Bitcoin has the reputation of being one of the most volatile asset classes among investors. Over the years, investors have earned and lost a lot of money over trading bitcoin and other cryptocurrencies. When the coin was first introduced over a decade back, mining was easier and more economical for people interested in it who would build their setups in the comfort of their homes to mine the coin. Over the years, the difficulty of mining has increased, and ASICs required to mine a bitcoin have become more powerful and require a dedicated storage area and proper maintenance to manage the equipment. Everyone is wondering if Bitcoin mining is still the most profitable and secure investment after everything that has happened in the last few months, especially given the reasons behind the current crypto market crash. In this article, we will look at how bitcoin mining performs in the short term as well as how it may perform in the long term as an investment. Before making any investment decisions, consult with your financial advisor.
Investment strategies
- Physical Mining at Home
People frequently wonder if they can mine cryptocurrency on a laptop and mine cryptocurrency at home without the hassle of maintenance. While that is possible for a lot of cryptocurrencies, there are some coins that need ASIC like Bitcoin. When bitcoin was first established, most people mined the coin from the comfort of their own homes. Due to the rising difficulty of mining and the power consumption of the ASICs, this alternative grew less and less reliable over time. With time, more options for mining became available like ‘cloud mining’ and ‘remote mining’.
In cloud mining, the miner would just enjoy the benefits of mining, but would not own the equipment, depriving them of control over it. This issue was solved with remote mining. The person mining remotely becomes the owner of the equipment essentially enjoying all the perks that come with it having control over the miner.
With the growth of alternative options for mining, mining at home lost its popularity, especially after the growth and increased recognition of remote hardware mining.
- Remote Mining
Remote mining has made mining activities convenient for anyone who is looking to get into the mining space. Remote hardware mining allows a provider to lease/sell mining equipment directly to a customer. The customer then pays for electricity and storage costs associated with hosting. This enables users to mine purchased equipment without dealing with the storage, electricity, and maintenance concerns of running mining hardware on their own.
You have several exit options when you reach a point of breakeven (earning enough to cover your miner costs). You can either sell the equipment and make a huge profit, or you can continue mining to earn a passive income on the side daily.
The purchaser has more control over hosted bitcoin mining machine because they have access to the exact specifications and output of their mining equipment, as well as remote access to their mining hardware to monitor exactly how it is performing. Furthermore, because each customer owns their mining equipment, the hosted service never has to touch the cryptocurrency, reducing the security risk between the miner and a third-party service.
- Cloud Mining
Cloud mining enables customers to pool processing power to mine cryptocurrency on a large and more cost-effective scale. Because there is no cost to purchase mining equipment, it is affordable to begin using cloud mining services, where customers typically pay for electricity consumption and mining fees, as well as a percentage of the block reward for cloud mining services.
Anyone who is cloud mining should ensure that the service they are using can guarantee the hash rate and mining capabilities they specify, as fraud and false advertising are common in the cloud mining industry. Security is also important here because cloud-based mining services collect mined coins and distribute them to customers. It is also worth noting that cloud mining provides the least amount of control over your mining activities when compared to the other two options where you own the miner and have complete control over it.
Is it a Good Time to Buy Bitcoin Miners in the Short Term?
When deciding whether or not to invest in Bitcoin Miners, a number of factors must be considered. Among them are:
- Bitcoin Price in the Short Run
The price of bitcoin is one of the most important factors to consider and monitor. The price of ASICs is correlated to the price of bitcoin, as are the mining rewards/profit per day. Mining rewards will be higher when bitcoin is in an uptrend and performing well, as opposed to when bitcoin is underperforming and declining. The best strategy would be to enter the mining space when the price of bitcoin is low (as it is now) in order to enjoy higher profits when the price of bitcoin rises, giving you the option to sell after a year at a premium in addition to the accumulated profit.
- Volatility
Bitcoin and other cryptocurrencies are notorious for their volatility. While this can help you make a huge profit, it can also be a contributing factor to any losses you may incur. To avoid losses due to volatility, it is critical to define the duration of your mining investment after assessing your risk capacity. Long-term investors are usually less concerned because bitcoin is known to outperform itself every few years.
- Miner Price
As previously stated, miner prices are correlated to bitcoin prices, which means that when the price of bitcoin is low, you can get miners at a discount, making these times ideal for investing in mining. This also increases the likelihood of earning higher profits during a market uptrend.
- Exit Strategies
Choosing the right hosting service is critical because it may increase your chances of exiting the market the right way. With Zionodes, you have the option to sell after a year or to keep mining in order to earn a passive income. Mining may also continue after the initial investment has been repaid in profit, leaving you with a risk-free profit every day.
We are optimistic about Bitcoin price in the short term but bearish in the long term. Because Bitcoin has an 80% correlation with the S&P 500, the short-term trend is determined by the performance of risky assets, which is determined by monetary policies. Since the peak of the CPI, the US economy has shown clear signs of being on the verge of a recession, such as negative GDP growth for consecutive quarters and declining labour participation. The Federal Reserve’s tightening is less likely to proceed as planned.
As a result, the Bitcoin price will be significantly relieved, and sentiment will improve in the short term. Meanwhile, the world will most likely avoid stagflation in the long run. The history of the previous similar stagflation period, which lasted from the late 1960s to the early 1980s, shows that precious metals such as gold and silver, as well as core commodities such as crude oil for energy and farmlands for crops, outperformed most sectors. In essence, the upstream becomes good land, and this may very well apply to Bitcoins in the upcoming history loop.
Will Bitcoin Mining remain profitable in the long run?
Bitcoin mining may become a safer investment even in a bear market. ASICS’s technological advancement is significantly slowing. This increases the profitability and benefit of acquiring advanced miners today. Good mining farms at reasonable prices are becoming scarce.
High-end miners purchased at low prices during the bear market and hosted in good farms at reasonable rates will respond to any sudden price volatility by harvesting more Bitcoins as the old generation accelerates phasing out during such drops.
An investment in bitcoin mining will always be profitable, especially for long-term hodlers. Mining through the dip and accumulating miners will only increase your reward during a bull run. Historically, hodlers who have kept a firm hand through every dip have profited from Bitcoin, particularly Bitcoin mining.
Bottom Line
On Zionodes, clients can get miners at a lower cost than their competitors, with a one-stop solution that includes procurement, quality control, delivery, customs clearance, hosting, maintenance, repair, and even insurance. This alleviates the pain points and specific risks that smart investors face. Furthermore, Zionodes Marketplace enables risk-free peer-to-peer transactions of miner ownership on trusted farms. Such standardization generates liquidity and allows clients to instantly determine the cash value of miners at any satisfaction point.
