypto hits the llc, it’s no longer taxable (and losses not deductible).
Simple.