Technically, you would owe taxes for every block that is mined that you get a payout from at the exchange rate at the time the block is mined. So, yes, that would mean you would need to keep records of every block you get a payout from and all of the exchange rates. I am doing it on a daily basis as I only record the exchange rate once per day and all the coins I've mined that day. It should be good enough for the IRS even though it might not be technically what is required.
And yes, if bitcoin drops in value you could owe taxes and not have enough money to pay them. That is why you need to sell a little everyday when you mine. You can deduct the loss as a capital loss, but unless you have capital gains you can deduct them from you are very limited as to how much capital loss you can deduct from your income (I think it's like $3,500 a year or something).
Still, this situation is better than paying income tax when the coins are converted to fiat. Here is an example:
Say you mine 10 coins when bitcoin is worth $500. After mining them, the value of bitcoin rises to $1000.
If you declare the income right away, you would owe income tax (say 30% on $5,000). Let's say you sold the 10 coins over a year later for $10,000. You would owe long term capital gains on the $5,000 of appreciation (15% fed tax). So you would owe 30% on $5,000 and 15% on the second $5,000 or about $2,250 in taxes.
Now let's say you only owed income tax when the coins were sold. Say you still held on to the coins until they were work $1,000 a coin.
In that scenario you'd owe income tax on the whole $10,000 or roughly $3,000. You would get no long term capital gains benefit for holding on to your coins as you never established a basis when they were mined.