3 min read

How to cut your cryptomining costs with colocation

3 November 2017

Bitcoin, arguably the most well-known cryptocurrency, surpassed a record value of over $12,000 in 2017*.

Despite expected fluctuations, the value of popular cryptocurrencies has steadily increased over time. While many see the potential profits in the likes of Ethereum, Ripple, and other up and coming cryptocurrencies, many more see mining them as a risky, and potentially unprofitable venture. So how can you reduce the risks and costs, and take advantage of the cryptocurrency opportunity before it’s gone?

How to cut your cryptomining costs

The risks of cryptocurrency mining

While the value of cryptocurrencies has only increased over time, so have the challenges associated with mining them.

That’s because all cryptocurrencies rely on blockchain: a distributed, peer-to-peer ledger technology that ensures cryptocurrency transactions are validated and secure. Miners add new blocks to the chain by using mining software to identify Secure Hash Algorithms – and in return, they are given some cryptocurrency units.

Because miners are effectively competing to be the first to solve a particular Secure Hash Algorithm, budding miners run into a few challenges:

  • Many cryptocurrencies have a limit to how many units can be in circulation at any time
  • The mining scene for popular cryptocurrencies can be very competitive, making it difficult to get started
  • Less popular currencies may be simpler to mine, but there’s no guarantee they will stay valuable over time

Beyond these risks and challenges, there is another key concern in how to get the energy, space and compute resources required to power cryptocurrency mining software.

The compute costs of mining

Successfully mining cryptocurrency requires a range of important assets that can potentially come at a high cost.


All miners need some kind of hardware to power their mining applications. Some use a conventional CPU, others use a customised graphics processor or field-gate programmable array, and more recently some miners have started using pre-programmed application-specific integrated circuits.

Whatever hardware you decide to use, you’ll need to carefully consider how it balances cost and flexibility, and how this stacks up against potential profits.


The hardware used for mining has a small physical footprint, but GPUs and ASICs consume vast amounts of power. And when you factor in the additional power cost of keeping the hardware cool, it’s a significant cost that can cut deep into potential profits.

For example, the bitcoin network currently uses approximately 16TWh of electricity per year, accounting for 0.08% of the world’s energy consumption. To put this in perspective, this is the same as powering 1.4 million average households – or the entirety of Tunisia. The energy cost of a single transaction could power five households for a day.


Because Secure Hash Algorithms must be submitted to the cryptocurrency network, it’s important for your mining operation to have a stable network connection.

Making sure you have a low-latency network connection can also give you the best possible chance to solve a block and mine the cryptocurrency before anyone else can.


Significant players in the mining community have been targets of distributed denial of service (DDoS) attacks in the past. So, if you’re planning on mining seriously, you’ll want to ensure you have a secure network with protective measures in place to keep downtime to a minimum.

Similarly, physical security should also be a key concern if you plan on mining seriously. Without a secure site for keeping your mining hardware safe, you run the risk of theft.

Colocation can help you maximise your gains

All of these mining requirements add up to a significant investment. While the costs can be substantial, the opportunity for generating revenue is higher than ever – and it’s an opportunity that many will want to capitalise on before the mining market becomes even more saturated.

So how can you cut the costs, reduce the risks of mining, and make the most of the cryptocurrency opportunity?

Colocation can help reduce the risks and costs associated with cryptocurrency mining – and maximise the amount of profit you can make from it.

By moving your mining equipment into a shared data centre managed by a third party you can:

  • Significantly reduce power costs – data centres are designed to handle massive energy requirements in the most efficient way possible
  • Get a stable, low-latency network for less – data centres offer enterprise-class internet with significantly higher uptimes
  • Secure your valuable mining assets – data centres can provide a myriad of security measures, ranging from CCTV and guards, to comprehensive DDoS protection

To find out more about more about cryptocurrency, and how colocation can transform mining profitability and risk, take a look at our cryptocurrency mining white paper.


*Value of Bitcoin correct as of 06/12/2017