Mining vs. Trading Cryptocurrency – Which One Is Best for You? | Tips & Tricks
There are many ways to obtain cryptocurrency. Mining and trading are two of the more popular ways. Both have their advantages and disadvantages, and depending on your knowledge and expertise, one might be better than the other. If you are wondering which is better for you, here is an article explaining the pros and cons of both.
Advantages of Mining vs. Trading
If you are a techie, mining cryptocurrency is probably your first choice. You probably already have some equipment to get a taste of mining but are still wondering if this endeavor deserves the huge investment in better mining equipment. Here are some of the advantages of mining to consider while making up your mind.
- Less risky. Even though mining does have its risks, it’s still less risky than trading. For instance, when the prices of the currencies you mine drop big time, you might never repay your investment. You can also lose money if the electricity costs are higher than the value of what you mined. However, you can always sell your equipment for cash (though maybe not at a profit), while in trading if the coins in your portfolio lose value, you are left with nothing.
- Less time consuming. Once you set your mining equipment, it basically goes on autopilot. With GPU mining you do have to occasionally update your software (such as when there is a fork) and occasionally restart your rigs if they go down, but this is nothing compared to constantly watching the market. Mining is a more passive form of income, and while there are tools to automate trading, trading is still much more time-consuming.
- Less stressful. With all the fluctuations of the prices of cryptocurrency, trading isn’t for the faint of heart, especially when large amounts of money are involved. In regards to stress, mining is just a piece of cake.
Advantages of Trading vs. Mining
If messing with rigs and ASICs isn’t your cup of tea and you are good with numbers, trading is something you might want to try. These are some of its good aspects in comparison to mining.
- Does not require equipment and technical skills. It’s easy to start trading because you don’t need any equipment. You do need some capital, but you can start with $10 or less, and after you get the knack of it, then you can invest more money.
- Many more coins to choose from. With mining, your hardware limits your choice of coins. This isn’t the case with trading – since you are not tied to a particular coin or algorithm, there are thousands of coins to choose from. Not all coins are equal – some of them don’t have huge earning potential because of low trading volume and/or low price fluctuations, but even the good ones for trading can number in the hundreds.
- Huge earning potential. All equal, with the same amount of money invested, with trading you can earn much more. While mining in better times, your equipment pays off in four to six months, yet with trading you can double your money in less than a month. Even if you are not the world’s greatest trader, if you play it safe, you can make three to five percent a day (or even ten percent or more on a particularly good day). Of course, never forget you can lose all your money, so don’t consider trading a sure way to get rich – if it were that easy and profitable, everybody would be doing nothing else but trading twenty-four hours a day!
Which One to Choose?
Now when you know the advantages and disadvantages of mining and trading, you’ve probably already made up your mind which one is better for you. Even if you still haven’t, there is no reason not to do both – who says you must choose only one of them? If you are totally new to cryptocurrency, it’s safer to start with trading (small amounts only, of course).
On the other hand, if you already have some mining equipment, you can start with this. In any case, even if you are a miner, it won’t hurt to get some trading skills – this way you can maximize your profits (or lose them, if you don’t know what you are doing).