One in 10 UK adults owns cryptocurrency, according to data from YouGov.
With a market capitalisation of around $523 billion (£423 billion), Bitcoin remains the single largest cryptocurrency on offer – and is a popular starting point for investors with an interest in crypto.
But purchasing Bitcoin through a crypto exchange isn’t the only way to acquire this digital asset.
Here are some ways to earn Bitcoin in the UK.
In the UK, the cryptocurrency market is as-yet unregulated, so if something goes wrong, you will not have access to compensation. With a cryptocurrency investment, all your capital is at risk. You may lose all your money.
What is Bitcoin and how does it work?
Bitcoin is a form of virtual currency, which utilises blockchain technology to handle transactions that take place between users of a decentralised network.
The Bitcoin blockchain is essentially a digital ledger. Groups of transactions are listed in ‘blocks’ that are added to a chain. Because all users have access to a copy of this ledger, it would be extremely difficult for someone to lie about how many Bitcoins they held, since the ledger would contradict them.
No central authority, such as a bank, is involved with handling the transactions, offering anonymity.
Different ways to earn Bitcoin
1. Mining Bitcoin
When Bitcoin transactions are completed – and a new block is added to the blockchain – a Bitcoin is ‘minted’ in a process known as mining.
The process of validating a transaction is complex, and requires computers in the Bitcoin network to solve a cryptographic problem. The first to do so is rewarded with the newly minted Bitcoin. By this process, around 900 Bitcoins are ‘mined’ every day.
Mining Bitcoin requires a huge amount of energy. By some estimates, carrying out a single Bitcoin transaction requires 707 kilowatt-hours (kWh) of electricity – roughly 70 times the amount used by the average UK household in a day.
It also requires an elaborate ‘rig’, and specific mining software, making it difficult for new miners to break in. For this reason, Bitcoin miners regularly band together to create what’s called a ‘pool’ – sharing resources and splitting profits.
It’s also worth noting that the amount of Bitcoin awarded for processing each transaction halves every four years. There’s also an upper limit on the total supply of Bitcoins (21 million). Once this limit is reached, no more can be mined.
2. Lending Bitcoin
Bitcoin lending is a popular method of earning Bitcoin.
Trading platforms such as Zebpay and Crypto.com pool cryptocurrency deposits, and use it to offer interest bearing loans. In exchange for depositing their crypto with the lender, some of these interest payments are funnelled to savers. The exact rate you could earn varies depending on the coin and term length you choose.
Interest rates vary – with Zebpay, for instance, savers can earn up to 1.5% (annualised) for lending crypto. Similarly, lending Bitcoin through Crypto.com could earn savers an annual interest rate of up to 1.5%, while lending Ethereum pays up to 2%.
Lending is a risky way to earn Bitcoin, since there’s always a risk that borrowers will default.
3. Holding Bitcoin
Investors with a long-term view on cryptocurrency hold Bitcoins, and later sell their position at a profit when prices are high.
If you already own Bitcoin, you can combine this technique with holding them in one of the savings accounts mentioned above to maximise earnings.
4. Bitcoin trading
Bitcoin trading involves buying and selling Bitcoin via an exchange platform with the goal of earning profit – which may or may not be invested in additional crypto holdings.
Strategies run the gamut from intra-day trading, to buy and hold to hedging.
To maximise their chances of success, it’s important for Bitcoin traders to keep up with fluctuations in the market and stay abreast of news that could impact crypto.
Individuals keen to try their hand at crypto trading will need to carefully consider whether they have the time and capital to invest in this high-risk, speculative strategy.
5. Claiming airdrops
‘Airdrops’ are a marketing strategy used by certain crypto and blockchain companies to incentivise awareness raising and attract new users or investors.
During an airdrop, the company distributes free coins or tokens to cryptocurrency holders in exchange for meeting certain criteria.
Some companies simply ask for a crypto wallet address and some basic personal details, while others ask claimants to prove they already hold some of the company’s coins or tokens.
You may also need to complete tasks before coins are awarded, such as following the issuer on social media, writing reviews or sharing posts.
To take part in these airdrop events, you may need to have a social media account on platforms such as Twitter, Facebook or Telegram.
The most popular crypto airdrops in 2022 were Lucky block, Metamask, StormGain, DeFiChain and Battle Infinity.
Crypto enthusiasts who want to take part in airdrop events should act quickly, since they typically operate on a first come, first served basis.
6. Help to find bugs
Certain crypto developers may offer incentives to users who help them find bugs or glitches in their systems.
For instance, the crypto exchange Kraken has a ‘Bug Bounty’ programme, which rewards users with Bitcoin for finding vulnerabilities or bugs.
7. Incentivised learning
A few trading platforms allow users to earn small amounts of cryptocurrencies by completing lessons on crypto and blockchain related topics.
Coinbase and Binance, for instance, allows users to earn a few dollars’ worth of certain cryptocurrencies in exchange for completing lessons about how they function.
Bottom line
In the world of cryptocurrency, there is no easy or low-risk way to earn extra Bitcoin.
However, if you are familiar with the fundamentals of cryptocurrency and comfortable taking some risks, there are plenty of options to try.
