Holding and mining are two of the most lucrative activities in the cryptocurrency space. Whereas the holding of cryptocurrencies refers to the act of purchasing and holding tokens for a long time until the market is ready to give considerable returns, mining refers to the process of verifying transactions in a particular blockchain network and getting rewarded for the same.
With many industrial experts treating the cryptocurrency market as one with huge growth potential, all crypto related activities like investing, holding and mining have been on a high trend in the last few years. But the ultimate question that keeps bothering crypto enthusiasts is - whether they should invest/hold or mine cryptocurrencies or which one is a more profitable option. Let’s try to figure out.
Cryptocurrency Holding
The holding (or HODLing) of cryptocurrencies is an activity which aims to create more profitability for the holder in the long term. The idea is to keep holding the coins for a long time unless the market is good enough to produce considerable returns in terms of profits.
Given the fluctuation rate in the prices of bitcoin, this may or may not return a profit, depending on how long you keep the cryptocurrency for.
Cryptocurrency Mining
The mining process of bitcoins (or any other cryptocurrency in that matter) is essentially the process of creating new blocks by verifying and adding transactions in a blockchain. The first miner or group to find a new block is rewarded with a certain amount of cryptocurrencies.
Determining the profitability of crypto mining
The cryptocurrency mining profitability depends on a number of things, of which the initial cost is a very big factor. The initial cost of mining is high because of the requirement of very sophisticated computing hardware for the mining process along with a dedicated and high-power, constant energy source which can keep the process running 24/7. Moreover, the increasing competition in the bitcoin mining space is forcing miners to use advanced hardware with more processing power.
The high cost of electricity and mining hardware, high power consumption, increasing difficulty, and BTC price are some of the factors which limit the profitability of crypto mining.
According to an estimate, one cannot and should not expect any positive returns from bitcoin mining in the first year, however, the profits will start showing by the second year if you continue to mine and also depending on the price of the token/coin.
An easier way to increase the profitability of your crypto mining efforts is to use energy-efficient alternatives such as solar energy for this purpose. Pieta is one project which is experimenting in this area. Pieta is presently investing in the worldwide development of solar power plants and encouraging businesses to use solar power in their establishments. The use of solar power in the blockchain mining will not only reduce the cost but also will significantly reduce the detrimental effects of mining on our ecosystem.
Check the details at https://pieta.network