Find Colocation, Dedicated Servers & Cloud Hosting:
Call Now (888) 400-5732

Using Cloud Servers For Bitcoin Mining Pt. 1

Posted by QuoteColo on January 31, 2014

using cloud servers for bitcoin mining

We already know what you are saying – not another article on bitcoin mining! Well, before you get your undies into a bunch, stick with this for a bit. We promise you, it will be worth your bitcoin hating time.

So, before we even get into using Cloud Servers to carry out your bitcoin mining plans, we first need to answer a basic question that everyone might not know. That question: what is Bitcoin cloud mining?

Bitcoin Mining?

What is bitcoin mining?

A bitcoin is an online currency that operates within a peer-to-peer network. Each bitcoin miner, technically owns a small percentage of the overall bitcoin marketplace. As there is no central body governing bitcoin – like there is for US currency – the bitcoin miners must approve each transaction that takes place on the network. Thus, the more bitcoin miners, the more stable the overall network is.

How do you earn bitcoins?

Bitcoins are earned by utilizing powerful compute resources to solve – you guessed it – mathematical equations. Once the equation is solved, bitcoins are rewarded on the basis of work involved in solving said equation. Like any monetary system, bitcoins can be exchanged for services rendered.

How does bitcoin mining work?

Bitcoin mining works by utilizing powerful compute resources to solve said equations. The issue with this is simple: mining bitcoins requires a ton of compute resources. Those resources require a ton of electricity and thus, generate a very good amount of heat. That heat, to ensure server uptime, requires a good amount of cooling. Coming full circle, cooling requires a ton of electricity.

The problem is cyclical. Bitcoin mining eats up a ton of compute resources, which in turn eats up a ton of electricity, which in turn eats up a ton of cooling, which in turn eats up more electricity.

Now, as you know, colocation and web hosting solutions value one thing above all else – the cost of electricity.

The Problem with Bitcoin Mining and Cloud Servers

The major issue with bitcoin mining and Cloud servers is the amount of resources they use up. By utilizing and leaning on Cloud server resources so heavily, individual miners on a Cloud hosting network endanger other Cloud servers owned/leased by other consumers. The caused threat means the possibility of bringing down a network and thus causing major downtime issues for any Cloud hosting firm. This is why the majority of Cloud hosting companies do not allow bitcoin miners to operate on their network.

However, for the Cloud hosting companies that allow bitcoin mining hosting on their network, those companies are doing so with strict rules and regulations. This can’t be said enough – for bitcoin mining to take place on a Cloud server network, the web hosting company has to cap the compute resources and server allowances to ensure stability.

This said, there are a few Cloud server companies who allow bitcoin miners to operate on their network under certain rules and regulations. In Using Cloud Servers for Bitcoin Mining Pt. 2, we will discuss why and how those companies allow bitcoin mining on their network.

Categories: Cloud

What Do You Think?