Why do miners choose exchanges to exchange cryptocurrency for fiat funds

Where do the miners prefer to sell the mined coins? ... the question of which wallets is better to receive the minimum payments is ambiguous ... What are the differences between the exchanges and the exchangers - the key ones for the miners ...

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Why do miners choose exchanges to exchange cryptocurrency for fiat funds


What is the best way to transfer the funds into fiat for those who are engaged in bitcoin mining and other cryptoсurrencies?

For those who did not want to just buy bitcoin it more promising to purchase equipment for bitcoin or other cryptocurrencies mining, the question comes quickly enough of the best ways of storing and selling the extracted coins. The problem of finding such ways is divided into three separate problems: choosing the optimal storage location for those cryptocurrencies that you do not intend to sell yet, choosing a method of delivery of cryptocurrencies to the point of sale, and finding the best rate. Let's see how these problems are solved.

Where is it better to store mined cryptocurrencies and where is it more convenient to sell them?

Both when mining through the pool, and during solo mining to get coins, you need to register a crypto-currency wallet in the pool settings for the appropriate currency. A more detailed description of the pros and cons of different types of cryptocurrency wallets is beyond the scope of this text, but for a quick review of this topic, it will be enough to divide the wallets into two groups.

1) In the first group, there will be wallets provided to you by those services where you can sell bitcoins or cryptocurrencies that are available on your account. First of all, these are wallets associated with the user's cryptocurrencies on certain exchanges. Such accounts are replenished by transferring funds by a user into a specific cryptocurrency wallet opened by the exchange for the needs of this user's account replenishment (on some exchanges the address of such a wallet changes periodically, but in a typical case, for example, on EXMO, it is unchanged). After crediting the crypto currencies to the account of the user, one will be able to sell them at the exchange tenders - this will be at least easier than using the exchanger for the same purpose, and often much more profitable.

It should be noted that during the sale of the bitcoins by the miner to the one who wants to buy bitcoins, the miner will not have to spend additional money on the transfer of bitcoins. The essence of buying bitcoins (and any other currency) on the exchange is simply the transfer of assets ownership, the storage of which, until the owner wishes, the exchange takes over.

After your cryptocurrencies deposit to your exchange wallet, they are either stored directly in the mentioned wallet, or, if the exchange has serious approach to the security of the funds entrusted to it, the automation sends these cryptocurrencies through one or more wallets to the "cold" wallets in which your cryptocurrencies are stored in perfect security, completely offline.

a) In the first case, the minimum possible amount of replenishment is quite low or equal to zero, however, this is due to a significant decrease in the safety when storing your funds. The notorious theft of 119,756 bitcoins from the Bitfinex exchange is unlikely to have succeeded without manifestation of carelessness on the part of the exchange itself, which previously refused to keep funds in the "cold" wallets.

b) In second case, the minimum amount of replenishment increases slightly, mainly in the case of currencies such as bitcoin. This is due to the fact that to transfer bitcoins to "cold" wallet the exchange must bear additional costs for the commission of relevant transactions. These expenses are taken by all the fairly solid stock exchanges, however, so that the costs of the above transactions do not fall on their budget too heavily, they have to raise the minimum amount to replenish the balance of the user, for example, in the case of bitcoin, the minimum amount of replenishment may be 0.001 BTC in a separate transaction. This is a forced measure, which is necessary to reduce the cost of moving very small sums. When working with an exchange with such restrictions, you will not bear any additional costs, you just need to make sure that all your payments from the pool (and other transactions directed to the exchange bitcoin-purse) were not less than the agreed amount. It is especially important to monitor this moment if you collect satoshi from bitcoin-faucets.

An example of an exchange that organizes reliable “cold” storage of cryptocurrencies, including those obtained by mining bitcoins, is the old and reliable EXMO exchange, which has some well deserved authority among users.

2) In the second group of wallets - an extensive set of local (stored on the user's computer) and online wallets, which are not so difficult to set up receiving payments from the miner pool, but it is not so easy for beginners to turn these payments into fiat money. To do this, in addition to the ability to ensure the normal functioning of the wallet, you need the skill of sending transactions to exchanges and exchangers, and sending with the setting of a sufficiently high commission.

Note that if you are used to selling mined coins, for example, selling bitcoins on a certain exchange, then it is more than reasonable to keep wallets for receiving payments from pools on this exchange (provided that the addresses of exchange wallets for replenishment do not change periodically, as it is on some exchanges). In this case, you do not have to bear the additional costs of sending cryptocurrencies to your exchange account from an external wallet (for example, local). The pool for a fixed commission, which it takes in any case, will ensure the guaranteed sending of your share of the cryptocurrencies to the wallet chosen by you.

Insufficient reliability of storing cryptocurrencies on a number of online wallets in the added absence of "cold" storage, local wallets are presented in more details here.

In the meantime, we note that for an inexperienced user it will be better not to rely on local and, especially, online wallets, but to trust a reliable and honest exchange that provides services for cold storage of crypto currencies and, moreover, gives users the opportunity to protect their balance and account using two-factor authentication (produced via SMS or Google Authenticator). The EXMO exchange is an example of such an exchange.

Where should we look for the best rate of bitcoin and other cryptocurrencies?

In addition to the technical side of the matter, amateurs of bitcoin and altcoin mining, of course, are interested in the most profitable ways of converting the digital currency they have extracted into ordinary currency. Bitcoin (or other mined cryptocurrencies) exchange for cryptocurrencies is also interesting for them, which miners cannot extract or do not want, but consider promising for investment. In order to carry out all these types of exchanges, the miners need a convenient, reliable and providing profitable rates trading platform. The role of such a site is claimed, first of all, by such specialized resources as crypto-exchange exchanges, however, online exchangers are also ready to compete with them.

More detailed financial and technical differences between exchanges and exchangers are discussed in this material.

However, since this article is written from the point of view of the interests of the miners, it will be useful to make a review, specialized more narrowly. Let's pay attention to what differences between exchanges and exchangers are of particular importance for miners.

1) The prices for bitcoin in the exchangers may well compete with those on the exchanges, the prices for other cryptoсurrencies (altcoins) are not so good (we will consider this point below). However, it's not just about prices: convenience and ease of exchange, reliability and security against fraud are also of great importance. An extensive set of withdrawal methods that the best exchanges can provide definitely gives them an advantage over exchangers, which, along with a simpler trading process, makes exchanges more attractive even with peer-to-peer prices (some tips that make the withdrawal more profitable can be found in this article, in the subsection about prices on exchanges and in exchangers.

2) The remark about the simplicity of trade is especially applicable to those exchanges where it is possible to trade through a special simplified interface, like the interface of “Exchange” page on the EXMO exchange; the principles of trading via orders may seem too complicated for beginners, who, first of all, need a simpler mechanism for selling the cryptocurrency. Therefore, for those who have just started trying their hand at bitcoin mining, it is really worth looking at the crypto currency exchanges.

3) For large scale miners (and in the case of coins that are still of small complexity, anyone can join this group of miners), exchangers are less suitable than exchanges because the "walls" on serious stock exchanges greatly exceed the reserves in any exchangers.

4) It has already been mentioned above that the input of relatively modest amounts of cryptocurrency (exceeding the minimum input) to the stock exchanges in the form of deductions from the pool does not require from the miner to pay any additional commissions; you only need to pay a fixed fee once to the pool, which is taken when you withdraw to any wallet. You can sell on the exchanges the amount of cryptocurrency of a wide range, starting with the equivalent of thousands of dollars. If you receive payments from the pool to a wallet that is outside the exchange, you will have to pay the commission when sending cryptocurrencies to the place of sale, whether it's a stock exchange or an exchanger. For bitcoin, with these are very significant commissions, this makes small transfers unprofitable: for example, a commission of 100% of the amount of transfer may be needed to forward the amount of 0.001 BTC for sale, and even more. For other cryptocurrencies, the commission fees are not so high, but significant minimum purchases are still relevant for exchangers. Thus, if the miner decides to take the mined assets to the exchangers ready to buy the cryptocurrency, he will definitely have to sell it in large portions, much to avoid significant losses from expensive transactions.

5) Miners mining relatively popular altcoins, for example, ETH, cannot always find in exchangers at least as profitable rates of their sale as the ones on exchanges, not to mention more profitable rates. If you pay attention to the less popular altcoins, then as the popularity decreases, fewer and fewer exchangers are ready to include a specific coin in their trade directions, and the best of its purchase prices are increasingly moving away from the average exchange level (apparently, the weakening of competition between exchangers working in a certain direction has a certain impact). So, judging by the most authoritative monitoring of exchangers, to sell bitcoin for Yandex.Money, the owner will be able to choose more than in 60 exchange offices, in the best of which the cost of bitcoin is comparable with the exchange one; selling ​​DASH will only succeed in a dozen exchangers, and selling Namecoin - only in one, and about twice cheaper than the market price. (By the way, the attempt to buy bitcoins in the same exchangers will just turn out to be a tolerable overpayment in comparison with the purchase of less known crypto currencies).

Thus, the more attention the miner gives to the mining of altcoins and the more exotic they are, the less interesting for him are the prices in the exchangers.

Note that some of the miners specializing in mining using video cards constantly "migrate" to the ones most profitable at a given moment, but often very little known cryptocurrencies, many of which are not sold at all and are not bought in the exchangers. Naturally, for those who prefer this style in the mining, the exchangers are the least interesting.

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