Answering Your Cryptocurrency Mining and Colocation Questions
What is cryptocurrency and how does cryptocurrency work?
Cryptocurrency is a computer-generated monetary system. It is created by powerful computers called “miners,” which compete mathematically to secure “transactions.” The transactions are bundled into a “block,” which the cryptocurrency miner digitally verifies to assure the validity of all transactions. The miner computes a “cryptographic hash,” a computerized method to ensure the block’s validity and prevent invalid block construction. Blocks are accumulated and accounted for in the blockchain, functioning as digital ledgers. Miners are rewarded for their transactions with a set amount of cryptocurrency.
Learn more about how blockchain and cryptocurrency mining works.
What are the long-term projections for cryptocurrency?
Cryptocurrency is still in its relative infancy but has come a long way since the Bitcoin network first launched in 2009. Mainstream adoption of cryptocurrency and blockchain applications have been growing at a remarkable rate in recent years and months, which ultimately bodes well for the long-term outlook of digital assets. Many forms of cryptocurrency – including bitcoin and Ethereum – experienced all-time price highs in early 2021, which many experts state is a good thing for the future. Bitcoin has begun to be seen as a welcome alternative asset class in investment portfolios, particularly as a hedge against risk similar to the role gold has played for decades. Still, it’s important to acknowledge that we’re in the early stages of crypto, which lends itself to both opportunity and volatility. While the long-term outlook is largely positive, miners, investors, and newcomers should keep this volatility in mind when ramping up operations.
What are the advantages of cryptocurrency over fiat money or a credit card?
Cryptocurrency transactions are all peer-to-peer, meaning there is no third-party intermediary involved in the process, such as a bank or a credit card. This also means there are no third-party fees involved in cryptocurrency mining. It is much more private than fiat, as there is no way for a seller and purchaser to identify one another. Everyone can see every transaction that takes place, but no one has to share their specific identity to perform a transaction. There is no charge to keep crypto in your digital ledger, and it is less expensive to transfer money across borders. With crypto, you are able to instantly process transactions versus having to go through a days-long process like you would with fiat money.
Learn more about the key differences between cryptocurrency and fiat money.
What cryptocurrencies can I mine with Compute North’s colocation services?
Our facilities are built specifically for cryptocurrency mining and can handle virtually any coin that can be mined using a proof-of-work protocol. The most common cryptocurrencies that are mined by our clients are Bitcoin, Ethereum, Zcash, Litecoin, and Dash.
What are the advantages of colocation over cloud mining or running my own equipment?
Colocation is by far the most cost-competitive way to mine cryptocurrency. The increasing complexity and difficulty of mining operations require far too much power for at-home mining to be effective. Cloud mining requires high upfront costs that may never be returned. Colocation gives you the best opportunity to enter the market and scale your operations quickly and profitably by providing you with energy-efficient space to host and manage your hardware.
Learn more about the strategy behind miner colocation.
What type of mining equipment can Compute North operate?
Compute North partners with many of the most well-known hardware brands in the industry, including Bitmain, MicroBT, Innosilcion, Canaan, and more. Our facilities are built with the power and resources to handle almost any mining equipment, and our managed services offering provides hands-on oversight and optimization from our nationwide network of crypto and IT experts.
How does Compute North economize on energy consumption?
Crypto mining hardware requires a significant amount of energy to run effectively. Compute North has established TIER 0™ data centers in strategic locations where energy costs are low and renewable energy is readily accessible. We also partner with renewable energy companies to conserve energy and lower costs. Our data centers are in geographic locations where the innovative use of ambient cooling technologies further reduces costs for our mining operations.
Learn more about the modular design and rapid scalability of TIER 0 data centers.
Where are Compute North’s facilities located?
Compute North owns and operates colocation facilities in strategic locations in Texas, South Dakota, and Nebraska.
Learn more about our facilities.
How much do colocation services cost?
There are two main costs to consider when mining via colocation – the cost of your hardware and the hosting fee. Hardware cost is a one-time expense incurred at the time of purchase that varies based on the quantity and quality of your equipment. The hosting fee is paid to the colocation facility and varies from one provider to the next, often based on the space, expected wattage of your mining equipment, and services selected. Compute North’s hosting facilities are strategically located near reliable and cost-efficient energy sources in the U.S., helping keep power costs low. The scalability of our TIER 0™ data centers helps maximize profitability for our customers while also affording them the versatility to shift and grow in the future.
What is proof-of-work?
Proof-of-work is a consensus algorithm used in many forms of cryptocurrency, including Bitcoin, Ethereum, Zcash, and others. Within the proof-of-work protocol, miners compete to solve a complicated mathematical puzzle in order to add transactions to the blockchain. A new block is added to the blockchain each time this puzzle is solved, and the miner is then rewarded with the current block reward and any transaction fees included in the block.
What is cryptocurrency’s legal status?
The legality of cryptocurrency varies from one country to the next, but the majority of the world has begun to accept cryptocurrency as a form of legal tender, including the U.S., the E.U., India, Japan, Singapore, South Africa, Mexico, and Sweden – just to name a few. Other countries, such as China and Russia, have specific regulations against cryptocurrency that vary from one nation to the next.
Is cryptocurrency taxed?
Different jurisdictions have different regulations regarding payrolls, income, sales, capital gains, and other aspects involving cryptocurrency and taxes. Investors are responsible for reporting and dealing with taxes in their local jurisdiction.
Learn more about cryptocurrency and taxes.
Can I pay my monthly Compute North invoice with cryptocurrency?
Yes. Compute North offers the ability to pay monthly invoices with cryptocurrency through BitPay. With the blockchain payment service, we do not collect or store any sensitive customer information. Simply visit www.computenorth.com/pay-crypto to start the process using your preferred cryptocurrency (e.g. Bitcoin, Ether, or Ripple). Be sure to have your invoice handy so you can reference the invoice number when you submit payment.