Colocation Mining vs. Cloud Mining

Colocation Mining vs. Cloud Mining

Even in today’s bear market for cryptocurrency, miners continue to flourish and thrive; because of this, there are a wide range of choices for those wishing to mine Bitcoin and other cryptocurrencies. In this volatile market, efficiency in your mining operation is essential; the right tools will help you gain as much revenue as possible from your investment and activity.

In the early stages of cryptocurrency mining, it was easy to set up a GPU rig and begin mining from home. An increase in the competition for mining rewards meant that miners need to be both fast and cost effective – a typical home setup today is more for hobbyists. You can no longer earn real revenues or competitive rates with this rudimentary setup. This leaves a few options for those wishing to enter the mining game;

  • Open a data center to hold your dedicated miners
  • Opt for colocation, and have your dedicated rigs hosted securely
  • Try cloud mining, and pay to use someone else’s rigs

Miners need significant resources and know how to set up an efficient and operational data center, from the actual physical property to the time or employees to watch over the system and keep everything running. Most of us are left with two options; colocation or cloud mining.

Today, we are taking a look at these two easily confused terms and highlighting the differences between the two. This is also a heads’ up for new miners, as “cloud mining” is often used by scammers hoping to cash in on your inexperience.

Colocation vs. Cloud Mining

The difference between these two forms of mining is usually defined as “owning vs. renting”, but the reality is far different. Cloud mining allows you to buy time only, you have little say in how operations work – and the field is awash in scammers trying to make a quick buck off of the uninformed. We’ve outlined the distinctive differences between these two cryptocurrency mining options below.

Mining Colocation

We’ve covered the benefits and details of colocation extensively here; when you opt to collocate, you own your own mining rigs and they are placed in a secure facility and monitored 24/7. You don’t have to worry about service disruption (since units are monitored around the clock and onside support is incredibly responsive), theft, high heat or soaring energy bills. You own your ASIC rigs and operate them as you like, but don’t have to cope with keeping things cool or managing support staff.

It’s like placing your expensive sports car in a high-end garage and having someone care for it and watch over it for you daily. You get the fun of driving the car, someone else takes care of your vehicle’s every need.

Cloud Mining

Cloud Mining is different from colocation. The theory behind cloud mining sounds pretty good. You rent time or become a mining pool member and receive a portion of funds based on performance. You will be charged for using the equipment but will have little control over how the equipment is used or how effectively it runs.  There is usually a long term, expensive contract in place as well. Investopedia lists cloud mining as one of the most frequently encountered scams in the cryptocurrency world, so we recommend proceeding with caution.

This model is closest in comparison to a rental or timeshare, where you pool with others to buy into a specific plan, you do not actually own anything and have little say in how the process works. The cloud mining world is also tough to navigate, instead of a straightforward purchase and contract, you have to sift through and comply with all kinds of group rules – and may even end up losing your initial investment.

So Which is Better, Colocation or Cloud Mining?

We recommend colocation over cloud mining for the following reasons:

Versatility and Control

An ASIC mining rig isn’t like a refrigerator – – you don’t just plug it in and then let it do its thing. You need to be able to strategically invest and adjust as needed based on your own preferences, not on someone else’s arbitrary schedule. Colocation lets you be in charge, while cloud mining just lets you tag along for the ride.

Risk Mitigation

Cryptocurrency remains volatile, but you should not be exposed to other risks. A fly by night cloud mining operation could disappear or simply make poor choices. A colocation brand is heavily invested in your success and is dedicated to watching over your assets and keeping your systems safe.

You Get to Keep your Profits

When your rigs in a colocation facility make money, those revenues are yours, just like they would be if you hosted those pieces in your own home. When your cloud mining team makes money, you get a small portion, paid when the pool decides to release it.

If you are interested in mining as a hobby, then a home rig is still a better option than cloud mining; you’ll own your own equipment and make your own operation decisions. When you are ready to begin mining a high cap cryptocurrency like Bitcoin, though, the benefits of colocation are worth exploring – and any cloud mining contract should be scrutinized with care to avoid losing your investment.

Cryptocurrency Mining with MiningStore

Many of our colocation clients came to us after starting in cloud mining – and seeing less than optimal results. Whether you want to get started the right way from the very beginning or are ready to make the jump to taking control of your own mining future, we can help. Contact MiningStore today to learn more about colocation and getting your own mining operation off the ground.

2018-11-08T21:01:28+00:00

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MiningStore hosting facilities are designed to maximize the profits from your cryptocurrency mining investment while keeping your mining equipment safe and properly maintained.

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