A Complete Guide to Bitcoin Riches in 2024

Bitcoin had another volatile yet overall positive year in 2023, gaining over 50% amid wider adoption. With the long-awaited SEC approval of a bitcoin ETF looking increasingly likely in 2024, there are some attractive opportunities to generate passive income from the world’s largest cryptocurrency. Here are a few methods to consider.

Bitcoin Mining

One way to potentially earn passive bitcoin income is through bitcoin mining. Although the mining industry has professionalized and expanded greatly in recent years, individual miners using specialized rigs can still validate transactions and earn small amounts of bitcoin from mining rewards and fees.

While the days of easy mining profits with a regular home computer are over, investing in an efficient ASIC mining rig to setup in your home, garage or even storage unit can lead to profitable mining returns with bitcoin’s price expected to continue rising over the long-term. Just be sure to account for electricity costs based on your utility rates. Miners in colder regions can benefit from naturally cooler ambient temperatures.

Here are some of the top resources for those looking to get into bitcoin mining:

Getting Started Guides:

BitcoinMining.com - One of the most popular mining guides, it provides detailed information on how bitcoin mining works, how to set up a basic mining rig, and recommendations for specialized hardware.

CryptoCompare.com - Their guide explains bitcoin mining technology clearly and concisely for beginners. Also includes mining profitability calculations and hardware power consumption stats.

Mining Rig Retailers:

Bitmain - The world's largest designer and producer of ASIC bitcoin miners. Choose from their Antminer line of mining hardware with varying price points and hash rates. Reputable but often sells out quickly after new batches arrive.

Compass Mining - Allow you to purchase mining rigs hosted at their facilities which mine bitcoin on your behalf in the cloud. Costs more than owning your own hardware but is much easier.

Hive Blockchain - A publicly traded crypto mining operation with mining farms built specifically for efficiency. You can buy shares in HIVE to gain bitcoin mining exposure without running any hardware yourself.

Mining Pools:

SlushPool - One of the original and most popular mining pools, run out of Prague. Charges both ASIC fees(2%) and FPPS pool fees (2%).

AntPool - Run by BitMain, Antpool controls a large portion of overall bitcoin network hash rate. Charges a 4% fee for the huge active community and tech support.

These represent some of the best starting points for novice bitcoin miners looking to get into mining and start generating bitcoin from mining in the most efficient manner possible. Be sure to consider all profitability factors and bitcoin's volatility.

Lending Bitcoin with DeFi

In the world of crypto, decentralized finance (DeFi) applications are unlocking new ways for investors to earn attractive yields on their coin holdings. One such method is lending out your bitcoin to earn interest through DeFi lending platforms.

Unlike traditional savings accounts, DeFi lending rates can often reach 8-12% APY or higher, allowing bitcoin holders to generate substantial passive income on their dormant crypto assets. The key is that your coins remain under your control instead of being locked away by a centralized entity.

How DeFi Lending Works

Platforms like Aave, Compound, Celsius Network and BlockFi facilitate peer-to-peer crypto lending markets using smart contracts. Borrowers can take out crypto loans by locking up more valuable collateral, while lenders can earn interest by depositing their bitcoin into designated lending pools where it aggregates with other lenders’ deposits.

Supply and demand economics determines the bitcoin lending rates, which adjust based on loan activity but have historically remained well above 6% and even into double digits during crypto run ups. Lenders continue earning interest until they withdraw their coins from the lending pool.

Top Bitcoin Lending Platforms include:

Aave - An open-source DeFi protocol featuring fixed rate and variable rate lending markets. Rates for supplying bitcoin currently sit around 3.5%. Aave allows lending and borrowing over 20 different cryptocurrencies with bitcoin and ether collateral options.

Compound - Issues cTokens to lenders that represent their share of the lending pool and accumulate interest automatically. Compound rates on their bitcoin market are currently around 3%. A classic DeFi bluechip prized for its transparency and efficiency.

Bitcoin ETF Options

2024 may finally see the much-discussed SEC approval of a bitcoin exchange traded fund (ETF). This would allow more mainstream brokerage accounts to easily invest in bitcoin through buying shares in a fund tracked to bitcoin’s price. While simply holding a bitcoin ETF does provide price exposure without directly owning any coins, employing options strategies on bitcoin ETFs has greater profit potential.

For example, if a bitcoin ETF is approved and listed on a major exchange like CME, investors can sell cash-secured puts just below the share price. This means you can collect premium income from the option buyer upfront. If the ETF’s price stays above the put strike at expiration, you profit from the full premium with no shares being assigned. The key is to sell puts at prices you would be willing to purchase shares. This passive income strategy works well when moderately bullish on bitcoin over the short-to-medium term.

Here are some additional options strategies bitcoin investors can use to potentially generate larger profits:

Bull Call Spreads

One way to limit upfront costs but retain upside exposure is to use a bull call spread. This involves buying a call option and simultaneously selling a higher strike call option on the same underlying bitcoin asset. The net debit taken to open the spread is lower than just buying the call outright. The profit potential is capped at the width between the strike prices minus the net debit paid.

As an example, with bitcoin trading at $20,000, one could buy a $22,000 call and sell a $24,000 call to open the spread. This allows for up to $2,000 of potential profit while reducing cost compared to just buying the $22,000 call. A spike above $24,000 by expiration yields maximum gains.

Protective Puts

Investors with existing bitcoin can hedge downside risk by buying put options below the current trading price. This protective put functions like insurance in case of a price crash, while avoiding having to liquidate holdings.

For illustration, an investor with 10 bitcoins at $20,000 could buy 10 put option contracts struck at $18,000 for a couple months out. If bitcoin plummets below $18,000, the put options become profitable to offset losses, making for an elegant hedge.

Collars

A collar combines calls and puts to create a rangebound strategy. To establish a collar, the investor sells calls above the market price and uses the premium collected to purchase protective puts. This caps upside profits in exchange for downside protection.

For example, with bitcoin at $20,000, one could sell calls struck at $22,000 while using the premium to buy $18,000 puts. This would establish a collar between $18,000 and $22,000 by expiration. If bitcoin closes within that $4,000 range, the original holdings are retained.

These give a preview into some smart options strategies for commodities like bitcoin with ample volatility. Be sure to utilize proper position sizing and risk management when leveraging options.

Conclusion

There remains much speculation over bitcoin’s future, but employing one or more of these methods allows individuals to generate some level of passive crypto income based on their risk tolerance. As always, only allocate an amount you can afford to lose given bitcoin’s famous volatility.