Should You Consider Bitcoin Mining from a Colocation Center

Bit Coin
Bit Coin

Bitcoin mining colocation can be confusing for newbies, and even send them to a hardware store in search of pick and shovel. In reality, bitcoin mining is far from being a physical activity of course.

To succeed, you need is a quick mind, a powerful computer and a blisteringly fast connection. And, before we forget to mention it, you need to be online at all times. Then you should be able to maximize the opportunities presented by this new form of wealth.

I Am New to This. Remind Me What Bitcoin Mining Is

It’s often good to refresh our minds when aligning technologies with secure data storage. Bitcoin users collectively create their own crypto currency. Although before you get too excited the opportunity is not endless.

Bitcoin pioneers created the initial store of wealth by using fast computers to solve complex mathematical equations. Bitcoin servers never sleep and soon people were doing this all over the world. They achieved three things by volunteering:

  • Their dedicated hardware helped secure the network by being part of it
  • Each time they solved a mathematical equation this created new bitcoin
  • In that way, they gained a personal share of the wealth they can spend

Bitcoin aims to keep the value of its crypto currency high, by restricting supply and holding just enough stock. Its computers achieve this by manipulating the difficulty-rating of the complex mathematical equations.

So in a sense, bitcoin mining colocation works like the diamond industry. Diamond miners work together to keep the mineral scarce, and therefore valuable. If they dropped this idea and mined indiscriminately, then diamonds might be worth no more than a block of compressed carbon.

So I Need Somewhere Secure to Keep My Bitcoin Computer?

Sure thing you do, because this opportunity is not open ended. Moreover it is getting harder to earn money because the competition has become incredibly tough. Each Bitcoin block of value has a winning equation that releases it when solved.

Today, there are thousands of computers trying to crack these equations with dedicated ‘Bitcoin mining rigs’. If they drop a connection or their power goes down they have to join the queue and restart the process.

So yes, you do need a secure place to keep your dedicated Bitcoin server but that is not all.

Some Advantages of Keeping a Rig in a Bitcoin Mining Colocation Center

You may be reading this because you have made a start with mining bitcoin and other crypto currencies successfully. Possibly you find your local line speed insufficient.

You may have experienced a severe income contraction when your power utility went down in a storm and realized you need to ramp up to a rented space with reliable power and cooling you could never achieve yourself.

However, be careful before you reach a decision too fast. Not all cryptocurrencies are as good. The same applies to the wealth of bitcoin mining colocation centers popping up all over the place.

Some Considerations Regarding Bitcoin Mining Colocation Facilities

A decent rented bitcoin mining colocation space should be an environment with power, networks, and cooling able to island and keep operating despite what’s happening outside the walls. This means the IT equipment it hosts can keep running.  However, just because a place calls itself a colocation data center, does not mean this is going to happen. Fortunately, there is an independent rating system.

  • A Tier 1 center does not have any redundant capacity components
  • A Tier 2 center has some redundant capacity components
  • A Tier 3 center adds dual powered equipment and multiple uplinks

However what you really may need is a Tier 4 facility. That’s because in addition it has all components fully fault-tolerant.  Everything has dual-power including chillers, HVAC, uplinks, storage, servers, fire suppression etc.

Tier 3 and Tier 4 cost significantly more and only you will know whether you can afford it. If you can live with 36 hours downtime a year you probably won’t have to.

You May However Wish to Afford Military-Grade Security

Effective bitcoin mining colocation security depends on multiple control points. A determined intruder may hide from a patrolling guard, or duck under a camera.

However the chances of a person outwitting security booths, cameras, mantraps and biometric scanners on a single occasion are negligible.

Again, only you can decide whether your bitcoin mining rig and store of knowledge deserve this level of protection, personal attention, and fire suppression. Do you remember the last time you had a power outage?

You felt kind of rejected when you lost power and data connectivity at the moment you were close to solving a complex mathematical equation. Think how much better it would have been if your dedicated equipment never failed you.

It’s a question of deciding how important bitcoin mining is for your family and your future.

Where to From Here

You start by figuring out your power requirements, plus say 25% more for expansion. Ask your technical people how many kilowatts of power your mining operation consumes when running at full capacity.

Next you need to decide how many racks you need to hold that equipment. Don’t plan on squeezing it in too tight. It needs breathing space to enjoy the benefits of consistent cooling.

Some centers charge for space, others base their rates on power consumption. Others use a combination of both. Run the numbers. Which option works best for you, and does it feel right?