Figuring Out if Crypto Mining Makes Sense for You
Everyone is always talking about making money investing in crypto, but there are lots of other ways to make money betting on this sector. One way that isn’t discussed nearly enough is mining.
Now, the actual act of setting up a mining rig is way outside the realm of my expertise, but several cloud mining companies have emerged in the last few years, and they have some very compelling offers. The big question is: does it make sense for you to rent a mining rig?
Explaining the Business Model
These mining-as-a-service companies really aren’t all that complicated. Just as Amazon Web Services rents out computational power to perform tasks, cloud mining companies do the same. The only difference is they only service this one need, but this actually allows them to provide a cleaner customer experience.
As I mentioned before, running a mining rig can take technical know-how, which is why these cloud mining companies are so great. The user interface is designed to make it extremely simple for
I’m currently experimenting with the company Argo. They are the first cryptocurrency mining company to be listed on the London Stock Exchange, but more importantly, they are easy to work with. The interface is very clear, and you can tell exactly what you’re putting in and receiving. It is referred to as a HODL score and shows exactly how much you’ve earned.
As you might know, the crypto market is experiencing a downturn right now. As such, some of these mining rigs actually cost more to rent than they yield. If you were signing a 2-year contract like you would for a company like Genesis, this would be a way bigger problem. Luckily, Argo is paid on a monthly basis, and you can cancel at any time. But do keep in mind that Argo is often fully subscribed, so don’t cancel unless you think the price is going to stay at an unprofitable level for a long time.
Making a Decision
And for any of you who are struggling to measure whether mining a certain currency is profitable or not, you can use CryptoCompare to sort that out. One thing to note about Argo is that they have increased the hash rate (the rate at which energy is spent mining) on their rigs for 3 months in a row. This positions you nicely for when crypto has a comeback.
There are a few additional considerations to have on your mind when using these platforms. First, you want to look at the transaction fees on the cryptocurrency you want to mine. Eventually you are going to want to transfer the currency to your wallet, and that will cut into profits just the same. At the same time, this gives some mining rigs an advantage over exchanges, since there are no “trading fees” to speak of.
Most of all, you should do your research and figure out if you’re ready to trust whatever mining company you’re considering with your crypto. It may be a small amount, but you never want to get ripped off.
An Alternate Route
A final answer to the mining question is to actually invest in these companies. Argo, Genesis, and many others are publicly listed. This way, you’re betting on their business operations and the future of cloud mining. You would end up with a lowered exposure to the cryptocurrency industry, which could be desirable if you’re looking to diversify a bit.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.