Bitcoin has recovered significantly after its last crash and there’s a renewed interest in the cryptocurrency market once again. As more investors are looking for their way into the market, many are starting to consider options that don’t involve investing in expensive and complicated gear.
The facilities and tech needed to run a Bitcoin mining farm are the most expensive part of the process and they need to be paid before any profit is made. That’s why the alternatives are becoming so popular, even though they may be less profitable overall.
Cloud Mining Contracts
The most popular way of earning through Bitcoin, without having any mining facilities of your own is through cloud mining contracts. The gear used for mining is provided by a third party and you only rent it for a monthly fee or for a share of the profits.
Sites such as Truely offer in-depth reviews of these services and allow you to choose the best provider for your needs. Using cloud mining contracts allows you to get into the industry without a large initial investment but with smaller profit margins.
The State Of The Industry
At this point, the cloud mining industry is experiencing a boom since the equipment needed to mine has become too expensive and too complicated for an average user to deal with on their own. Two companies dominate the market, but there are also hundreds more that are of smaller scale and provide a good service.
The two largest companies in the field are Genesis Mining and HashNest. However, their capabilities are limited and they can’t take on new users since there’s too much demand for them and not enough gear available.
Downsides
There are a few downsides to this approach, you should take into account. First of all, it does cut into your earnings somewhat and this can add up in the long run when compared to having your own gear. There’s also less control when it comes to what kind of gear and software the provider will use.
Those who are in it for the tech as much as they are for the profit won’t get much out of cloud mining contracts either since all the tech is handled by someone else. Many are interested in assembling and using the gear themselves.
Crypto Lending Services
This is a more traditional option of earning money via crypto without mining it, at least traditional in the sense that it’s somewhat similar to earning with traditional currency. The profit is earned by using your current stack, to borrow funds against it.
This is only an option for those who are already in the industry and have a stack they can utilize in this manner in the first place. There are also large companies that provide this service in a more organized way, somewhat similar to banks.
How The Industry Is Doing?
Two companies are most well known in this part of the crypto world, but there are also many more, smaller ones that you should review and use. Celsius and Nexo are the biggest and the safest crypto lenders out there and most use their services. The returns that these two offers are also pretty similar.
Celsius offers a yield on investment of about 6.2 percent, while Nexo offers a return of 5 percent. There are also many smaller companies that offer a return of about 4 percent which is a decent amount. Many also offer crypto credit cards as a bonus.
Disadvantages Of Using This Service
One of the biggest disadvantages of using this service is the volatility of the cryptocurrency itself. Its value can change regardless of what you do with it and even though that’s somewhat similar to the fiat currency, with crypto it’s much more noticeable. That’s why the returns are bigger than with a traditional bank.
The risk of default is also greater but since the industry is growing and more users are looking for these alternative options to mining, it’s starting to settle down. It’s still imperative to incorporate the risks into your plans.
Earning Bitcoin From Centralized Exchanges
Centralized exchanges have started incorporating Bitcoin in their portfolios since cryptocurrencies are now considered to be more common. Those exchanges are usually used to trade in traditional foreign currencies and now it’s used for Bitcoin in a similar fashion. The returns are a bit lower than with other methods we’ve mentioned.
The rates will vary but not that much. It ranges from 1.8 to 1.4 percent depending on what exchange you’re using and what kind of fee structures they have. Keep in mind that now when big players are entering the market smaller users are getting squeezed out.
How Things Are Going?
The largest CEX that allows cryptocurrency trading is called Binance. The biggest exchange that’s based in the US is probably Gemini. It offers 1.6 percent returns on your deposit. There are also others that allow for a more “free market” approach to lending and borrowing in BTC.
It seems that yields are soon going to be produced and paid in BTC as well. At this point, you can only get it in traditional currency, but that’s the next logical step when it comes to making BTC trading more mainstream.
Should You Try These Cryptocurrency Investments?
Many believe that mining and staking are the most important and the basic way to earn from the cryptocurrency market. It is the most common one but there are others as well and especially now when cryptocurrency is becoming a more mainstream thing. The methods we have mentioned are equally valid and equally lucrative if you play your cards right.
As is the case with any other investment you should take into account that diversity is an asset on its own since it allows the investors to earn from different sources and thus deal with less risk than they would if all of their eggs were in one basket. This is true when it comes to earning from Bitcoin as well.