Is it better to mine or coin speculate?

Is it better to mine or coin speculate?

Compared with speculating coins, mining has many advantages for investors who value long-term investment.

First of all, in terms of cost, mining is a cheaper and more stable way to obtain bitcoins. 

There are two ways to obtain bitcoins, buying from the secondary market and mining. Bitcoin purchased through the secondary market, often referred to as speculation, carries a premium on market sentiment. This premium may be a positive premium or a negative premium. The recent fall in the price of the currency is because of the negative premium of market sentiment.

With data such as miner costs, electricity costs, other fixed operating expenses, and the hash rate of the entire network, the cost of mining bitcoins can be roughly calculated. In the industry's early days, many miners with faith accumulated a vast amount of wealth.

With the rapid development of the industry, the difficulty of mining and the hash rate of the entire network has increased significantly, the price of miners' shutdown is getting higher and higher, and the cost advantage of mining to obtain Bitcoin is gradually decreasing or even disappearing. But at the same time, this has also promoted the specialization and centralization of the industry. Large-scale mining farms and pools have gradually appeared, dramatically reducing the marginal cost of mining. In the case of good market conditions, mining is still profitable.

Secondly, mining is a suitable risk hedging method. 

The blockchain industry has its ups and downs, and the market conditions in the past few months are suitable proof. Any short-term operation, especially leveraged trading, is a considerable risk when the currency price reaches a fluctuation range of nearly 30%. Therefore, mining continuously producing coins has become a risk hedging method to reduce the average cost of obtaining coins.

Once again, the profit model is clear, and much of traditional capital favors mining. Although Bitcoin's violent fluctuations can bring a lot of profit from speculative transactions for investors in traditional industries, its risks are also unbearable for ordinary people. At the same time, many traditional capitals do not understand the value of Bitcoin, so they are reluctant to rush into speculation. The economic model of mining is relatively easier to understand. The scale of the mining farm will give people a very spectacular and down-to-earth feeling: the vast roar of miners and the invisible factory buildings will give people an impact on large-scale industrial production. The payback period of mining is about one year, and the payback period and profit rate can be estimated quantitatively.

Finally, halving Bitcoin is both a risk and an opportunity for mining. 

At present, some old miners, such as Antminer S9s are shut down, and the hash rate of the entire network is expected to drop by 20%-30 % gradually. This is undoubtedly a blow to low-performance miners, but the era of shuffling and upgrading is coming for the entire industry. This provides a quantitative opportunity for miners to upgrade, helping to enhance the vitality and liquidity of the entire industry. In this context, whether it is miners, mining farms, or mining pools, it is necessary to continuously optimize, and improve efficiency and competitiveness, forcing the mining industry to develop in the direction of more professional, compliant, and efficient operation and management.

As the negative market sentiment gradually subsides, the market will eventually return to a rationalized position. It is foreseeable that independent small miners will gradually be out of the game, and the future will be an era of specialization, centralization, compliance, and efficient operation.

A personal point of view reminds us that those with spare money can invest a small part of the funds according to the situation and conduct Bitcoin mining. However, do not borrow money or borrow money to speculate on coins, and it is not recommended to play futures.