In this acco(i)nting method All assets are first divided into short or long term based on date of acquisition.
Then, they are simply averaged out regardless how many transactions it took to build the position. avg cost = total quantity of assets / total acquisition cost
In this way it makes it very simple to “pull out your capital”… you can sell enough shares/coins to recapture your total initial investment and realize Zero capital gains and there for Zero tax liability.
Your remaining shares can then “ride for free”.