What is more profitable: to mine or trade? Asics vs. crypto exchanges

Trading on exchanges and mining are the main ways of earning virtual coins. Which one is better? Much depends on the capabilities and skills of a certain person. Do you have asics? Great, so you can connect to a pool or mine yourself and get profit from it. If you know something about the crypto market, if you know its changes, if you can predict the fall or rise of crypto, most likely you can make good profit from virtual coins exchange. 

Let’s analyze the pros and cons of each of these types of crypto earning.

Mining 

Mining is the mining of crypto using special devices. To get BTC you will need special purpose integrated circuits (asics). The process of mining is not simple. Read about how to mine and set up equipment at home in one of our past articles.

We have talked a lot about the advantages and disadvantages of mining virtual coins on our website. Almost every article in the Review section directly or indirectly talks about the positives and negatives of mining. Let’s highlight the main points.

Pros of virtual coin mining

1. Development in a new field. Before you start mining virtual coins, you will have to delve into the study of mining and cryptocurrencies in general. Otherwise, you risk losing all your savings. 

You will have to pump up your knowledge in this direction in order to increase your profitability. And these theoretical and practical skills will be useful for mining, for trading on exchanges, and for consultations, for which, by the way, you can also get money.

The cryptosphere is very diverse. Specialists are always valued in it. 

2. Contributing to the popularization of blockchain technology and the world of cryptocurrencies. Virtual coins may become the currency of the future. Already now they surpass fiat by many parameters. This is decentralization, and convenience in circulation, and transparency of transactions, and much more. When you engage in mining, you become a participant in a process that will influence, or may even determine, the future. 

Every person who mines virtual coins also makes a positive contribution to the ecosystem of the crypto with which they work. 

3. Opportunity for further development. If a single asic standing in your garage stops bringing the desired profit, you can always think about creating your own mining farm. Yes, this process will be more resource-intensive than working with a small amount of equipment. But with the right approach, you can achieve high rates of return. And your investment will soon pay off.

Disadvantages of virtual coin mining

1. In most countries, such as Russia, there is still no clear legal regulation of mining. While the government of this country is trying to take steps in this direction, it is not quite clear when there will be laws that allow for the effective mining of virtual coins. And to perform this action without unnecessary questions from the regulatory authorities.

2. High cost of equipment. Unfortunately, expensive asics, necessary for profitable mining of crypto, are not available to everyone. Prices for these devices can reach several thousands of US dollars. On top of that, you will also need a cooling system, which is also not cheap. For example, the Bitmain «ANTSPACE HK» cooling container will cost from $100,000. It holds just over two hundred asics. The price of each of which – about $5.5 thousand.  

3. instability of crypto exchange rates. Virtual coins are constantly changing their value. And if you tie your business to it, you can go broke.

The change in the complexity of mining is one of the most serious problems facing those who mine crypto. According to rbc.ru, on October 10 this year the difficulty of mining BTC jumped to thirteen percent. Why is this important? The amount of crypto mined is inversely proportional to the difficulty of mining. 

Trading and investing

Trading is the buying and selling of crypto assets on virtual coin exchanges. This is a popular area for making money. 

In addition to speculative methods, there are principles of «position trading». They are based on analyzing a promising coin and selling it in the future at a higher price. 

This also requires a lot of theoretical knowledge. And if you engage in honest trading (without cheating and «gray» schemes), you can earn well and contribute to the development of the crypto industry as a whole. 

The advantages of earning on exchanges

1. Diversification. Investors also seek to diversify their risks by keeping different investments that behave differently in the same economic conditions. Some argue that cryptocurrencies provide a positive diversification effect, especially against rising inflation.

A large number of investment instruments are being developed that take advantage of more than just specific cryptocurrencies, such as bitcoin and etherium. We are also talking about specific investment funds that professionally manage cryptocurrencies on behalf of investors.  

2. Growth Potential. The sector is new, so there are potentially many more changes that could make investing in cryptocurrencies even more attractive. Examples include Stablecoins, which are cryptocurrencies linked to the value of fiat currency and assets to support the digital currency.

3. reliable protection for your investments. If you use reputable exchanges, the chance of losing your investment is negligible. 

Cons of Trading

If you’re not well versed in the subject, the crypto market can be a minefield for your wallet. From unfamiliar terminology to complex technology, this is a subject that takes some getting used to.

Like many businesses, trading crypto comes with risks. 

• Stock risk is the risk associated with changes in stock prices.
• Currency risk arises from changes in the price of virtual currency relative to real currency.

How economic conditions affect crypto mining and trading

Like many other processes, crypto trading and virtual coin mining are dependent on the economy. Because of the globalized and decentralized nature of crypto, it is affected by macroeconomic events that occur in many states. This could be the tightening of legal regulations regarding virtual coins, loss of confidence in fiat currency, and more.

According to some publications, the probability of growth of virtual coins is high. Therefore, experts advise investing in cryptocurrency assets. We are talking about bitcoin. But the economic risk affects the intentions of investors. Thus, the credibility of bitcoin compared to traditional assets, such as bonds or stocks, sags after its fall.  Which has also been triggered by various economic factors. For example: the takeover of cryptocurrency exchange FTX by its competitor Binance.

We can also see from other points (another example: the escalation of the trade conflict between the U.S. and China) that events in the global economic field affect the value of most assets. 

In turn, periods of recession force people to use more of their investments for everyday needs. At the same time, the demand for the same BTC is decreasing.