Mining is an extremely popular activity with assurance of profits and scope for expansion of the mining operation. Although Bitcoin is the most sought after cryptocurrency of miners, other altcoins can also be mined by using advanced mining hardware.
Concerns of in-house mining
The most important concern of mining on your own is to arrange for space, enough electrical energy and resource of computing power for running software for mining.
There are very few people who may not agree that dealing in Cryptocurrencies is not a profitable venture. However, majority of those would unanimously rate mining as a highly dicey proposition. The most important reason for this may be a miner has to deal with more and more challenges that have only become complex with the rising prices of Cryptocurrencies such as Bitcoin.
There is also a specific reason for growing complexity of mining altcoins and it is associated with the presence of blockchain which is leveraged by operators to validate as well as secure crypto transactions. Blockchain is an innovative approach that is based on distributed architecture with peer-2-peer technology.
In order to mine new coins of any cryptocurrency such as Litecoin or Bitcoin, miners must ensure identification of secure hash algorithms by making use of mining software to add new blocks.
The hash algorithms are being solved by a great number of miners while competing among each other for solving before anybody else. This is further complicated by the fact that majority of Cryptocurrencies have put restrictions on the total number of crypto units available for circulation at any given time.
Competition for mining Cryptocoins is cut-throat and one may face extreme difficulties right from the word go. Alternatively, if one attempts mining some of the less sought after coins it may not be worth the effort due to the volatility of crypto market.
Mining- a cost intensive proposal
Mining Cryptocoins is a significantly costly operation due to the need to procure expensive hardware for powering mining venture. Some miners try to make use of a traditional Central Processing Unit of a home PC or there is another option of using a graphic processor that is custom made for the mining purpose. Modern technology has also enabled use of field gate programmable array or IC systems that are specially built for the mining operations.
In contrast to the small size of a mining hardware, the inbuilt ASICs as well as Graphic Processing Units guzzle huge amount of energy. Add to this the equally significant cooling costs for maintaining seamless performance of the system that is prone to overheat to make things even worse.
Another important parameter for running a successful mining operation is to ensure stable network connectivity. Moreover, mining is a competitive operation since several miners are also trying to solve blocks simultaneously. This needs a network with least of no latency to achieve faster results.
All hardware for a mining venture must be physically secured because of chances of theft. That is not all, a smooth mining operation cannot be guaranteed unless one has stringent security measures in place to thwart malware or DDoS attacks.
Over to colocation mining
Mining of Cryptocurrencies such as Bitcoin is a highly profitable venture provided you have the right environment for running mining hardware. Considering a wide array of issues that have been discussed so far, colocation can be a right answer to address challenges of security, costs, and connectivity.
Let us look at the advantages of colocation from the miner’s viewpoint. Datacenters can be designed to deliver a large number of security measures consisting of physical and network security. Usually, security at data center comprises of continuous CCTV monitoring, armed guards and several electronic access control measures.
Mining operations can be guaranteed to receive support of high uptime due to top-class internet connectivity of data centers for seamless performance. On the energy front, miners can be assured to be backed by a data center’s huge capacity of catering to increased power needs.
Colocation can prove to be a right solution to the hassles of independent mining as the mission-critical mining equipment can be positioned at data center facilities for unrestricted network support and enterprise class security.
Downside of colocation
Although, colocation appears to be the panacea for all mining issues, one must also look at the other side of coin before arriving as a final decision. Redundancy is an extremely cost intensive proposition and it can substantially ad to costs of colocation hosting.
According to a renowned publication, cost of running a redundant Tier 3 data centers can be twice than operating a Tier 2 facility. This will automatically reflect in the prices of colocation hosting if a miner is placing hardware at a top tiered data center that guarantees incessant uptime.
Similarly, the fortress like security measures in a data center that include several layers of security can be a right choice for few organizations that have exceptional security concerns. However, for an individual Bitcoin miner the cost of colocation hosting plan may not be economically viable.
Choosing a right colocation service
It would be ideal to analyze power needs of your mining operation before embarking upon the search for a data center for colocation. Another factor that needs to be considered is the space requirement for housing your mining equipment as most of the colocation providers have hosting plans that are based on space or number of racks.
Colocation costs must be analyzed in terms of the parameters of energy and space and then compared with individual requirements in order to know whether adoption of a colocation plan would worth the effort as well as costs. You may not be in a position to go for colocation, since, majority of colocation hosts make it mandatory to pay one year’s advance.
Bitcoin mining can be a profitable proposition if you opt for a right Server colocation provider that has specifically designed hosting plans for supporting mining operations. Some of the trusted colocation centers that can be approached are Enhanced Mining, Mining Technologies, and Frontline Data Services. Some of these colocation providers are offering services at number of locations across US and Canada.