How to Make Money with Cryptocurrencies:
I wrote this guide mostly to help people who are new to cryptocurrencies or have an interest in earning additional side income. All ways listed are something I’ve personally profited from or know someone who already uses the method so I know it works, but it will take either initial investment or some learning on your part. If you do happen to read through without your head exploding and have a dying question, feel free to drop a comment. Without further ado…
Trading / Investing
One of the best ways to turn a profit is trading and investing. You’ve heard about it on the news how a young kid becomes a millionaire by buying Bitcoin. These stories are true despite the hype because some cryptocurrencies have reached over 300x their initial value throughout the last 2–3 years. Overall, trading and investing yields the highest returns and you can start with any amount of money in cryptocurrencies.
However, just because trading and investing yields the highest returns doesn’t mean it’s the right way for you to make money with cryptocurrencies. Trading and investing is incredibly risky and gut wrenching if you do not know what you’re doing and not everyone is good at trading. You’ll figure that out really soon, but do not worry, there are many other ways to turn a profit.
During my years of trading in the cryptocurrency market, I’ve seen a lot of crazy things and heard many crazy stories. One thing that comes to mind is a lady who just started getting interested in cryptocurrencies. This lady, as could be seen from reading her questions, had no idea what she was getting into. In fact, she was asking people whether it would be a good idea to put her life savings and retirement into cryptocurrencies. After reading that, I think my jaws dropped at that time at how crazy people were getting over cryptocurrencies. In my view never ever put more than you can afford to lose. The volatility of cryptocurrencies is like a dual edged sword and while you can gain a lot quickly, you also stand to lose a lot very quickly.
Now that I’ve warned you, let’s get straight away to how you can get better at trading quickly and start making more money. To be good at trading or investing, you have to train and work hard every day. Not only that but you must understand market psychology, trends, master your emotions and consider always using a Stop Loss.
Note: For those unfamiliar, Stop Loss is a common tool you can use in most trading platforms. It allows you to sell when a certain price is met to avoid more losses.
If you’re new to cryptocurrencies, my advice would be to sit on the sidelines and find a time when everyone has a poor outlook on cryptocurrencies, then decide a good time to buy and hold for the long term versus play the small swings. The funny thing is, this has worked multiple times already. When you get that sinking feeling in your own stomach that cryptocurrencies are dying, those are the exact times in which you should buy temporarily and sell when there is upside. I’m not sure why more people don’t notice this, but it happens often in Bitcoin.
If you’re still unsure about trading, you can check out this website https://bitrpc.com. There you can find some people that have a general idea of the mood of the market. The best way to get started as a newcomer would to be to watch professionals or find good mentors. One person who has really hit the mark and has a good overall strategy is Dan at the ChartGuys Youtube channel. I originally was watching Dan to see how he viewed things and compare my notes with his videos. After some time, I’m confident he has a solid strategy.
I think the reason is he offers really good advice for free is because he’s building his subscriber base for his paid trading courses. If you follow what he says, he does give away some useful secrets and hints, but you have to do your due diligence to learn as you go along.
Additionally, there is an awesome free tool (I have no affiliation with), that will help you get better quicker. If you look around, many crypto traders use www.tradingview.com to keep track of coin prices. There you can find charting tools and watch the cryptocurrency market. You can select all different types of currencies in their search and they have a lot of charting tools. I highly recommend signing up.
Now that you’ve got a roadmap of starting, let’s get setup with the right trading platform. The best thing you can do is go to Coinbase.com and create a free account. Coinbase is one of the most reputable exchanges to exist and has been doing business for many years. Coinbase is located in the Bay Area in the US and they are highly regulated. They take many steps to be secure and pretty much everyone in Crypto Land trusts them.
Once you create your free Coinbase account, upload a small amount you would not lose sleep over (maybe less than $100) from your checking account. We’re actually not going to use Coinbase but GDAX which is Coinbase’s exchange to make trades because Coinbase is lengthy to buy coins and it’s a bad way to get coins at the price you want. Once Coinbase has received your money, transfer that amount in USD to GDAX. They take some time to process which is frustrating really. If you transfer the money to GDAX, which is Coinbase’s exchange, you can immediately purchase the coin of your choice.
I recommend learning to trade Litecoin because you’ll have a bit more than 1 whole coin. Don’t trade Bitcoin because it will be in a small fraction. Each day track your ups and downs and learn from mentors as before or learn basic stock trading. Also, learn to utilize the various selling tools GDAX offers.
It will take practice, but it is definitely trainable. This is the most preferred way to make money in cryptocurrencies because it nets fastest results and allows you to get in and out quickly. There is no infrastructure cost and you can trade anywhere. Once you start to grow in confidence, you can start investing with more money of course and you can become your own crypto millionaire.
Mining is a good way to get into cryptocurrencies and tends to be much less risky than trading/investing. The positives are that you can earn a consistent amount of money each day and own some tangible assets (graphics cards or hardware) in the case cryptocurrencies drop in value. The downside is that your returns will be much smaller and you may have difficulty getting your return on investment depending on how things play out.
The truth is, to be highly profitable at mining, you will need to stay on your feet and know when to sell your equipment or upgrade. Even my current recommendations will shift as things change. Because of this, I’ve got some people to help me constantly update our Master Mining List which will provide hash rate information and the current best dollar / hash / watt on most mining equipment. When I get the first draft ready, I will be sure to update it here.
For those unfamiliar with the basics of mining, mining is a way of using computing power to acquire cryptocurrencies depending on the algorithm and blockchain reward offered. If you search for “how does cryptocurrency mining work” in Google.com or Youtube.com you can get a general idea of how mining works. Many guides and tutorials have been written on the subject, so I will focus on mining as a for profit business.
If you want to get started with mining, you should really only get into mining if your electricity costs are low or you get free energy. By low, your long-term energy costs should be under $0.10 per kWh. You can try if you’re close to that, but long term, you’ll want to have cheap power to turn a profit regardless of conditions.
I’ve been asked before by many people with expensive electricity, “What if I invest in solar panels and combine that with my utility?” My response is that most times, its usually never worth it. Unless the cost of installing, getting permits, and purchasing the solar system is under $0.40/ watt in total, you should instead put the money into buying more cryptocurrencies, more mining equipment, or finding a colocation service to send your miners off to.
If you still want to try it, I think you can still give it a run, but you have to really calculate everything out and make sure to account for difficulty.
You’ve read through and decided mining is right for you. Here is my recommendation for how to turn a profit depending on what level of investment you’re running with.
When the investment size is small, veterans will typically advise you to buy undervalued alt coins or just buy coins instead of mine. After watching the market and mining myself for some time, I have come to agree with this sentiment because the amount you are investing won’t yield much as a miner. Each day you might be making possibly $1 or less, but the amount you could be earning just holding might double or triple in the span of one year.
If you still want to pursue mining, I would only recommend mining if you already have an existing PC and you could add a graphics card to your current build. If that’s the case, the GTX 1060 6GB (don’t buy the 3GB one) is the card you want, but try to find it for under $199. You might be able to take a chance on an Antminer L3+ for Litecoin mining if you calculate that you can get a return of investment in less than 200 days including electricity, but you would need to check if your electricity is cheap enough to sustain that for some time.
$500 — $1000
If this is your current investment, I would highly recommend buying an oversold or undervalued alt coin and invest for the long term. However as before, if you do have an existing computer and can fit one graphics card, you can still give it a try. I would recommend purchasing the GTX 1080 Ti. But wait!
As of now, this might not be the best option because of the rumors regarding the new 11 or 20 series being released this year or early next year by NVIDIA. Due to this, my new recommendation is to invest in some coins for the time being until they release the newer graphics cards or find a used / refurbished GPU that is under MSR. If you still want to mine, I would recommend finding a cheap RX Vega 56 for roughly $350 — $400 to mine Monero which is a much better risk to reward vs. other cards because there are ASIC resistant algorithms that do well with the card.
At this current moment in time, it still might be good to buy some coins, but with this amount of investment, you can now build your own mining rig. If you do not want to build a computer or do not have much experience with basic computer troubleshooting, I would highly recommend looking into purchasing some ASIC machines.
If you are not familiar with ASICs, you could read about it online. These types of machine tend to be high energy consumers but can save you time in that you don’t have to build anything and they are practically set and forget. I am still working on getting some things together but I will provide a breakdown of the profitability for these.
If you do have some familiarity with computers or are willing to learn how to fix them, then I suggest building a graphics card (GPU) miner. This is something I’d ultimately opt for over ASIC miners because you have more mining choices, less risk, and you will learn more.
With a GPU miner, there are hundreds of coins to choose from and you are not forced to mine one algorithm. Also, GPUs tend to have 3-year warranties compared to the typical 1 year or less warranty provided by ASIC manufacturers. This means if things go south, your investment can be protected from loss which is invaluable asset down the line.
The top choices for gpus for the time being will be the RX Vega 56 and the GTX 1060 6GB.
$5000 — $20000
I would recommend building a mix of multiple GPU rigs and possibly purchasing some ASICS at low prices. If you are doing this within your residence, you may want to consider going the route of GPU mining because they tend to provide more revenue per wattage. This means you won’t have to request additional amperage from your local utility and electrician which is an additional cost for most.
However, doing both GPUs and ASICs can be workable as long as you carefully plan how much you are going to use. In terms of which GPUs to buy, there are several good setups. Our ideal setup constantly changes, so if you want the current one, please head over to our cool website: https://bitrpc.com. I would create multiple rigs similar to the ideal we have.
In terms of ASIC machines, it is mostly just a bet on your side as too which ASICs will do well in the long run, but my recommendation is to wait for the next generation on miners to be released. Do not rush out to buy the Antminer S9 or offerings from Halong until there is news regarding the newest ASIC. If you really want to start, consider attempting to find the best possible deal on the Antminer S9, but don’t invest too heavily.
$20000 — $50000
Most of the advice is going to be similar to the $5000 — $20000 bracket, but personally I would build out a large GPU mining farm. The reason is because GPUs tend to provide more revenue per wattage used, so your residence could be used to mine with the maximum amount and you can save on rent or the costs of having a more professional setup.
This may change as ASICs improve, but at the current stage, building a GPU farm is the way to go. I would however wait for the current prices of GPUS to drop below MSRP and have more definitive news from NVDIA regarding the release of their new 11 or 20 series.
So far, no one except NVDIA knows for sure when the release date will be, so stay peeled for more. You could subscribe to us for that news, or read online, but the best choice would be to wait for them to announce a release.
If you’re dealing in excess of $50,000, it’s a good idea to look into renting out industrial space or space locally for mining. The exception is if your house can use greater than 400 amps, but again, it is recommended to get a more professional space to build.
Assuming you were able to rent out or get access to such a place, my recommendation for mining large scale is to diversify rather than focus on one type of ASIC or GPU rig. If you are a smaller operation with few people to help, it is recommended to work with ASIC machines because the units are self-contained and it is easier to find out the problems for them.
If you have others that are helping you and you have enough expertise, then looking into GPU might be a good way to diversify, but again, there may be more headaches down the road due to having to find out which of the GPUs is the problem or whether it is the riser cable, etc.
While there are methods to decrease this such as riserless motherboards and software to help, again, it may just be easier to invest in the newest ASIC machines and have a software that manages all machines in an easy manner.
I’m mentioning this as a method because many people do make money from mining contracts, but in my years of experience, mining contracts are only really profitable if you get in before the next rise in cryptocurrencies or bull runs. This is not to bash on contracts. I do have contracts myself, but I don’t believe the risk to reward is usually worth it compared to other forms of investing unless as I said before, you’re early.
As such, I still think it deserves a spot on the profitability list if you go with a reputable company. The companies I would stick with are either Bitmain or Genesis Mining. I don’t believe BItmain offers them now compared to Genesis Mining, but if they do, they’re very reputable as long as you can get in early.
Hashflare I would stay away from despite their long track record because recently, they’ve changed their terms of service on their customers twice to avoid paying their customers. In addition, as of writing this, they currently don’t even pay out their Bitcoin contracts due to their tremendous fee which is absolutely bonkers.
Reselling / Flipping Hardware
A lot of miners are going to give me some flack on this one. I know, they hate it because it creates a sense of urgency and causes prices for their mining equipment to go up, but this way definitely works.
In order to be effective, you’ll either need some credit line or already purchased cryptocurrencies such as Litecoin. You should expect to spend a minimum $1000-$3000 depending on the hardware.
Next, you’ll want to check out some new sales happening such as those from Bitmain or other equipment companies. One way to always be on top is the visit the BitcoinTalk forums and look under the Alternate Cryptocurrency and Mining section. People will always post when a new sale occurs.
If you do purchase from non-US vendors or vendors that are not big brands, expect to only pay in cryptocurrencies. I suggested Litecoin because these companies usually only take either Bitcoin, Bitcoin Cash, or Litecoin. Litecoin is fast and usually accepted.
If you’re looking to capitalize on graphics cards, the only real way to be ahead is to use alert services or have bots designed to monitor sites for you. The one used by the average reseller/flipper is https://www.nowinstock.net/. You have to be very fast as some people have automated buying bots or are competing with you to buy them. As of July 2018, people aren’t so interested in buying graphics cards as they were before, but when the next rush for graphics cards come, you’ll be equipped for flipping your parts.
Now that you have a general idea of how to find the graphics cards, the next step is how to sell them. You can use all the traditional ways known such as eBay, Amazon, or even the BitcoinTalk forums. If you want something even better, I’d go with Craigslist as its all cash. The only downside is people will be paying less but it’s also okay since the other places charge some type of fee usually aside from the BitcoinTalk forums.
Also, when transacting over the internet, be extra vigilant for scammers. Do not accept Paypal or Venmo since they can easily claim their money back. Stick to either cryptocurrencies or pure cash in person.
Selling Digital Products for Cryptocurrencies
This method is a bit similar to starting an online business. However, people have been able to profit very well and consistently. In order to start doing this though, you’ll have to be able to get a credit line and find a credit card that offers cashback rewards.
You can search online for the best card with highest cashback, but typically you should expect to get 1.5%-2% cashback from the credit card alone with stacking on other cashback programs such as Ebates for instance.
Next, you’ll have to find deals on gift cards or digital products on sale. When a digital gift does go on sale, you purchase them in bulk and then sell them directly for cryptocurrencies. I don’t suggest this as a means to avoid paying taxes of course, but it is useful as people with cryptocurrencies often times don’t want to use an exchange to cash out and will buy from you.
What I’ve seen resellers typically net is around 5–15% depending on how easily they can get sales. They also find deals on software and other digital products try to build a network of people that can trust them for future sales/purchases. If you do plan to do this, don’t expect to make a huge killing initially and it may take a bit of work to get leads or people purchasing your products, but over time it can help you earn additional cryptocurrencies to invest and play with. Eventually you can hire someone for a cheap cost using Upwork or other freelance services to help you find leads once you get it going.
One note I forgot to mention but if you plan to sell digital products, make sure to use escrow. If you use the BitcoinTalk forums to sell some products, there are reputable forum members who can help but you will need to do your own research.
There are many more ways to make money with Bitcoins or cryptocurrencies, such as creating your own tokens and creating software that helps miners monitor their hardware or increase their performance. Because these require programming skills, it’s not something you can easily jump into without them so we may create a series depending on interest.