Top 7 reason why Bitcoin mining outperforms buying Bitcoin.
When it comes to cryptocurrency, there are a lot of different ways to obtain it. You can buy it in an exchange, or you can mine it. When people think about acquiring Bitcoin, they think about buying it on an exchange. However, Bitcoin mining is a better option in many cases. Also, when you mine Bitcoin, you can make more money than if you had just bought it. Here are the top seven reasons why mining Bitcoin is better than buying Bitcoin:
- Daily Bitcoin earnings despite market conditions.
- Set up an LLC – very similar to owning a rental property with passive income.
- Very effective way to mitigate tax liabilities.
- Mitigate capital gains exposure.
- Mining contracts historically appreciate – 1:1 with Bitcoin price.
- Produce Bitcoin for less than spot price in electricity.
- Preserve your anonymity, as the Bitcoin flows directly to your wallet.
1. Daily Bitcoin earnings irrespective of market conditions
One of the best things about mining Bitcoin is that you can earn a daily income from it, regardless of market conditions. If the price of Bitcoin goes up, you will make more money. However, even if the price of Bitcoin goes down, you will still receive your daily earnings. This is because mining is not affected by the price of Bitcoin. For example, if you bought Bitcoin at $20,000, which fell to $10,000, you would have lost half of your investment. However, if you were mining Bitcoin during that time, you would have continued to earn your daily income, regardless of the price.
2. Create an LLC – this is the same as owning a rental property with passive revenue
Another great thing about mining Bitcoin is that you can create an LLC, a legal entity that can help protect your assets. This is very similar to owning a rental property, where the LLC protects your assets from any liability associated with the property. When you mine Bitcoin, you can create an LLC, which can help protect your assets from any potential risks associated with mining. Don’t forget that mining is a very technical process with associated risks. Setting up an LLC can help protect your personal assets from those risks.
3. A good way to stop tax liabilities
You can also use mining to mitigate your tax liabilities effectively. When you mine Bitcoin, you can deduct the costs associated with mining from your taxes. This includes the cost of electricity, the cost of the internet, and the cost of any equipment you use to mine. This can help you save a lot of money on your taxes, which can be a big benefit. In cases where you are in a high tax bracket, this can be an especially useful way to reduce your tax liability. Also, if you live in a country with a high tax rate, mining can be an effective way to reduce your overall tax burden.
4. Stop exposure to capital gains
Mining can also help you mitigate your exposure to capital gains taxes. When you sell Bitcoin, you are subject to capital gains taxes. However, if you hold onto your Bitcoin and don’t sell it, you will not have to pay any capital gains taxes. This can be a big benefit, especially if you are in a high tax bracket. For instance, if you are in the 33% tax bracket, you would save 33% on your capital gains if you don’t sell your Bitcoin.
5. Mining contracts historically appreciate – 1:1 with Bitcoin price
Mining contracts have also historically appreciated, at least in terms of USD. This is because they are denominated in Bitcoin, and as the price of Bitcoin increases, so does the value of mining contracts. This can provide you with a nice hedge against the price of Bitcoin, as the value of your contract will go up as the price of Bitcoin goes up. When the price of Bitcoin goes down, the value of your contract will go down as well, but not by as much. This can provide a nice way to hedge your bets against the volatility of the Bitcoin market.
6. Get Bitcoin below the spot price in electricity costs
When you mine Bitcoin, you can get Bitcoin below the spot price in electricity costs. This is because mining is a very energy-intensive process. It is estimated that mining uses about as much energy as the entire country of Iceland. However, because you are paid in Bitcoin, and Bitcoin’s price is currently higher than the cost of electricity, you are effectively getting paid more than the spot price in electricity costs. This can be a very big benefit, especially if you live in an area with high electricity costs.
7. Keep your discretion, as the Bitcoin moves to your wallet directly
Another great thing about mining Bitcoin is that it can help you preserve anonymity. When you mine Bitcoin, the Bitcoin goes directly to your wallet. You don’t have to use a third party to receive your Bitcoin. This can be a big benefit, especially if you are concerned about privacy. It can also help you avoid fees that come with using a third party to receive your Bitcoin.
These are just a few of the many benefits of mining Bitcoin. As you can see, quite a few benefits come with mining Bitcoin. If you are considering mining Bitcoin, these are just a few things you should keep in mind. Mining can be a great way to earn some extra money, and it can also be a great way to hedge your bets against the volatility of the Bitcoin market.