What is cost basis in crypto?
Cost basis is what you paid for a crypto asset, used to work out your gain or loss when you sell. FIFO, HIFO and average cost explained, with examples.
Updated Nov 8, 2026
In short
Cost basis is what you paid to get a crypto asset, fees included, in your own currency. When you sell, swap or spend it, your gain or loss is what you got minus that cost. When you bought the same coin several times at different prices, a method decides which purchase you're selling: first in, first out (FIFO), highest cost first (HIFO), or the average. Which methods you may use depends on your country.
A simple example
You buy 1 ETH for $2,000, then another 1 ETH for $3,000. Later you sell 1 ETH for $3,500. What's your gain?
- FIFO (first in, first out) sells the oldest first: $3,500 − $2,000 = $1,500.
- HIFO (highest cost first) sells the dearest first: $3,500 − $3,000 = $500.
- Average cost uses the average of what you hold, $2,500: $3,500 − $2,500 = $1,000.
Same trade, three different gains. That's why the method matters, and why your country's rules decide which one you may use. The UK, for example, matches sales with buys on the same day, then the next 30 days, then a pooled average.
What counts in the cost
What you paid, plus the fees of buying it, in your own currency at the time. Coins you earned (staking rewards, airdrops, interest) usually start with a cost basis equal to their value when you received them, and count as income then.
Why it's hard in crypto
Coins move between wallets, exchanges and chains, get wrapped, lent, staked and bridged. Every step has to be followed so the original cost travels with the coin, and moves between your own accounts aren't mistaken for sales. Exchanges often share only part of your history, which leaves gaps.
In Burokku
The tax report works out cost basis across every wallet and exchange you've connected, matching moves between your own accounts by their transaction hash. It uses your country's own rules and files in 28 countries, with FIFO, highest cost first or average cost where you can choose, and counts sales with an unknown cost apart. Print it or save it as a PDF, or export CSV files for Koinly, CoinTracker or ZenLedger. It's an estimate for your records and your accountant, not tax advice.
Questions
- Is swapping one coin for another a sale?
- In many countries, yes: swapping ETH for USDC disposes of the ETH at its value then, with a gain or loss against its cost basis. Check your country's rules.
- What if I don't know what I paid?
- If the purchase isn't in the history a tool can read, for example coins sent from an old exchange, the cost is unknown. Burokku counts those sales apart so you can add the cost rather than report a gain that's too large.
- Is moving coins between my own wallets a sale?
- No. It isn't a disposal, and the coins keep their cost basis. A good tool recognises your own wallets and exchange accounts on both sides of a transfer.