If you’re getting involved in crypto mining or trading, make sure not to make these common mistakes as you get started. Read our guide to learn more.
Cryptocurrencies have become one of the most popular forms of non-fiat currency today. They are a form of digital currency that uses blockchain technology without government oversight. Interestingly, crypto has grown so popular that it has become its own industry. Some countries, such as El Salvador and the Central African Republic, have even made Bitcoin their national currency.
Bitcoin is only one example of popular cryptocurrency. There are currently over 10,000 types of cryptocurrencies to mine and trade. If you’re interested in getting into crypto, be sure to know these common mistakes to avoid.
Not Accounting For Budgetary Constraints
As with any hobby, budgeting is important. The key to efficient crypto mining is taking time to research and understand the financial limitations of your setup. For instance, crypto mining uses a lot of energy. Your processor is mining for hours throughout the day, sometimes all day. This results in a high energy bill you may not expect. Additionally, you need to maintain your crypto miner and ensure it runs efficiently.
Not Doing Initial Research
It also helps to do some initial research. There are many different types of cryptocurrencies today. Some are major with incredibly high values, like Bitcoin and Ethereum. Still, these cryptocurrencies have a limited supply with their own reward systems and hash rates. Others have much less market value but unlimited market supply. These smaller digital currencies may have started out as a joke or competing currency but have not seen the popularity and media attention that Bitcoin has. Again, each cryptocurrency has its own hash rate. When deciding how to diversify your portfolio, make sure to read about hash rates and mining power.
Using The Wrong Miner
There are two main types of crypto miners to know: ASIC and GPU. ASIC miners are inherently powerful devices made for single-currency mining. That means you’re limited to one type of cryptocurrency with excellent processing power. GPU miners offer more customization and mining diversity but may not have strong processing power. GPU miners can be configured with any desktop or laptop so long as you use the proper crypto mining software with it.
Trading At The Wrong Time
Another common mistake to avoid when getting into crypto is poor trading. As previously mentioned, market values change over time. Sometimes crypto values increase while others decrease. Like with any tradable commodity, it’s important to research the right time to sell your crypto tokens for the highest return on investment. Trading at the wrong time leaves you in a financial rut with costly energy bills as well. Do your research and keep up with market trends to see the best time to sell for you.