Investing in Bitcoin can be done in many different ways. Similar to gold, there is also an option to invest in mining operations. That approach may not necessarily be the best course of action, as Bitcoin mining is a very complex industry.
Bitcoin Mining has Many Drawbacks
For those willing to take the plunge on Bitcoin mining, there are a few options at their disposal. One option is to simply buy the mining hardware and run it, either at home or at a dedicated location. Finding the right home for a Bitcoin miner can be challenging, as there are many aspects to consider.
First of all, mining units are incredibly loud. It is almost like sitting next to a jet engine when a Bitcoin mining unit operates at full capacity. Secondly, these machines are very expensive as an investment, and require a lot of electricity. Without access to cheap electricity or renewable sources, it is not advised to engage in this effort at home.
Making matters worse is how one Bitcoin mining hardware unit will not do much good. To be even remotely competitive, investors need multiple units. The more the better, as it increases their overall contribution to the network. Unfortunately, the high upfront quest, combined with high electricity costs, make this option unfeasible for most consumers. It is a downside to cryptocurrency mining as a whole, but the industry has become very competitive over the years.
Even if all of the above is feasible, there is the Bitcoin volatility to take into account. The market value of Bitcoin can go up or down in a drastic manner every single day. It is difficult to determine the point at which one’s mining operation may no longer be profitable. Another reason to look into alternative options.
What About Cloud Mining?
On paper, the concept of Bitcoin mining via a cloud mining provider seems appealing. There are companies who run a mining farm, allowing investors to purchase specific packages of hardware and keep the earnings for themselves. Investors will often need to pay maintenance fees, among other things, but there is still a little bit of profit left afterward.
At the same time, the chances of recuperating one’s initial investment are slim to none. Cloud mining is a very complex industry where returns are never guaranteed. In fact, there have been incidents in the past where Bitcoin mining through this approach was costing investors money. Their daily earnings were lower than the actual maintenance fees, resulting in a net loss.
Can you Invest in Bitcoin Mining Firms?
Unlike gold mining stocks, companies engaged in Bitcoin mining are hardly ever found on public platforms. More specifically, these companies will not have public stock for sale. This makes it difficult to invest in such providers, but nothing is impossible by any means.
One thing all Bitcoin mining providers have in common is how they continuously want to expand. Doing so costs money, thus external funding will be looked into every now and then. This creates an opportunity for wealthy individuals to put down a wad of money and receive a stake in the overall operation. Even so, not all operations are profitable.