Is It Worth It to Invest in Bitcoin in 2020?5 min read04/12/2019
The popularity of Bitcoin is continuously decreasing for the last two years. Regardless of a relatively high interest in June 2019, fewer and fewer people are turning towards buying the cryptocurrency. According to the Google Trends service, Bitcoin was at its peak at the end of 2017 when its price was the highest – about $20,000. Since that time the Bitcoin price has dropped by 57% and now it’s $8.636. Although, this is still the most expensive cryptocurrency. The closest competitor is Ethereum with its $183 per coin. Such high pricing encourages potential traders to muse whether it’s worth it to invest in Bitcoin in 2020.
When it comes to cryptocurrencies, investing can involve two methods: mining and buying it expecting the price to grow in the future. Both approaches have their advantages and disadvantages. Despite the chosen method, this niche could make anyone rich during the period of the extreme Bitcoin price growth. 18,000 crypto investors became millionaires in a short term doing nothing. For example, Grant Sabatier made over $1,000,000 out of the air in four years by investing only $5,000. The question is whether such a simple path to success is replicable in 2020.
The time of traditional GPU mining has gone. In 2020, this method makes no sense because of its low efficiency taking into account the current competition in the Bitcoin mining market. You should use special mining devices called ASIC devices. For example, ASIC Antminer T17e has the hashrate of 50 TH/s and consumes 2,750 watts per hour. With the price of electricity equal to $0.12 per kilowatt-hour and Bitcoin valued at $7,235, no matter how many ASIC devices you will buy, your expenses will always exceed the total cost of mined coins.
The situation will be different if the Bitcoin price equals $20,000 again. Then you will need 10 Bitmain Antminer T17e devices to earn $3,000 per month by ASIC mining. However, the single device costs over $1,000 which results in the 4-month-long payback period. Unfortunately, U.S.-based entrepreneurs currently have no chances to successfully invest in Bitcoin mining unless they establish their mining farms in the countries with cheap electricity. For example, miners from Ukraine pay only $0.05 per kWh. With such a low price, you can make $1,000 per month with 10 Antminer T17e devices, thus paying them off in a year.
The other option is cloud mining that refers to mining a cryptocurrency by remotely renting hardware instead of buying it. In other words, a hardware provider mines bitcoins and share a reward between customers for a certain fee. Is cloud Bitcoin mining worth it? The answer lays in the business model. Assuming that cloud mining providers like Hashflare, Bitcoin Pool, and Hashnest have enough equipment to mine bitcoins, why don’t they focus on mining rather than creating separate platforms for other miners?
Cloud mining providers mitigate risks of the Bitcoin price fluctuation and decreasing reward for hash calculation which is the basic task behind mining. These services get stable profit no matter how much the cryptocurrency costs by charging users with monthly fees. By signing a contract with a cloud mining provider, you still put your money at risk even though you don’t have to purchase and set up expensive hardware as well as install and configure Bitcoin mining software.
Is it worth it to mine Bitcoin in 2020? The more miners will appear, the more powerful hardware you miners will need to create a transaction. The amount of the reward, which is now is 12.5 BTC, for successfully creating a data block in blockchain becomes smaller by 50% every 210,000 blocks, or roughly every four years. On May 14, 2020, it will be equal to 6.25 BTC. Therefore, the reward is expected to hit almost zero around 2140. If you’re looking for the right way to invest $20,000 and you’re new to the blockchain technology, then you should search for more reliable assets than Bitcoin.
The global Bitcoin fever was born from the idea of having the shocking 20,000% profit. In March 2011, you could invest only $100 and earn $2,000,000 in less than 7 years. However, the Bitcoin price was that low, you could hardly hear something about it. Few people remember the day when it costed nearly nothing and it was hard to find a person who would believe in blockchain. Those who did, managed to make the others kick themselves later.
Investing in Bitcoin in 2020 means buying at least a piece of the coin hoping the price to rise again. The answer to the question of whether it will grow or not can lay in the reasons why it was that high back in 2017 and whether they can appear again. According to TechCrunch, the very first driver of the Bitcoin price boom was the rumors about upcoming institutional money injections that could legitimize the cryptocurrency on Wall Street, thus opening the market for traders.
“Don’t buy Bitcoin”.Grant Sabatier, Bitcoin millionaire
Then a group of enthusiasts started buying Bitcoin for a cheap price expecting it to be worth $1,000,000 one day. With the growing number of participants, the price also was becoming higher and higher while the interest in Bitcoin was becoming bigger and bigger because of the worldwide hype and news. One of the major rules of the economy says that the growing demand leads to higher prices if the level of supply remains the same or decreases. This law is also applicable to cryptocurrencies. Is it worth it to buy Bitcoin in 2020?
The total number of bitcoins mined has surpassed the value of 18,000,000 and it continues growing. The low adoption level, high Bitcoin mining market entry threshold, and numerous barriers from regulators reduced the interest to cryptocurrencies despite all expectations. As a result, a high supply level and lowered demand made the Bitcoin price go down. What can raise it again? Another hype wave? Well, yes, if some breaking crypto news appears, for example, some country adopts Bitcoin as the national currency, or smart contracts become a standard method of registering business relations. As of now, it’s rather a fantasy than a realistic possibility.