Cryptomining isn’t what it used to be. In short, you can’t really turn a profit in the current market climate with a small mining rig setup in your house. For many, it has become wiser to either join a mining cooperative or use colocation, or “mining hotels”, for crypto mining.

In the early days you could run multiple GPU processors in your house/shed/garage/outbuilding and make a decent profit. As interest has ballooned in recent years, miners have had to compete with larger datacenters – and each other – in a decentralized network using more powerful ASIC miners.

Increasing Hash Rate in a Congested Environment

Mining rigs need to perform complex mathematical problems in order to be rewarded with pieces of a crypto coin, token, etc. The amount it can calculate is known as the hash rate. Hashes refer to the output of a hash function – the speed at which the calculations are done – meaning a higher hash rate increases your chances of getting the next coin/token reward. ASIC mining equipment was developed to deal with the higher demand for solving these equations.

To compete as a miner, your equipment needs to perform faster than the traditional home-based methods such as GPU processing. Also, the increase in miners equals an increase in congestion. Cloud mining, hosted mining and cooperative mining solutions were born in response to both the congestion and increasing power/processing demands of the market.

Colocation for the Cryptomining Community

Colocation allows you to, in a sense, outsource the infrastructure and management of your mining equipment. Just as many internet startups took advantage of shared web hosting, software hosting, VPNs, cloud computing and virtual machines to build companies and wealth across the world, so too are miners taking advantage of a managed offsite infrastructure solution for crypto mining endeavors.

Colocation services include a reliable large-scale shared facility that can house and cool ASIC mining equipment. You can often purchase the equipment from the colocation data center service, too. You run your equipment on their servers and pay for power rates. You are typically paying for kWh and you should try to find the most renewable options available. Terms are usually annual or biannual and many, if not most, crypto mining colocation service providers run on some form of renewable energy.

Managed Cryptomining Solutions

Many crypto mining setups are making the logical switch to colocation services due to the increasing costs and demands of the market. There is also increased pressure on power consumption, which creates few opportunities to turn a profit in crypto mining at home or in your own small mining operation.

Colocation allows you to offload power management, equipment and hosting. As the lifestyle becomes a drag for many, miners have found that managed services for crypto mining offer the benefit of increased time for other ventures, home life, career and projects. It’s essentially managed IT services, but for crypto mining.