Colocation (Mining)

Colocation in Bitcoin mining is an arrangement where you retain ownership of your ASIC hardware but ship it to a third-party Hashcenter that provides the power, cooling, network connectivity, and physical security needed to run it. You pay a recurring fee — typically an all-in rate per kilowatt-hour or a flat per-machine charge — while the facility handles day-to-day operations. The term is borrowed from the wider IT industry, where colocation has long meant renting rack space and infrastructure for hardware you own.

How colocation differs from cloud mining

The defining feature of colocation is ownership. You hold title to the machines, you can usually watch dashboards showing real-time hashrate and temperatures, you choose your own pool and payout address, and you keep the residual value of the hardware when a contract ends — you can sell it, redeploy it, or ship it home. This separates colocation sharply from cloud mining, where you merely rent a slice of someone else's compute, own nothing physical, and depend entirely on the provider's honesty about what is actually hashing. Colocation suits operators who want industrial-scale electricity rates without building their own facility; cloud mining has historically been where exit scams live.

What to evaluate in a host

All-in power rates in North America commonly land in the range of roughly USD 0.055–0.085 per kWh, and Quebec-style hydro hosting is often quoted as a flat monthly rate per kilowatt of capacity instead. Either way, the headline number rarely tells the whole story. Ask how downtime is billed — do you pay for hosting while your machine sits broken? What is the repair turnaround, and does the site have a bench or does hardware ship out for weeks? What is the curtailment policy when the grid is stressed, and who keeps any demand-response revenue? Add deposits, setup fees, minimum terms, and insurance, then check the physical basics: three-phase distribution done properly, real security, and honest reporting. Reputable hosts publish their service-level terms plainly rather than burying them.

Logistics and repair deserve their own line of questioning, because they are where colo economics quietly die. A hashboard failure at a facility with no bench means your machine ships out for component-level work — weeks of downtime plus freight, often while hosting fees keep accruing. Ask who does the repair, at what rate, and whether you may route boards to your own repair shop instead; a host that objects to you using an independent bench like D-Central's repair service is telling you something. Cross-border shipping adds customs brokerage, duties, and the risk of hardware sitting in a warehouse queue, so factor the full round-trip cost of a failure — not just the happy-path power rate — into any comparison.

The custody question

Colocation is a custody trade-off, and it deserves the same clear-eyed treatment as any custody decision. Your machine sits in someone else's building, behind someone else's locks, subject to someone else's solvency. Hosts have failed with customer hardware inside; contracts have changed terms mid-stream when power prices moved. Mitigate it the practical way: know who you are dealing with, keep the machine registered in your name with serial numbers documented, retain firmware-level access where the host allows it, and never colo more than you could afford to fight for.

The home-mining alternative

At D-Central we view colocation as one useful layer, not the default answer. A meaningful share of miners are better served running one or a few machines at home — heating the workshop with hashrate, keeping full physical custody, and learning the hardware first-hand — and a refurbished ASIC from our shop keeps the cost of entry modest. Colocation earns its place when your electricity is expensive, your space is small, or your fleet outgrows your panel. Compare the related models in our Mining-as-a-Service and Mining Pool Fee entries before signing anything.