What is the difference between FIFO, HIFO, and Spec-ID for crypto?

FIFO (First In, First Out) treats your earliest-bought coins as sold first. HIFO (Highest In, First Out) treats your highest-cost coins as sold first. LIFO uses your latest-bought coins first. HIFO and LIFO are forms of Specific Identification (Spec-ID), where you choose which lots are sold.

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Which Bitcoin did you sell? FIFO vs HIFO vs Spec-ID

Enter your buys and one sale. This free calculator shows your capital gain under each cost-basis method side by side — and which one lowers your taxable gain the most.

Short answer: The IRS uses FIFO (oldest coins first) by default. HIFO (highest-cost coins first) usually produces the lowest current taxable gain — but to use it you must specifically identify the lots at the time of the sale and keep records. This tool shows the dollar difference on your own numbers.

1. Your Bitcoin buys

2. Your sale

BTC sold

Sale price per BTC ($)

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FIFO vs HIFO vs Spec-ID — explained

What is cost basis?

Cost basis is what you originally paid for the Bitcoin you sold (including fees). Your capital gain is the sale proceeds minus the cost basis of the specific coins ("lots") treated as sold.

FIFO, HIFO, LIFO — what's the difference?

FIFO (First In, First Out): your earliest-bought coins are sold first. HIFO (Highest In, First Out): your highest-cost coins are sold first. LIFO (Last In, First Out): your most recent coins are sold first. HIFO and LIFO are forms of Specific Identification (Spec-ID), where you choose which lots are sold.

Which method saves the most on Bitcoin taxes?

HIFO usually produces the lowest current taxable gain because it disposes of your highest-cost coins first. The catch: it needs meticulous records, and in a rising market the highest-cost lots are often short-term, which can be taxed at higher ordinary-income rates. The best method depends on your situation.

What does the IRS require?

If you don't specifically identify which units you sold, the IRS applies FIFO by default. To use Specific Identification (including HIFO or LIFO), you must identify the specific units no later than the date and time of the transaction and keep contemporaneous records.

Sources: IRS Form 8949 instructions · IRS Digital Assets. Reflects U.S. rules as of 2026.