Buying, selling, and holding Bitcoin has never been easier, thanks to platforms that facilitate these once-difficult processes. Users still have the option to store Bitcoin the “old-fashioned way” with physical hardware and keys – arguably a more secure method.
These are just the Bitcoin basics, and even casual crypto adopters should know the deal by now. When it comes to mining Bitcoin, things get more complicated, and it’s not a cut-and-dry decision anymore.
That’s because Bitcoin mining now requires more ingenuity, investment, and commitment than before, as we find ourselves in the middle of the “crypto gold rush” on a global scale.
Not to say that mining Bitcoin is a bad idea by any means – you just need to think it through and do it the right way. Here’s a look at all the factors to consider when mining Bitcoin, and how to maximize results as competition ramps up.
Bitcoin Mining Methods
Before you start running numbers and projecting profits, begin by exploring the Bitcoin mining methods available. Starting here will help you decide which approach is worth your time and money, and will prevent you from going all-in on a dead-end strategy.
The first technique to consider is standard DIY mining performed with a gaming computer or a small-scale configuration of hardware. This is how the first generation of Bitcoin miners accumulated their coins back in the day and created small fortunes for themselves over time.
Of course, the price of Bitcoin has risen sharply since the technology was first released, and it’s no longer so profitable to take the DIY route when mining. You may be able to make some pocket change by setting up a small in-home operation, but not much more.
If the technical aspect of DIY seems too daunting, you can opt for cloud mining to fill your wallet with Bitcoin, since many of these operations have gone mainstream. The idea stems from cloud computing, in which a third party manages and maintains these resources while you pay a monthly fee and collect your portion of the profits.
Cloud mining gives you the advantage of being hands-off, but you do lose a bit of transparency and control in the process – a trade-off you need to consider.
Finally, you have the option to set up a large-scale Bitcoin mining “farm” that will require a high capital investment, but far more potential for reward. This approach is for hardcore crypto enthusiasts who see a bright future for the technology and are willing to walk the walk.
Running the Numbers
Now that you know the basics of Bitcoin mining, you’ll need to determine if it’s something you want to pursue. This means it’s time to run the numbers.
First things first – think about the most precious resource there is time. How long will it take to set up a mining operation, and will it be worth foregoing other business pursuits that may be more profitable?
It’s the classic cost/benefit analysis you’ve done so many times, but it’s worth a reminder.
Since so many people get “flashy object syndrome” with crypto, remember to stay grounded and think about things in terms of dollars and cents.
This leads us to the cost question – namely, how much money can you expect to spend bringing your mining plan up to speed? It’s not just the one-time upfront investment, but also the ongoing costs of energy, maintenance, and possible obstacles along the way.
Energy costs are up across the board, no matter how you slice it. Sustainable energy sources are becoming more reliable, but that doesn’t mean they’re significantly cheaper in all circumstances. These things also fluctuate based on world events and conditions, so stay tapped into the marketplace and track these key metrics at all times.
The Price of Bitcoin
We can’t avoid the inevitable when talking about Bitcoin, and that’s the price of the asset itself. Bitcoin saw all-time highs in the past year, followed by a dip down below average in what many analysts view as a bear market.
It’s all a matter of perspective, and your own views on Bitcoin will determine whether now is a good entry point for buying, mining, or any other acquisition.
It’s important to note that Bitcoin mining tends to decrease when prices drop, meaning the opportunities are there for bold investors. Everyone wants Bitcoin in a bull market, after all! It’s during the low points when fortunes are accumulated over the long haul.
More Ways to Mine
Bitcoin mining will not be going out of style, even as prices rise and fall in the short term. However, it may be wiser to simply buy Bitcoin outright, or utilize other trading methods to build your portfolio more efficiently.
Use this guide to determine if Bitcoin mining is right for you, and remember to always run the numbers.