The ASIC Colocation Business

Any colocation business is very formulaic: plug-in the client’s computers and keep them online. After setup, most of the business is in handling customer accounts, shipping and receiving.

Hosting ASIC hardware is a little bit easier because the hardware is single purpose. The network requirements are minimal. The only moving parts are the fans. The increased power draw and heat output ASIC of hardware presents special challenges, eliminating it as a potential revenue stream for most traditional colocation hosts.

The dominant players in colocation hosting for Bitcoin mining are not large businesses. The space includes suspicious operations, anonymous administrators, questionable business practices and scandal. Most are uninsured, and many even lack redundant power. The atmosphere is somewhat reminiscent of the dark web, or the early days of internet gambling, despite the attitude of the Canadian government being viewed as very favorable towards Bitcoin.

Some of these companies will survive but right now they’re all struggling, either to keep up with demand, fund expansions, or dealing with unforeseen consequences of noise complaints and the real costs of labour. For the largest players, the biggest challenge is the low rates for large accounts. The colocation host is essentially owned by its largest clients — one more reason why I like small accounts.

There is a segment of this colocation market which is fully booked and quite happily living off the profits. That is a short-term but totally valid business model in this market.

It’s very hard to say at this point what the mining business is going to look like in five or ten years. One increasingly important motivation to open mining operations across the globe is that each one represents a share of political control over Bitcoin. It’s possible that we continue to see more numbers of smaller data centers popping up with mining operations, or the market could be dominated by a few large players. At this point it’s anyone’s guess.

The most legitimate player that is openly expanding their ASIC hosting capacity is BTCMeq.

The efficiency of a mining data center is a closely guarded secret. Unlike traditional data centers, an efficient design and the timing of its implementation can make all the difference in the race to success.

There are numerous ways that we can leverage the Canadian climate to implement a passive design that’s superior to most of what is available in the market today.

Please create an account and join the discussion of exactly how we’re going to do this.