Mining vs. Staking – Which Should You Choose?
We’re pretty sure that’s the most asked question in the crypto area after “Should I buy Bitcoin?”.
For as long as time has been recorded, “old vs. new” was always in trend. There will always be those people loyal to the origins and those who want to try everything new. And even if crypto only turned 12, we can already see this kind of dispute between crypto users.
So before deciding what option fits you best, take a look at this article and find out the advantages and disadvantages of crypto mining and staking.
Crypto Mining – Goods & Bads
Crypto mining is the process of solving complex equations to validate blockchain transactions. The crypto miners are rewarded every time they find the correct combination. And if you succeed by doing it solo, you can definitely expect to get a worthy reward.
Now let’s dive in.
Crypto mining advantages
- Your income can rise considerably.
The value of a single BTC is $50,725 at the time of writing. The last time we checked, the reward for a new block generated was 6.25 BTC, with the sum being distributed between contributors.
- Your mining rewards are safe.
The more computer power the network has, the harder it is for malicious actors to access your account. For example, they would need to own 51% of the network – which is expensive and not rewarding.
Crypto mining disadvantages:
- It’s expensive
To mine cryptocurrencies, you need to buy mining software and a cooling system. Plus, the mining process will require a lot of electricity. So prepare your wallet.
- There is a lot of competition.
Of course, it depends on the coin you want to mine. But if you want to mine Bitcoin, for example, you compete with mining farms worldwide. So most people choose to do pool mining instead, but the rewards are significantly lower.
- You contribute to global pollution.
Electricity consumption is a genuine concern in 2021 since it contributes to climate change. Take note that on March 18th, the annual power consumption of the Bitcoin network was 129 TWh, meaning 129 billion kWh.
Crypto Staking – Goods & Bads
Crypto staking is an alternative for crypto mining, where all the validators need to do is lock their cryptocurrencies and wait for the rewards. The longer you lock them for, the greater is the profit.
Crypto staking advantages
- It’s easy and cheap
You don’t need to buy any kind of mining software. Staking requires some assets that you are willing to deposit in a pool for a period of time. And the rewards are distributed daily.
- Your assets are still secured.
A malicious actor would need to own no less than 51% of the total staked cryptocurrencies to hack your account.
- It’s environmentally friendly.
Staking doesn’t need a lot of electrical power. Everything is done just on your computer, so it doesn’t differ from your usual online activity. Plus, a lot of wallets are available on mobile, consuming even less energy.
- It got a lot of popularity.
The rewards depend on the total amount of crypto staked in the pool, so the more users, the better. And since the new generations prefer eco-friendly and convenient solutions, staking platforms are crowded.
Take Student Coin, for example. After just 12h since the launch of the STC token, 1.2 billion tokens got staked on the platform. That means a total of $40 million. Impressive, right?
Crypto staking disadvantages
- The rewards are smaller than with mining.
Because there are more people to distribute the rewards to, their earnings will be smaller. So don’t expect to get rich just by staking. But it is still a great source of additional income.
- The value of your assets can decrease.
If you stake your coins and, in the meantime, a bear market occurs, you can find yourself in a pretty tight spot. Some platforms lock your coins for a specific period, and if you want to withdraw them sooner, you would need to pay some fees.
So, it’s a little risky, but that’s the beauty of working with volatile currencies.
Well, you are the only one who can answer this question since we all have different desires and expectations.
If you have enough money to invest in crypto mining, then you can go for it. But if you just want some extra money or don’t like the idea of pollution, you should go for staking.
So, what would you choose and why? Tell us in the comments!