HODL Or Mining: Is Bitcoin Mining Worth It?

Introduction

The Cryptocurrency community is slowly growing. However, the community is divided into three communities when potential ways of earning from Cryptocurrency are talked about.

The first one is the traders. These people are the ones that take part in buying and selling Cryptocurrencies to keep the market moving. They use the volatility to their advantage and make a profit. With the practice of strict risk management, they keep themselves consistent in the market.

The second part of the community is the long-term investors who have high hopes for Cryptocurrencies. No matter how the market is performing, they hold their Cryptocurrencies and wait for the prices to increase in the years to come.

The third one is the miners. These are the individuals who do not trade or hold the Crypto asset for long. Instead, they have invested in the hardware equipment that manages the Blockchain network and helps with transactions.

Crypto trading is not a new subject; almost everyone knows everything about it, so we will take that out of the loop. That leaves us with Crypto mining and Holding Cryptocurrencies.

Which one will give you more return? Let’s find out.

What Is Bitcoin HODL?

The term HODL means Holding in the Crypto industry. This term originated from the misspelling of ‘HOLD,’ and since then, the term has been attached with the meaning of Crypto buy and hold.

Today this term is used excessively in the Crypto industry. When someone says they are hodling, it means that they are not moving an inch with their Crypto assets.

pros

Using the HODL strategy to invest in Cryptocurrencies has several benefits. Among them all, the best one is that it makes the amateurs understand what Cryptocurrency investment is all about.

This is because beginners don’t have to think too much about the technicalities of Crypto trading. Instead, they simply need to buy the Cryptocurrencies that show the most potential and wait for an extended period of time to make a profit.

You can even say that HODL is the simplest strategy out there to earn from Cryptocurrency investment.

Cons

The most significant disadvantage of the HODL strategy is that the investor doesn’t know just how long they have to wait to make a profit.

Furthermore, the holding strategy makes the investors miss out on opportunities in the short term that could have helped them earn a significant ROI.

What Is Bitcoin Mining?

Bitcoin mining is the process of generating new coins and transactions. The process involves a vast decentralized network of computers that verify and secure Blockchain. In return for offering processing power, miners are rewarded with new coins.

You can even say that it is a virtuous cycle where miners help maintain the Blockchain network, the Blockchain rewards the miners with coins and the coins provide miners incentive for their hard work.

pros

The most astonishing thing about Bitcoin mining is that they are free. You don’t have to invest your money to buy Bitcoin. If you have a computer in your home that can support mining software, you can use your computer system to mine Bitcoin.

The rewards you get in Bitcoin mining are in Cryptocurrencies. You can use Cryptocurrencies to sell or trade. However, even if you don’t do that, you will get interested in your Cryptocurrencies by just keeping them on trading platforms.

Cons

The only con we find with Bitcoin mining is the need for power. The software that helps with mining is powerful and needs a supercomputer to run. Unfortunately, supercomputers consume a lot of power. So, you might find your monthly electric bill rising while mining Bitcoin.

Conclusion

Both HODL and Mining are different strategies to earn from Bitcoin. One is buying and holding the asset for a long time, while there is about investing in the equipment that maintains the Blockchain network.

Both have their differences, so you must know everything about them. While we have given a rundown between the differences, visit Bitcode Prime to know more in details.

If you have any other queries regarding the article, you can drop your question in the comment section below.