As the digital market develops, developers are offering more ways to put cryptocurrencies to practical use. This contributes to the growing popularity of digital coins. More and more online platforms are adding payment gateways to accept BTC.
However, for most users, bitcoin remains only an investment tool. In 2024, the market offers several ways to make money from the first cryptocurrency:
- Coin mining (building a farm on your own or connecting to cloud services).
- Trading (short-term speculation on the BTC rate).
- Investing (investing money with the expectation of price growth).
Mining
Blockchain is a decentralized system without a single management. The work of confirming transactions and creating blocks is performed by nodes (powerful PCs) that solve computational problems. Miners are rewarded for finding the right combinations (hashes).
Computers work in a competitive mode. The first one to send the correct solution gets the reward. The block creation time must be constant, it is embedded in the code. Therefore, as the computing power of the network increases, the complexity increases.
To meet the new conditions, miners are constantly increasing capacity. In 2022, Bitcoin mining in solo mode is unprofitable. Miners join pools (Binance, F2pool) to receive stable payouts.
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Investments
Since Bitcoin’s launch in 2009, its price has increased more than 2.2 million times (from $0.03 to $69k at its peak in November 2021). To understand how much it was possible to earn on bitcoins, it is enough to make a calculation.
For 13 years, the cryptocurrency has experienced several major corrections. During these periods, the rate fell by more than 80%. After each such correction, bitcoin rewrote extremes. Investors who did not sell coins in panic, but acted the opposite and built up positions, gained the most profit.
Crypto-enthusiasts choose different strategies to increase the volume of the asset:
- Evenly throughout the year (for example, at the beginning of each month).
- When quotations decrease by 5-7%.
In essence, investing in bitcoin is a long-term trade. You can make money on BTC by fixing profits in installments after reaching new highs.
Cloud mining
This way of earning money appeared as a more affordable alternative to classic cryptocurrency mining. The user does not need to assemble a farm and ensure its performance. Instead, it is enough to rent capacity in a data center.
Usually, investors sign a contract for a year or more. Profits from mining go to the cryptocurrency wallet. The operator keeps the costs of farm maintenance, electricity and service fees.
Cloud mining is a good way to invest in bitcoins with minimal investment. The initial contract amount is usually $80-150. However, there are a lot of scammers in this field, so you need to choose the resource carefully.
Trading
Trading involves short-term (intraday) and medium-term (with the expectation of several days) types of trading. Bitcoin is a highly volatile coin for which crypto exchanges give up to x125 leverage. You can trade in 2 ways:
- Daytrading. This method is based on a large number of short trades with or without margin lending. Users do not carry trades to the next day.
- Swing trading. The participant’s task is to catch a large price movement on a daily or 4-hour chart. The position is held for several days or weeks.
Beginning traders are better off not using margin lending. Under unfavorable conditions, it can lead to loss of capital. For profitable trading, users need to understand how the market works, have a lot of experience and a high speed of reaction to changing conditions.
How to make money from mining
In September 2022, ether switched to the Proof-of-Stake (PoS) consensus algorithm. After that, miners switched to mining other coins (ETC, RVN). Many chose Bitcoin. In October, the complexity of the Bitcoin network increased by 13.55%.
According to experts, the current cryptozyme is a good time to start mining. Prices for asics are in direct correlation with the rate of the asset, so you can enter the market at the lows. The main task is to wait for a new bull cycle to sell the mined coins with a good profit.
However, you need to assess the risks first. It is impossible to accurately predict the end of the downtrend. Therefore, you need to have sufficient reserves to earn for some time only on electricity and hosting fees.
Designing a farm
In 2022, cryptocurrencies are mined using GPUs, ASICs, processors, and hard disks. Due to the high complexity of the blockchain, Bitcoin is only mined using asics. It is possible to make money on Bitcoin, but you need to make a business plan beforehand. You will need to calculate the cost of installing the farm and its payback. It is also necessary to prepare a room for mining cryptocurrency or find a data center.
Profitability of earning on BTC
The profitability of investors in cloud mining depends on several factors:
- Hashrate. Each service has a set price per unit of capacity. The cost of the contract increases disproportionately to the hash rate. You need to find the optimal ratio, look through the options of different platforms.
- Complexity of the network. In the Bitcoin blockchain, there is a constant inflow of power, new participants appear, the previous ones buy more modern equipment. Therefore, revenue is falling. To maintain profitability, you need to buy new contracts.
- Bitcoin price. Profits are accrued in cryptocurrency, so earnings depend on market quotations. Investors can sell assets immediately or wait for price growth.
- Commissions. Services set fees to cover electricity and hosting costs. Contracts have different commissions, so you need to calculate all options.
Investments in Bitcoin in 2024
Conservative market participants invest in bitcoins for the long term. Waiting to reach price levels to lock in profits can take a long time. This requires a growth of more than 50%. This time can be used to generate additional income.
Investment platforms offer to lock in funds for a fee. Compared to traditional financial institutions, cryptocurrency services give better rates and flexible terms. Popular ways to invest (similar to conventional banks) are deposits and lending.
Deposit in BTC on cryptocurrency exchanges
Today, almost 13 thousand coins are traded on the market. But most investors buy bitcoins. Cryptocurrency services reward customers for storing coins. You can take the cryptocurrency at any time, the profit will be withheld only for an incomplete period.
Unlocked assets are available for transfers or trading transactions in just a few minutes after the withdrawal request.
Bitcoin is an asset with minimal risk of scam, so exchanges pay small rewards. For example, 2024 BTC can be deposited on Binance at a rate of 1-5% per annum depending on the amount of the transaction. The deposit period is not limited. The tariffs of the Bybit exchange are presented in the table.
| Transaction term (days) | Transaction volume (BTC) | Rate (%) |
|---|---|---|
Lending
In 2024, Bitcoin is also being used in lending transactions. Investors can lock coins on lending platforms and earn recurring income. For example, Binance Lending pays up to 5%, Nexo pays 4% (+1% for blockchain for a minimum of 30 days).
You can borrow stablecoins against BTC collateral on MakerDAO, AAVE and other platforms. Stablecoins are placed in decentralized finance protocols (DeFi) for additional earnings. The advantage of such transactions is that there is no need to sell BTC. After making a profit in DeFi, you can buy the asset back. To place bitcoins on Binance Lending, you need to:
- Log in to an account on the exchange.
- Go through verification.
- Go to the “Simple Earnings” section.
- In the search bar, find BTC.
- Select an offer.
- Enter the amount. Agree to the terms of service.
- Confirm the asset blockchain.
Trading on BTC in 2024
Holders of cryptocurrency can profit from trading transactions. Centralized exchanges (Binance, Bybit, FTX) are more suitable for trading. Many features are available on these platforms: simple purchase of the asset, margin transactions, derivatives trading.
Spot
This is the safest type of trading. Transactions are executed immediately at the market price. The buyer receives rights to the asset: he is allowed to transfer coins to another platform, exchange them for fiat, use them for collateral.
An open spot transaction can be held for as long as you like. If the bitcoin rate falls, there will be no liquidation of the position.
An example of a transaction on the Binance exchange:
- Log in to the account with username and password. Refill the account with a card or transfer from another platform.
- Go to the “Trading” section. Select the menu item “Spot”.
- Use the search bar to find the desired coin.
- Enter the transaction amount.
- Specify the order type (market or limit).
- Click on the “Buy” button.
Margin trading
In such operations, traders take money from the broker to buy BTC. Bitcoin is earned on bitcoin within the platform. It is not possible to transfer coins to another platform. The purchased Bitcoin is pledged. For this, the trader pays a percentage to the broker.
This approach allows you to increase the volume in transactions. If circumstances are favorable, the trader can increase income by 2-5 times. After closing the deal, he returns the loan to the broker, and takes the profit (minus the commission).
If the BTC rate falls below a certain value (margin), there will be a forced liquidation of the position. The trader can make a big profit or lose capital. Therefore, this method of bitcoin trading should be used with caution.
Options
Derivatives are agreements in which an investor receives the right to buy or sell bitcoin at a certain price after the contract expires. The other party to the transaction agrees to purchase or sell the asset regardless of market conditions. The party that is in a privileged position pays a commission.
Options are often used as insurance against rate changes. For example, an investor fears Bitcoin falling below $13 thousand and buys an option (he will have to pay a premium). Now he can sell the asset after the contract expires for $13 thousand, even if the market rate is $10 thousand or less. If the exchange price rises, the owner has the right not to take any action. You can trade options on Bitcoins in 2024 on OKX, Bybit and other platforms.
Futures
This is the most convenient tool for speculative trading. The trader does not need to buy the rights to the underlying asset (bitcoin), but can profit from changes in the exchange rate. Futures trading is a leveraged transaction, but unlike margin lending, the broker does not lend money. The loan is “stitched” inside the contract.
To open a deal, a trader does not have to have the full value of the asset in his account. A portion is enough, usually not more than 10% (depends on the coin and the volume of the transaction).
For example, Binance offers leverage on Bitcoin x125 for order amounts less than the equivalent of 50 thousand USDT. You can also trade futures on OKX, Bybit, and Huobi exchanges.
Frequently Asked Questions
✌ What can cryptocurrency loans be used for?
Traders often blockchain BTC in exchange for stablecoins for short-term speculative trades. But the purpose of the loan can be anything, such as withdrawing stablecoins into fiat.
😎 What is a wrapped bitcoin?
Most DeFi projects are built on the Efirium blockchain or its clones (Polygon, Near). To block BTC on such platforms, you need to convert it into a wrapped form – an ERC-20 token.
❓ What is more profitable: investing in BTC or trading?
To trade, you need knowledge of technical and cluster types of analysis, risk management skills. A mistake can lead to loss of capital. When investing, the risk of loss is lower, but the potential profit is also lower. If you strictly follow the trading strategy, trading can bring more income.
📱 How to calculate the efficiency of BTC mining?
You can use online calculators: Whattomine, Coinwarz, Cryptocompare. To calculate, you need to enter the electricity and hosting prices.
💵 What can you save on when building a farm on asics?
Rig should have powerful power supplies, motherboard, good cooling system for video cards. You can save money on everything else.
🧐 How much can you earn from bitcoin per month?
Mining on a powerful Bitmain Antminer S19 brings about $50. Exchanges accept deposits in BTC at 1-5% per year. Funds are allowed to be withdrawn every month. Trading can be more profitable, but requires practice and market knowledge.
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Author: Saifedean Ammous, an expert in cryptocurrency economics.
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