What to look for in a mining colocation provider

colocation mining farm

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The best way to invest in cryptocurrency right now is by mining it. We’re not talking about old-school mining from your basement. We’re talking about mining colocation. With colocation, you’re essentially renting space and power while maintaining control over your operations. When done correctly, it’s by far the most cost-effective mining approach.

Unfortunately, it’s not always done correctly, especially as more and more players enter the market and try to take advantage of the crypto mining boom. Many traditional data centers are throwing together colocation mining packages without properly scaling their operations. Add in all the fly-by-night colocation services that don’t really understand cryptocurrency, and you have a good chance of failure if you don’t do your due diligence.

Here’s what you need to look for in a colocation provider if you want to be a successful miner:

Cost-effective power

Low-cost power is the number one reason mining colocation works. If you’re overpaying for power, you’re not going to be able to mine enough to be profitable. The best colocation facilities are located in strategic regions of the U.S. that allow them to utilize a broad mix of energy sources, including renewable energy. This doesn’t mean you should just go with the cheapest colocation provider. You have to balance what they are offering with the cost. This is where having a good knowledge of the power requirements and value of your currency comes into play.

Adequate power requirements

Speaking of power, you need to be sure your colocation facility is equipped with enough power to handle your mining hardware. Many colocation providers will overload their facilities and give you far less power than you were promised. And they won’t give you a price break for it. Make sure you find a colocation service that gives you maximum power for your dollar. If they don’t know how much power your hardware requires, then you can find a better place to send your equipment.

Cryptocurrency expertise

You might not need your colocation provider to give you a cryptocurrency consultation, but you need to make sure they know the industry. If they’ve never mined before and don’t fully understand how blockchain works, then how can they build a facility that maximizes the performance of mining equipment? Don’t be shy about asking difficult cryptocurrency questions. If they can’t answer them, then you want to look elsewhere. An added bonus is if they’ve mined in their own facilities before. That tells you immediately that they not only know what they’re doing, but they also trust in their own work. Would you trust a chef who doesn’t taste his own food?

U.S.-based location

If you’re based in the U.S., you obviously want to keep your hardware here. That makes it more cost-effective and gives you the peace of mind of knowing your equipment is close to home. If you’re located in another country, then the United States is still your best bet. In addition to having excellent availability of low-cost renewable energy, the U.S. also doesn’t limit your mining potential or tack on massive taxes like many other countries do. That’s why many overseas investors are flocking to the U.S. for all their cryptocurrency mining needs.  

Efficient cooling

Mining hardware works hard. If your colocation facility doesn’t provide the appropriate cooling, your equipment isn’t going to last long. Ambient air cooling is the best method for delivering maximum hardware performance. Anything more will be far too expensive for you to mine effectively. Anything less will result in your hardware burning up. Be sure to ask what type of cooling they use before you send off your valuable equipment.

Equipment swaps

You aren’t going to keep the same mining equipment forever. With new, more efficient machines coming out all the time, you need to be sure your contract doesn’t commit you to the same hardware for the long haul. You should be free to switch your equipment when your mining needs change. So go ahead and buy that expensive new miner that delivers industry-leading ROI.


If your equipment isn’t running, then you aren’t mining. You need onsite support to make sure your machines keep working. A good colocation provider will notify you immediately about any downtime and will work doubletime to get you back up and running. While redundancy and being up 24/7/365 with 0.000000001% downtime would be ideal, this type of setup would result in unaffordable mining costs. Proactive monitoring and hands-on technical support will ensure your mining efforts aren’t going to waste because of technical difficulties.

Transparent pricing

What are you really getting for the price you’re paying? Colocation pricing should be all-inclusive. For a fixed price, you should get an agreed on amount of power and space in addition to cooling, internet, physical racking, security, and more. Some services, like monitoring, may require an additional charge that are worth it for added peace of mind. However, a colocation provider who nickels and dimes you on everything isn’t going to be conducive to profitable mining. Know exactly what you’re supposed to be paying for and make sure they aren’t skimping on any of the details.

Colocation with Compute North

As one of the leading colocation providers in the U.S., Compute North brings you strategically located facilities designed by cryptocurrency mining experts. Contact us today for cost-effective U.S. based mining colocation services that will help you rapidly scale your cryptocurrency investment.

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