Could Hosting Colocation Be One Of The Next Big Things In The Bitcoin Mining Space?

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Bitcoin BTC/USD — the most popular cryptocurrency with the largest market capitalization — is capturing the attention of more people, making it a highly competitive mining market.

Most Bitcoin miners likely strive to maximize profits while maintaining a good rapport with the community, so colocation could be an option for those who want to increase profits or expand their operations.

What Is Hosting Colocation?

Colocation, also known as colo, allows someone to rent space in a third-party data center instead of owning servers in their own office space. What this means is that Bitcoin miners can shift their mining equipment by renting space in a colocation hosting center that provides everything necessary to effectively and efficiently run the Bitcoin mining equipment.

With colocation, a miner can fully own the physical mining hardware and rent the required physical space to house it. The colocation hosting facility holds ASIC machines in racks and connects each of them to the internet. Apart from sharing internet bandwidth, the center also provides cooling facilities and power connections. Colocation reportedly offers the following advantages:

• Miners are guaranteed the machines will run 24/7. The data center provides constant power and internet connectivity.
• Colocation facilities have multiple layers of security to protect equipment from loss.
• The data center employs qualified staff to take care of the equipment and fix issues, hopefully reducing downtime.

Mawson Infrastructure Group Inc. MIGI, a digital infrastructure provider that invested in Bitcoin mining, is among the companies providing hosting colocation services. 

A Dive Into Mawson’s Hosting Colocation Capabilities

In March, Mawson partnered with Celsius Network LLC and Foundry Digital LLC to have an accumulated 112 megawatt (MW) of hosting contracts. This brings the total MWs for hosting customers to 116. The hosting deals place Mawson among the largest hosting colocation companies listed on Nasdaq Stock Market just behind Riot Blockchain Inc. RIOT and Core Scientific Inc. CORZ.

According to the company, there is a significant level of demand for colocation services, owing to the large number of Bitcoin mining rigs ordered last year. However, most miners do not have enough energy to power the machines. Mawson, which says it invested heavily in energy and energy infrastructure, is helping miners turn on  their mining machines.

Customers renting Mawson’s colocation facility are charged an infrastructure fee with a power margin. Last year, Mawson generated $850,000 from 2MW of hosting colocation customers. Using simple algebra on the much larger hosting co-location customer base this year, 116 MW hosting, which will be online by July, the company reportedly has the potential to generate up to $50 million in annual revenue from its expanded hosting co-location business. The revenue excludes the company’s $38.5 million generated from Bitcoin self-mining in 2021.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.