Bitcoin mining started as a homegrown operation but quickly saw a major paradigm shift. The crypto mining sector has seen a general increase in complexities occasioned by periodic adjustments in mining difficulty, increased power costs, and bitcoin's volatility, among other factors.
As miners strive to operate amid the skyrocketing, plummeting, and leveling back of crypto prices, their operations have evolved to mining via a colocation service. The Bitcoin mining colocation service is now a popular trend for mining companies, but before jumping on the bandwagon, it makes sense to understand the service and whether it's an ideal choice.
Read on for a deeper insight into the Bitcoin mining colocation service.
What is Colocation in Bitcoin Mining?
A Bitcoin mining colocation service is an all-in-one service package that involves hosting Bitcoin miners’ mining rigs in a specially designed and controlled environment. Ideally, a colocation service works much like a warehouse. Bitcoin miners are the clients of a colocation service, so a miner can own all the hardware used in mining and then pay for the rack space and other ancillaries listed by the third-party colocation service.
The miner pays a monthly hosting fee that is determined by a mix of factors, such as the rack space, power consumption, mining rigs uptime, and all the ancillary services provided. A colocation service may outline the expected uptime, although the standard run time is usually around 95%. It can, however, vary slightly depending on the hosting service.
By specifying the expected uptime, miners are protected from unexpected interruptions during mining. The machines do not generate any income during downtime, which could undermine their mining activities’ profitability. Top colocation services are thus keen to provide the maximum possible uptime of the machines, including deploying technicians on-site to handle repairs and unexpected downtimes.
Why Work with a Colocation Service?
A colocation service is a quick way for miners to operationalize their mining equipment. Instead of constructing a bitcoin data center facility, they can access the power, space, cooling, and other mining requirements from a dedicated and shared space.
Here is a breakdown of the benefits of a Bitcoin mining colocation service.
•Reduced Costs
Colocation services reduce the initial cost of mining compared to setting up an individual mining facility. Here, the hosting service provider pulls all the necessary resources together, including power, network connections, rack space, and security. Miners only have to pay a monthly fee as per the contract, so they can anticipate the costs associated with their mining activities.
• Improved Security
Mining hardware consists of high-cost equipment, including miners, network connections, and cooling systems. Most miners deploy thousands of this high-cost equipment, so physical security is of the essence. Additionally, since miners are connected over the internet, network security is important to prevent breaches such as intrusion, data breaches, and other network-related threats.
Top bitcoin collocation mining services acknowledge the need for physical and network security and thus deploy advanced security features such as guards, CCTV, and DDoS protection to guarantee the security of their clients’ mining equipment.
Hosting services pool different miners to host their mining equipment in one location. Due to the nature of crypto mining, the facilities usually have access to large power sources and can access low-cost power. They can pay for electricity at a much lower price than power prices for residential consumption. These economies of scale are transferred to miners in terms of better hosting packages.
• Reduced Overheads
When mining under a colocation facility, you do not have to constantly hire technicians to monitor your equipment’s operation and efficiency. A good hosting facility has a support team that handles the general maintenance and ensures mining rigs run efficiently.
• Convenience
Mining at a colocation facility provides miners with the convenience of running their miners without dealing with the challenges of building a data center from scratch. Ideally, miners would otherwise have to find a reliable power source, which may be challenging to get from the national grid. Also, in some locations, they must ensure their facilities comply with relevant regulations.
Additionally, miners can transfer the burden of ensuring miners remain active as per the runtime agreed in the contract. With a colocation service, you only buy the miners and leave everything else for the hosting provider. They can enjoy the convenience of a redundant network, power, and cooling system without paying any additional costs.
• Improved Miner Efficiency
Top colocation services provide specialized equipment that helps mining rigs operate more efficiently and for a longer lifetime. For instance, a hosting service that provides immersion cooling, as opposed to an air-cooling system, protects clients’ hardware from corrosion with dust that could damage the hardware.
Choosing a Bitcoin Mining Colocation Service
Colocation can help transform mining risks and profitability, but only if the equipment owners find the right hosting service. A hosting facility is the heart of efficient Bitcoin mining, providing the support and resources that drive the business. Here are the principal drivers when choosing a colocation bitcoin service.
• Location
The availability of power, floorspace, and the environment largely determine the location of a mining hosting service. Typically, mining equipment tends to be noisy, which leaves hosting providers with the option of establishing their facilities in remote places or away from residential areas. Additionally, the power demands for data centers force them to be located in areas where they can access cheap power or tap underutilized and renewable energy sources.
While some of these locations may be best suited for the colocation facility, they may not align with individual needs. For instance, you want a hosting service that is easily accessible for technicians to respond to a disaster or quick maintenance needs. Natural disasters also tend to occur in certain locations more than others, so establishing the likelihood or frequency of natural disasters in a location is necessary to ensure your miners are safe.
• Cost
Cost is one of the most significant considerations when looking for a blockchain colocation service. Ideally, power is the primary resource in Bitcoin mining as mining activities involve converting electricity into bitcoin. Hosting facilities charge clients monthly per square foot or rack units. However, the cost is different among the different service providers.
A facility that can access cheap electricity may be better positioned to provide a hosting service at a lower cost and higher runtime. When looking for hosting, miners can check the price per square foot, the type of energy used, and power costs. A low-cost data center that provides a higher uptime is preferable, as it would be more profitable.
• Compliance and Security
As tech companies, colocation services have some of the toughest compliance requirements due to the diversity and volumes of data they process. The ideal hosting service must ensure that it aligns with the regulatory standards of its domicile and has robust internal data security controls. Data centers should demonstrate compliance by undertaking procedural audits from accredited agencies and attaining relevant certification. Businesses can also verify the security protocols in the service to ensure they meet their specific needs.
• Availability
Here, the availability of the hosting services regards the length of time per day they can have your miners running. Generally, it is referred to as uptime and is measured in percentages. Ideally, miners should run 24/7 to achieve the highest output level, although only a few hosting services guarantee a 99.999% runtime. The runtime may determine the cost of your package, so some hosting services will have different packages with different percentages.
What Companies Provide Bitcoin Mining Hosting Services?
The crypto mining colocation service has quickly evolved, attracting huge tech companies seeking solutions for high-cost data centers. Miners can now host their mining rigs on top Bitcoin hosting service providers like:
• EZ Blockchain
EZ Blockchain is a green crypto mining company that provides sustainable hosting services. We are a top-tier crypto colocation service provider that works with green energy sources of wind, solar, hydro, nuclear, and wasted gas. More than 65% of their energy sources are emission-free, and the company is constantly in the market for low-cost power. The company can provide mining hosting at $0.07-0.08 per KWH.
Energy sources that EZ Blockchain uses
With EZ Blockchain, clients are guaranteed the fastest deployment of their mining rigs to start mining at an uptime of 95%. Our services are available in air-cooled and immersion-cooled packages at different rates and capacities. However, all packages include monitoring, security, maintenance, support, cooling, scalability, flexibility, and miner supply sourcing.
• Blockstream Mining
Bitcoin colocation service provides enterprise-class mining facilities, professional device management, and support for colocation equipment. Its facilities are purpose-built with top-grade power and cooling infrastructure that ensures maximum reliability. Mining equipment remains safe with 24/7 surveillance, on-site security personnel, and access control systems.
• Start Mining
Start Mining promises an ethical hosting solution that includes all the necessary features for profitable mining. The company uses 100% green and renewable energy, allowing it to provide mining hosting at affordable energy rates while leaving positive impacts on the ecosystem.
Conclusion
For many Bitcoin miners, colocation is an attractive service, as it helps mining enthusiasts achieve results that may otherwise be too expensive or complex to realize alone. Data centers cost millions of dollars to construct, and the process could take quite a long time to complete.
With a service like EZ Blockchain hosting service, miners are relieved of the burden by a trusted dealer.
