In 2022, it is getting harder and harder to make money with Bitcoin (BTC). The promise of free Bitcoin is often a scam. Bitcoin mining, once accessible to retail investors, is now so competitive that profitable ventures are rare for smaller investors.
However, it is still possible to make money BitcoinYou can trade it, lend it, keep it, or earn it. Returns on this volatile asset are not guaranteed. Just as you can make money if the price goes up, you can also lose money if the price goes down. However, Bitcoin’s growth since its launch has made some cryptocurrency investors bullish about its future.
return: Varies depending on investment scale and price fluctuations. Bitcoin price more than doubled in the last bull market of 2021.
Buying and holding bitcoin as a long-term investment, or as some crypto enthusiasts call it, HODLing —As long as the price you end up selling is higher than the price you bought it for, you can make money the easy way in the long run. , it is reasonable to imagine that it may reach similar amounts in the future.
Bitcoin was initially conceived as a cryptocurrency that could be used for everyday transactions, but as its value increased, many investors began to view Bitcoin as a long-term investment. As with any investment, holding for the long term means you have to withstand price volatility without the temptation to buy or sell. If you choose to buy and hold bitcoin, you should ensure that you are not overexposed to any asset and that you are not investing money that you cannot afford to lose. One is to invest no more than 10% of your portfolio in risky assets like Bitcoin.
Use a credit card with Bitcoin rewards
return: Typically less than 5% per dollar for certain categories and 1% for all other purchases.
There are many crypto credit cards that allow you to earn rewards in cryptocurrencies. Similar to traditional cashback programs, you’ll earn a small percentage of your card purchases that can be paid with Bitcoin or other cryptocurrencies. Some even offer sign-up bonuses that allow you to earn additional rewards if you meet certain criteria.
Please note that crypto rewards may be reduced by transaction fees or spreads added by the provider. A spread is the difference between the market price and the rate offered by a particular platform. If a crypto credit card issuer has one that applies to rewards, it means you get a slightly unfavorable exchange rate both when earning and selling those crypto rewards.
If you already own Bitcoin, you can earn interest on your assets by lending them to other investors and institutions.platforms like Gemini Cake DeFi allows users to lend fractional shares of Bitcoin at interest rates as high as APY 5%.
However, each platform has provisions regarding lending. For example, with both Gemini Earn (Gemini’s interest earning program) and Cake DeFi, you could lose some or all of your investment if the borrower you’re lending to defaults.
Cryptocurrency lending is also a relatively new category and carries a high level of risk and uncertainty. Notably, several platforms stopped offering lending services this year.
Celsius, one of the largest cryptocurrency lending platforms, froze withdrawals in June 2022 and subsequently filed for bankruptcy following the cryptocurrency crash.
BlockFi has ceased offering its lending products pursuant to an order from the U.S. Securities and Exchange Commission. It was charged with failing to register offers and sales of retail cryptocurrency lending products.
Cryptocurrency platform Nexo, which offered a loan product, has been sued by multiple states for misleading marketing and has voluntarily stopped offering the product to new U.S. customers.
Pay with Bitcoin or receive tips
return: It depends on the settlement amount and price movement in Bitcoin.
Consider giving people options when taking payments or tips for a side job or business. pay with bitcoinThis can be done on platforms with processing services such as Coinbase and BitPay.
While relatively easy to set up, navigating the tax implications and risks associated with accepting Bitcoin payments can be more complex.Coinbase self-managed accounts can be set up in no time. BitPay takes a few days to approve, but can accept multiple cryptocurrencies.
Something to keep in mind: If getting in touch with Bitcoin is your goal, be sure to use a service that allows you to accept funds in Bitcoin.BitPay and Coinbase are options for receiving funds this way. but some processors only accept funds in fiat currency.
day trading bitcoin
return: It depends on the size of the investment, the transaction and the price movement.
It is technically possible to make money by buying and selling bitcoins in a short period of time, opening and closing positions as the market changes. However, just like day trading in stocks, you are much more likely to lose money this way.
Stock day traders use macro and microeconomic data, market trends dating back to the early days of the stock market, and other tools at their disposal to make educated guesses about which stocks to buy or sell. Still, these active traders struggle to match the returns they get from buying and holding low-cost funds that track broad market indices, for example.
Investors have little data on how Bitcoin behaves under certain economic conditions, which can make it even more difficult to predict Bitcoin price movements. At the time, 1 Bitcoin was priced above $47,000, but as of September, it is now trading at just over $19,000 per coin. Additionally, trading cryptocurrencies on a regular basis can quickly become a nightmare during tax season. There must be If you’re thinking of becoming a frequent cryptocurrency trader, it’s a good idea to speak with an accountant to see what you need to track before you begin.
You need a certain amount of volatility to make money in day trading. Prices have to go up and down for traders to make a profit. However, Bitcoin and cryptocurrencies are more volatile than other assets, making the seemingly difficult concept of “buy low, sell high” even more difficult. If you want to try this, start small and be careful.
What about bitcoin mining?
bitcoin mining It can be a lucrative way to make money with bitcoin, but not for retail investors.Since computing power is required, initial and ongoing costs can outweigh the mining rewards earned by far. may exceed.
Bitcoin’s blockchain works using a proof-of-work consensus mechanism. In other words, miners perform the important task of validating transactions to keep the network safe. A new block of transactions is added to the ledger every 10 minutes, and a miner who validates a new block is paid 6.25 Bitcoins (approximately $122,000 based on recent prices). Miners also earn transaction fees paid by users who want their transactions verified faster. This could add about $4,000 to the rewards for each block.
However, validating blocks of transactions for a chance to win bitcoin rewards requires powerful computers called ASICs (or application-specific integrated circuits) that can cost upwards of $10,000. I have. Also, competing with other miners requires spending thousands of dollars on electricity bills, and returns are not guaranteed.
Mining pools exist where investors can pool computational resources and share rewards for mining Bitcoin. However, the setup is not so simple. Pools charge users a fee, and the bigger the pool, the less reward.
Neither the authors nor the editors were involved in the aforementioned investments at the time of publication.