When it comes to making an investment or generating a profit in 2020, you need to keep in mind the fact that the idea of going into cryptocurrency mining might still be valid in 2020. Sure, those who hopped on this train prior to 2017 might have profited the most, yet, it is still not too late to get involved in this lucrative industry. Naturally, in order to increase your odds, you need to arm yourself with proper knowledge and here are five things that you need to know about cryptocurrency mining in 2020.
1. Coins to mine
The first thing you need to keep in mind about cryptocurrency in 2020 is the fact that the value of coins evolves with time. So, in order to get the most value, you first need to figure out which coins you should mine in 2020. At the moment, it seems like Grin, ZCash and RavenCoin are slightly ahead of the curve, however, there are other coins that might come to surprise you. Naturally, Bitcoin is always a popular choice, as well as some of its derivatives like Bitcoin Gold, etc.
2. Market consolidation
One of the biggest problems in the cryptocurrency mining community in 2020 is the fact that, with the skyrocketing in Bitcoin’s popularity, the market itself becomes incredibly crowded in both supply and demand. For instance, due to the fact that Bitcoin became a household name in the last couple of years (despite its market value fluctuations), the number of coins rapidly increased to more than 2,300. Keep in mind, nonetheless, that not every one of these cryptocurrencies is a major one. In fact, less than a third of all these coins exceeds a $100,000 cap. In the next year, it is expected that the market might consolidate.
3. Adequate tools
The third thing that you need to take into consideration is various hardware improvements and the fact that the field of mining is getting far more competitive. You see, having a powerful cryptocurrency mining rig can help you make a profit in the most cost-efficient way possible. Other than just having specialized supercomputing hardware, you also need a block explorer and a suitable cryptocurrency arsenal. Crossing all of these requirements from the list can help you out immensely.
4. Greater government interest
One more thing that was highly anticipated is bigger government involvement in the field of cryptocurrency; however, opinions about this phenomenon are still quite mixed. First of all, there’s the issue of tax reporting. The majority of the policies here are quite undefined, which means that even those cryptocurrencies that are interested in settling their taxes in a more regulated way may lack clear guidance on how to do this. For a cryptocurrency miner, nonetheless, what this means is that the market might get drastically affected.
5. An estimate of profitability
Finally, there’s one thing that doesn’t change and that’s the fact that you’re in it for the profit. Therefore, your first step needs to be the estimation of profitability. This is a fairly simple equation that depends on six major factors. First, you have the price of the cryptocurrency. Then, you have the block reward and halvings, which may make cryptocurrency somewhat less profitable than it was in the past. Then, you have the time of block generation, as well as mining difficulty and hash rate. Lastly, you need to take the equipment efficiency and the cost of electricity (as a fixed overhead expense) into the account. Once you have all of this figured out, you’ll know exactly how cost-effective it is to start cryptocurrency mining.
Keep in mind that this field might be far more complex than it initially appears on the surface. Therefore, you need to find credible resources and sources of information, as well as start acquiring some first-hand industry-related experience. All in all, the more you learn, the better your odds at making the right call. In other words, your success is in your own hands.
By Diana Smith