At the top of the market, in the spring of 2022, the floor price for a Bored Ape Yacht Club NFT sat above a hundred ETH, six figures in dollars for a cartoon primate. Collections with no art to speak of, just procedurally generated rocks and pixel blobs, changed hands for the price of a down payment. Then the buyers stopped arriving.
What’s left is one of the stranger financial graveyards on record. A 2023 study by the crypto platform dappGambl went through more than 73,000 NFT collections and found that roughly 95 percent of them had fallen to a market cap of zero. By their count, around 23 million people are holding collections worth nothing. The market itself is down something like 90 percent from its 2021 and 2022 peak.
Most of those holders have written the money off in their heads and moved on. Very few have written it off where it counts, on a tax return.
Under US tax rules, the losses are real and usable, with conditions. The IRS treats an NFT as property, the same category as a stock or a rental house. So the money someone sank into a now-dead collection can become a capital loss, and capital losses do useful work. They offset capital gains dollar for dollar, from crypto, from equities, from a property sale, from anything in that column. Losses beyond a filer’s gains knock up to 3,000 dollars off ordinary income each year, and the remainder carries forward until it’s spent. The whole thing lands on Form 8949 and Schedule D.
Consider the simplest case. Someone takes 20,000 dollars in gains selling bitcoin, and in the same year disposes of a batch of dead NFTs they’d paid 15,000 dollars for. The 15,000 loss cuts the taxable gain to 5,000. Same tax year, real reduction. For a wallet that swallowed five figures during the mania, that figure can be worth serious money.
So why is so much of this going unclaimed? Two reasons, and they’re the interesting part.
The first is that a paper loss isn’t a deduction. Owning a worthless NFT does nothing for a tax bill. The loss becomes real only when the holder disposes of the asset, by selling it, swapping it, or otherwise getting rid of it in a genuine transaction. A floor price of zero on OpenSea is not a taxable event. A sale or disposing of it as worthless property may be.
The second is documentation, and it’s where the real problem exists. For a collection that has genuinely died, the hard part isn’t proving ownership. It’s proving there was no reasonable way to sell: no recent sales, no standing bids, a floor at effectively zero, an abandoned contract. Reconstructing what someone paid across two years of on-chain history, then assembling the evidence that a market no longer exists, is tedious enough that I built a read-only tool that reads it straight off the blockchain rather than do it by hand so a collector can see their NFT tax losses. Whatever route a filer takes, the paperwork is what stops most people, not the concept.
A few honest limits belong here. The loss is deductible when the NFTs were held as investments, not when they were bought purely for personal enjoyment, which is a distinction a tax professional can help draw. The wash-sale rule, the one that blocks selling a stock at a loss and buying it right back, is written for securities, and whether it reaches NFTs is still unsettled. And starting with 2025 transactions, NFT marketplaces began reporting to the IRS on the new Form 1099-DA, so the days of assuming the chain was invisible are over. None of this is tax advice. Anyone sitting on real losses should walk through them with a CPA.
I’m not watching this from across the street. I co-created an NFT collection during the last cycle and have co-hosted The Bad Crypto Podcast since 2017, which means I own my share of dead JPEGs alongside everyone else.
The mania sold a story about digital ownership, and for most buyers the ownership turned out to be the only part that held. The token is still there, provably yours on a public ledger, long after the value evaporated. The last useful thing it can do is show up on a tax return as the loss it always was. It’s a modest ending compared to the one everyone was promised in 2021, and for a lot of people it’s the only money the whole episode will ever hand back.
Joel Comm is a columnist at Grit Daily, New York Times bestselling author, internet pioneer, and keynote speaker who has been helping people understand emerging technology since the early days of the web. Best known for making complex topics accessible, Joel speaks and writes about AI, entrepreneurship, digital media, and the future of technology in everyday life. He is the co-host of The Bad Crypto Podcast and host of AI for Everyone, where he explores practical, human-centered uses of artificial intelligence.
