Cryptocurrency mining requires the introduction of new coins into existing supply. It's also the mechanism that secures the network in which the coins run. This protection is given in the form of verification of the crypto-currency transaction and issuance of coins as a reward for verifying the blockchain.
Cryptocurrency mining is also sometimes called Bitcoin mining mostly because that's the most common crypto out there. Certain terms are also used, such as Altcoin mining and crypto-coin mining.
Cryptocurrency mining provides an easy way to acquire cryptocurrency. But when it comes to investment of both financial and physical capital, it is also a more demanding way compared to Bitcoin trading.
Cryptocurrency Mining Profitability Issues
The term miner is used because it is individuals who volunteer to be part of the transaction verification process. It goes without saying that the miners will need something to motivate them to do so. To them, this is a profit.
The complexity of the mathematical computations also increases as more transactions are introduced. This is what concerns miners. We are increasingly being required to invest in power computer resources to be able to solve the computations.
It's not just people who do the mining. A lot of companies have been involved in the process. Some of these companies have even gone ahead, setting up their mining centers in rural areas and closer to dams where electricity costs are less expensive.
Cryptocurrency mining has several disadvantages to it:
- Huge investment is required which is determined by the size of your operation.
- There is a great deal of time involved in the process, including the determination of the rigs, the location to be set up and the source of electricity, among others.
- Equations are becoming increasingly complex, hence the need for effective capital.
- Effective mining requires one to enter a fee-bearing mining pool.
You probably wonder if there's an alternative to crypto-mining. Yes, there is.
Why Choose to Trade Instead?
Mining isn't the only way cryptocurrencies can be mined. If you're not a fan of having to set up ASICs and rigs, and you know how to play around with numbers, then trading is the most feasible option.
You may want to get involved in cryptocurrency trading for every reason:
Needs no technical skills and equipment: Trading can start as soon as it is today. There are no specific skills necessary for this and you could use coinbits to do it for as little as $10. Once you get a better grasp of it all, you will increase your investment.
A number of coins: The mining equipment appears to restrict the miner to specific coins. You are not constrained by a particular algorithm or coin when it comes to trading, so you can trade in any corner of your preference. A total of 1600 cryptos exist as of now. Not all the coins are of course equal. You're better off choosing those which will give you higher earnings.
Potential to gain more: Crypto trading could potentially make you more money in a situation where you have spent equivalent amounts of resources and capital in mining and trading. Whereas mining can begin to generate revenue after about 5 to 6 months, you could double your mining investment within a month. Don't treat trading as a get-rich-quick scheme, though.
Cryptocurrency trading is the most viable option in most situations. For it to pay off, you don't need to make a big investment. You don't need complex skills and resources, either. Can't say the same for mining.