When most people think about investing in bitcoin, their minds automatically go to buying and trading it. But what if you could mine it instead? Mining is something a lot of people assume would demand a lot of money to start, but in reality, you could start mining bitcoin with a pretty modest investment. Mining is not a good option for anyone, however, and the price of bitcoin is not always the main determinant. There are some cases when it’s simply not viable. Let’s take a look at whether trading or mining crypto would be the best option for you.
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How Expensive is the Electricity Where You Are?
This is probably the single most important thing to consider when mining cryptocurrency. The reason why you can’t just connect your computer to a mining pool and start making money is because of how much you’re going to have to spend on electricity to mine coins. The only time where it makes sense for someone to mine crypto is when the cost of energy where they are is low enough for them to make a profit.
The good news here is that the price of bitcoin is very high at the moment which makes it much easier to turn a profit. So, unless the energy price is ridiculously high where you live, you should be able to get a margin with a decent machine.
The average price for electricity in the country is around 0.13 per kWh, and at this price, a middle-of-the-road crypto mining rig like the Antminer S19 would produce one bitcoin for around $15,600, which is more than enough for you to make money. Things become trickier if you live somewhere like Hawaii where electricity costs more than two times the national average, but you should be able to earn a solid margin pretty much anywhere else in the country.
The Risks of Mining Crypto
There is a significant amount of risk that comes with mining bitcoin, however. First of all, you have no idea what is going to happen with the price of crypto and you could quickly go under the breakeven level if the energy prices soar suddenly or the price of bitcoin plummets. Things are even worse if both happen at the same time. So, if you’re in a state where the cost of electricity is moderately high, you will need to constantly look at the crypto and energy markets.
Then you have to think about your equipment. A lot of things can go wrong with a mining rig, especially if you have built it yourself. There have been many cases where rigs literally caught fire, totalling the machine. At around $8,000 a pop for a mid-priced machine, that’s a lot of money if you don’t have the time to recoup.
The Benefits of Trading Bitcoin
With that being said, now could probably be one of the best times to start mining bitcoin, and for most people, mining would make more sense than buying crypto if they have the money to invest in a good mining setup. With bitcoin hovering around the $40,000 mark right now and a clear upwards trend in the market, virtually anyone could earn money with mining.
The most important part is getting the right equipment, making sure that you are covered against accidents, and that you join a good mining pool so you can maximize your earning potential.
As you can see, there are some pros and cons to mining bitcoin instead of trading it, and, in some cases, it could be a better option to mine. You need to be aware of the risk and responsibilities that come with mining bitcoin, however, and speak with experienced miners before you give mining a try.
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