Bitcoin Mining vs Trading: Which Should You Do?

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Bitcoin has become a major investment asset, returning massive profits to investors. If you’re like most people, you may be wondering how to get a piece of the crypto asset. 

There are many ways you can get into Bitcoin as an investor, two of which are Bitcoin mining and Bitcoin trading. While both methods can be profitable to you, the requirements are different.

Bitcoin mining is the process through which the Bitcoin network is maintained and transactions are processed and added to the Bitcoin blockchain

It is also the means by which new Bitcoins come into circulation or are minted. If you become a miner, you’ll be the first to receive new Bitcoins before they ever get in anyone else’s hands. That’s pretty cool right?

Now trading. Trading is the process of actively speculating on the price of Bitcoin. This is another way of earning Bitcoin, but requires a lot of experience to do profitably as we’ll see shortly. 

In this guide, we consider the two methods closely to help you choose the one you wish to engage in as your preferred Bitcoin investing method.

Bitcoin Mining

As stated earlier, Bitcoin mining is the process through which new Bitcoins are minted, and that’s how miners make their money. In times past, this method only required the use of a personal computer, but things have changed greatly.

You could still use your PC to mine, but the returns won’t be anything worthwhile. These days, miners instead use specialized computers known as application-specific integrated circuit (ASIC) miners.

These are powerful computers that are used to solve mathematical problems that lead to the verification or mining of Bitcoin blocks.

The computers unfortunately require a lot of electricity to work, which is something that Bitcoin antagonists have criticized for so long.

Depending on your location, the cost of electricity for running ASICs can be overwhelming, as well as the cost of acquiring the computers themselves. 

Nevertheless, there’s an option for this that makes a lot more sense to more people. This option is called cloud mining, which works just like cloud computing, only in this case you’re mining Bitcoin.

You simply contribute mining power to a mining pool and get a share of the profits depending on your contribution to the pool. This method doesn’t require any mining experience on your part. 

It requires less startup capital than if you choose to mine on your own, but the returns are also less than what you would get if you owned the who set up. You can start here though, and eventually get set up on your own if that’s what you want.

Bitcoin Trading 

Bitcoin trading is more of an intellectual process than one that requires high-tech equipment. You can trade with your PC and do great in trading. However, it requires a lot of experience to start doing profitably.

Crypto trading is very risky, so if you’re a beginner, it’s wise to start as a copy trader. Copy traders copy the trading strategies of more experienced traders instead of formulating their own. The goal is for you to become familiar with trading before you start trading on your own. 

The perk is that you earn when the trader you copy makes profit. After you have learned which strategies are profitable and which are not, you can come up with a unique one that fits you most and work with it on your own trades. 

Which Should You do?

Both Bitcoin mining and trading can be great ways to earn Bitcoin, but which one you choose will depend on your investment goals and how much capital you have. 

For mining, you’ll need a significant startup capital for equipment and electricity, but it gets easier from there. Trading can be started with any decent amount of capital but it requires skills to perfect. 

You should weigh these options carefully and you can go for the one that is most suitable for you.

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