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Same for me very often. I think this is due to starting a road without waiting long enough that sattelites are acquired.
In fact 3 sattellites allow to compute position, 4 are necessary to compute position plus altitude.
Accuracy of position and altitude is much better from 5 sattellites acquired.
So I advise to start your device OUTDOORS, in an open place (not near walls as it masks sattellites) and wait until screen automatically moves to run mode, meaning enough sattellites are acquired. You will get better chances to have a good accuracy.
Also on Garmin connect site, when you load your ride, you can correct altitudes automatically using real maps.
OK, There is a battery problem where the contacts become loose within the unit, i opened mine and followed the instructions i got on this site...MTB gurublog If you decide to do so..however if the 305 is in warranty contact garmin.com and ask for new unit... they accept the problem is widespread.
Sorry to have to break (no pun intended) this to you, but I have had two units do this. Once this problem starts eventually the Elevation field will display and stay at 65616. The problem is with the barometric altimeter and cannot be fixed without sending the unit to Garmin. When you call Garmin technical support, they will have you do all sorts of resets - be patient - eventually they will concede that the unit is busted and give you an RMA. Both times this happened was after the unit got a little roughed up (one time dropped it, the other time was mountain bike tumble) - evidently the altimeter is the least robust part. Good luck.
Found a fix, by resetting all user data my problem was fixed.
Garmin Edge 305
Power off device and hold 'mode + power'
Power off device and then hold 'page + enter + power'
Hope this helps!