It’s too late to start mining crypto. Investing is the new trend
When one is looking at two potential investments, there are several factors that they ought to consider. The fundamental factors of consideration include the relative cost outlay of each investment, the potential return and the risk involved in each of the investments. Considering these three factors, it is imperative to say that it is too late to start mining crypto. To shed more light on why this is the case, let us look at what Bitcoin is and what it entails.
Mining is the process through which transactions are verified on the blockchain, and it doubles up as the process through which bitcoins and other crypto are created. Anybody with a computer and internet connection can mine. However, the reward at this point is not as appealing as investing in the cryptocurrencies. Notably, the difficulty in mining the crypto is designed in such a way that as the supply cap is approached, the mining difficulty increases. Essentially the extent of hardship involved in finding a hash that is below a given target is what is defined as mining difficulty. Taking bitcoin, for instance, the current market supply of bitcoin is about 16,620, 725 bitcoins. Notably, the total bitcoin that will be in supply is set at a hard cap of 21 million bitcoin. This cap is expected to be hit by the year 2140. Putting things into perspective, the mining process consumes a lot of electricity regardless of whether one is engaging in cloud mining or actual mining. Presently, there are only a few companies that engage in actual mining.
In comparison, looking to inject funds into mining can be compared to putting one's funds into government bonds only that mining attracts more risks and high recurrent expenditure. On the other hand, investing in the crypto is essentially like investing in the forex market. The risk is high all right, but the return is worth the risk comparing it to mining. About 12 months ago, the value of bitcoin was around $200, but presently the value of one Bitcoin stands above $5000. Assuming one invested $1000 in bitcoin when the price was at $200, their investment value would be estimated at $25,000. On the other hand, if another person invested $1000 in cloud mining hardware, it is likely that they would be yet to enjoy any returns. Back in 2013 when bitcoin was beginning to get some traction, mining was extremely profitable. However, the increase in mining difficulty has continually made it impossible to mine profitably from home. Barriers to entry in actual mining are too high for consideration.
It is no doubt that investing in the crypto is the new trend and it does happen to be more attractive than mining. The flexibility, cost efficiency, and freedom that comes with transacting with crypto are gradually becoming known to the vast majority. Additionally, major industry players continue to explore the possibility of integrating the digital currencies with their systems, and this has contributed to further appreciation of crypto values. Just recently, China and South Korea issued bans on ICO trading and crowdfunding through the same model. This saw the price of bitcoin and altcoins plummet. However, the price of bitcoin has recovered moving on to hit new highs.
The good news is that unlike mining, one does not need huge initial capital outlay to invest in the crypto. In fact, one can invest with as low as $100 through crypto exchanges then sit back and wait for the profits to roll in. However, it is important to impress that one must perform their due diligence before investing in the crypto. Like in any other investment, the rule of caveat emptor applies.