Mining Colocation vs Cloud Mining

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Date Published

07/30/2018

Even with constant fluctuations in the cryptocurrency market, there’s no denying that crypto mining can be a highly lucrative venture–if you’re willing to put the right time and resources into it. Although you used to be able to earn a good amount of coin by mining from your own home, increased competition and advances in equipment have made home mining into nothing more than a hobby. In today’s market, if you want crypto mining to be a serious investment, you’re left with two options: mining colocation or cloud mining.

Before we talk about the pros and cons and help you determine the right solution for you, let’s briefly define each of these services.

What is mining colocation?

Cryptocurrency mining colocation is similar to any other colocation service. In simple terms, you are renting space and utilities for your own equipment and your own operations. In other words, you pay a set fee to put your equipment in a facility that provides all the resources you need to run that equipment. This typically includes rack space, power, cooling, internet, and more. A good colocation service will also provide setup and support for your equipment. The best mining colocation service will provide cost-effective power and have in-house mining experts who know what it takes to keep high-powered mining rigs operating at maximum capacity without breaking the bank.

What is cloud mining?

Cloud mining allows you to mine bitcoin or other cryptocurrencies without any hardware of your own. Instead, you buy mining power from hardware located in a remote data center. You ultimately become a participant in a mining pool and receive a share of the profits based on your allotted hash power. You’ll be charged based on usage, but you won’t have any control over the equipment or the operations. Essentially, with cloud mining you are paying for a service that allows you to earn some coin on the side.

So which is better?

Determining whether mining colocation or cloud mining is better requires you to answer a simple question: Do you want to maximize your investment as a miner? If the answer to that question is YES, then mining colocation is the clear winner in this debate. Here’s why:

Colocation is more cost-effective in the long run

Successful mining requires the right power at the right cost. At first glance, cloud mining may seem like the cheaper option because it doesn’t require you to buy any equipment. It has a low cost of entry, which makes it a good option for people who want to dabble in mining. However, cloud mining does not effectively scale for investors who want to maximize their long-term gains. The extra money you are paying each month to rent the equipment and for the expertise of using their mining “experts” drastically cuts into your potential profits. With colocation, you may have a higher initial expense because you need to buy your own equipment, but you’ll also get more power for less cost on a monthly basis. Once your equipment is paid off, you’ll be churning out a lot more profit each month.

Colocation gives you more control

Cryptocurrency mining isn’t a set it and completely forget it operation. It’s something you need to be able to control if you want to be successful. Relying on mining “experts” to handle your operations isn’t a strategic investment play. It’s a safe way for the cloud service to make sure you–and everyone else using the service–get just enough coin to be happy so you’ll renew your long-term contract. With mining colocation, you have unlimited earning potential because you don’t have to share in the profits. What you mine is what you get to keep. It’s easily scalable and allows you to dictate the terms of your mining efforts.

Colocation isn’t for everyone

If you really want low cost of entry and a completely hands-off solution, then cloud mining is the better play for you. However, given the long-term contracts that most cloud mining companies require, it’s best not to view cloud mining as a gateway to colocation. While many cloud miners eventually do move to colocation, they’ve already wasted a lot of time and money to get there. If you’re serious about crypto mining, colocation is the best place to start–and the best place to keep your operations for the long term.

Colocation with Compute North

If you’re looking to turn crypto mining into a large-scale investment opportunity, then mining colocation is the best option for you. Compute North’s colocation facilities are built by experienced miners who understand the specific requirements of mining hardware. Contact us today to take your mining to the next level.

Date Published

07/30/2018

Author

First Scribe

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