VC is typically invested in the companies servicing Bitcoin users (like ASIC makers and exchanges), not buying Bitcoin itself.
Paying taxes on a failed business
The IRS’s first instinct when looking at a failed business is to consider it a hobby. When you have a hobby, you’re only entitled to deduct your expenses up to your income. Under the hobby-loss rules, your business never got far enough to generate any income, so there’s no deduction. This means that you want to ensure that the IRS instead sees this failed venture as a real business and not a hobby.
Deducting a capital loss
When a real business fails at the outset, you can deduct the investment on Schedule D as a capital loss. Doing that, you’re limited to $3,000 per year over any capital gains you might have. That $7,000 investment made by Paul’s friend could take three years to generate tax benefits.
Deducting start-up costs
An aggressive tax professional might try to report the whole operation on Schedule C as business expenses and start-up costs. You may have a problem with that because the business needs to have its doors open in order to deduct start-up costs. However, if you could build a good argument for these costs to be business expenses, you could write them all off in the year you paid the expenses.
Reporting losses after losing money to a scam
If you can prove that the person you hired intended to defraud you from the outset, you may be able to treat the costs as theft or casualty losses. In order to do that, you would have to file criminal charges against the individual. That’s rarely going happen—but, when you’re angry enough, you’ll do it. As a theft loss, you can deduct all the costs in the year you discover you’ve been defrauded.
/Probably a lot better sources for the stuff, but it's what I found first.