Play-to-earn crypto games: how you earn crypto by playing
Play-to-earn games pay cryptocurrency for in-game quests and battles, but the IRS taxes those token rewards as income and cashing out can be hard.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- Play-to-earn games pay tokens or NFTs for achievements and time.
- You need a compatible wallet, and sometimes an NFT purchase first.
- The IRS treats game rewards as taxable income when you receive them.
- Earned tokens can be volatile and hard to sell.
Play-to-earn games are blockchain games with systems that let players earn cryptocurrency through gameplay. The game credits your wallet when you finish a quest or win a battle, and the reward depends on the game and on demand from other players.
How do you start playing?
You need a wallet that supports the game's blockchain before you can earn. The game's website names the network it uses, so you can pick a matching wallet. Some games also require you to buy an NFT character or item first.
How do you earn crypto in games?
Games pay for what you do, not for leaving the game open. You receive tokens when you finish quests or win battles, and some games pay in NFTs for characters, land, or items. You can often sell those NFTs to other players.
What taxes and risks apply?
The IRS treats game rewards as taxable income when you receive them, so you report the value at the time you get the tokens. Earnings often have low liquidity or volatile value, so cashing out may be hard. A token may have few buyers, and its price can fall sharply.
How is it different from free-to-play?
Free-to-play games let you play without paying upfront, but they pay you no cryptocurrency for normal play, and the items you buy usually stay in the game. A pay-to-earn label usually means the game asks for an NFT or token purchase first.
Frequently asked questions
You usually send the token to an exchange that lists it and sell it for dollars. Some games let you sell NFTs in their marketplace first. Network fees may apply.
The tokens and NFTs may lose their main use, and the marketplace may dry up. An NFT still exists on the blockchain, but it can be hard to sell without the game.
Some games are free to start, and you can earn tokens without an NFT purchase. Many others require an initial NFT, so check the rules before you connect a wallet.
