Cryptocurrency mining can be very lucrative with the appropriate time and resources. There have been constant fluctuations, equipment advances, and increased competition overtime. As a result, home mining has lower profitability. You need either mining colocation or cloud mining to make cryptocurrency mining a serious investment. In this guide, we will cover the definitions, pros, and cons of mining colocation and cloud mining. We will also include how each works to help you pick one suitable for you.
What Is Cloud Mining?
Cloud mining is the mining process of cryptocurrencies like bitcoin without owning any hardware. You will rely on a remote data center with equipment to buy mining power. The cost of mining power depends on your usage. Other people also purchase mining power at the data center. Together with them, you will be part of a mining pool. The data center controls the operations and equipment.
Pros of Cloud Mining
- Technical Knowledge Is Unnecessary. Beginners in cryptocurrency mining will find it very easy to use. They can begin and earn with little or no knowledge of cryptocurrencies. You simply create a user account, pay the fee, activate your account, and make a profit. Your earnings will be available for withdrawal or use in your user account.
- No Hardware Purchase. Hardware is not necessary for cloud mining. You will not spend the money to buy, maintain, and update it. Furthermore, there is no need to learn how this equipment works and devalue or update it.
- No Operating Cost, Heat, or Noise. Machines that mine bitcoin use up around 1500 watts per hour. They also emit a lot of heat and noise. Thus these machines are not conducive for home use.
Cons of Cloud Mining
- Low profits. You may not purchase the mining equipment but will still purchase mining power, which will eat into your profits. Moreover, mining itself may generate low earnings at any given time. Sometimes, it is advisable to purchase bitcoin directly rather than mine.
- A High Number of Scams. There are many fraudulent or fake cryptocurrency companies in the market. You will need to assess the cloud mining company thoroughly before you can join.
What Is Mining Colocation?
Cryptocurrency mining colocation is like a regular colocation service. You will rent space and utilities to store your mining equipment and run your operations. The renting facility provides space power, internet, cooling, and other resources necessary to facilitate and sustain cryptocurrency mining.
Some mining colocation services offer equipment setup and support. Top providers of mining colocation also offer in-house mining experts and cost-effective power. These experts have experience in operating high-powered mining rigs at full capacity. You don’t have to worry about high energy bills, heat, noise, and theft issues.
Pros of Mining Colocation
- Full Control. You will have full control of your cryptocurrency mining investment. As the owner, you will set the terms, decide who to hire, what equipment to buy, and more.
- Cost-Effective in the Long-Term. You may purchase the equipment and software. However, this means you do not have to hire the equipment or incur long-term contract costs. You will only need to pay for the physical space and network infrastructure.
- Scalable. You can increase your earnings if you host software-suites, websites, and more. Furthermore, it frees up space and enables companies to make better use of it.
Cons of Mining Colocation
- High Start-Up Costs. You will need a lot of financial resources to start and operate mining colocation operations. The equipment is exceptionally costly to buy and upgrade.
- Datacenter Management Issues. You are responsible for addressing hardware and software issues that arise at your data center. Thus, you need the skills of someone with them to address these issues.
- Compatibility Issues. Not all hardware is compatible with a data center facility provider. For example, the rack set up at the facility may be different.
Mining Colocation vs. Cloud Mining
The resources you have to invest will determine if you choose either mining colocation or cloud mining. However, mining colocation will help you maximize your cryptocurrency mining investment. Thus, cloud mining is best for miners with limited resources to invest while mining colocation is for miners who wish to maximize on bitcoin and other cryptocurrency mining. However, on aggregate, Mining colocation is better than Cloud mining because:
1. Mining Colocation Is More Cost-Effective in the Long-Term
Cloud mining may seem cheaper because of the low start-up costs, but mining colocation is more cost-effective. The right power for the correct price is necessary for successful mining. You may spend more to buy equipment in minion colocation, but you pay less for more electricity. Mining colocation also makes it possible to scale your investment and maximize your gains. On the other hand, cloud mining will call for monthly rent and expert fees and eat into your profit.
2. You Have More Control
Your cryptocurrency investment can be more successful if you have control. You will not maximize your investment If you delegate your mining operations to experts. Delegating makes cloud mining a safe option. However, experts want to make just enough coins for everyone to be happy and renew contracts. It does not guarantee maximum gains because you split the profit with other cloud miners.
Unless you partner with some people, you will keep what you mine and enjoy maximum profits from mining colocation. Moreover, you get to set the terms of your cryptocurrency mining investment. You will decide what equipment to use and when to upgrade it. Miners are not subject to external provider upgrade cycles and scheduled power outages.
Mining colocation is also scalable, which means your profits have a high potential for growth. You can choose to host enterprise email services, websites, software-suites, and more to increase your earnings.
3. Most Cloud Miners Eventually Shift to Colocation
Cloud mining undoubtedly gives you low-cost entry to cryptocurrency mining. Many people take cloud mining as a gateway to mining colocation. However, it is not ideal because of the costs you incur and the long-term contracts from cloud mining companies.
You will waste a lot of time and money in cloud mining before switching to mining colocation. Mining colocation is the best option to launch your cryptocurrency mining investment and operate it in the long run.
Serious cryptocurrency miners have to choose between mining colocation and cloud mining for a method to mine the cryptocurrencies. Your resources have the primary influence over which way you want. However, you will also have to ask yourself if you wish to maximize your investment. Cloud mining lets you mine cryptocurrencies like bitcoin without the ownership of mining hardware. If you have low start-up resources, cloud mining is the better option. However, the profits will be minimal because you will share your benefits with a mining pool.
Mining colocation is using your hardware and software to mine cryptocurrencies in a facility you rent. The facility has space and utilities to sustain bitcoin mining. D Central is a company that offers services relevant to bitcoin mining in Canada. One of its primary services is hosting bitcoin mining machines. We also provide hardware repair, training for your team, rapid interventions, and deployment.
D Central was launched in 2006 and only specialized in Bitcoin and has little interest in other cryptocurrencies or blockchains. We offer fully managed and insured hosted units at competitive prices. D Central aims to become a leader in this field as we enter the 4th era of Bitcoin mining.