Three mistakes every beginner makes when choosing a mining hosting!

You've decided to start mining cryptocurrencies. You've studied the materials, the risks, and whether it's profitable. Then you've come to a crossroads: mine at home or use hosting? If you don't want to invest in photovoltaics, hosting is the obvious choice. But how to choose the right one? And what mistakes to avoid? We'll tell you everything we've learned as professionals.

Choosing a hosting location based only on the price of electricity

By far the worst mistake beginners make is choosing the hosting with the cheapest electricity. At first glance this makes sense, however, all you have to do is think about it and the cracks start to show.

Also, the cheaper the electricity the provider offers, the more compromises it has to make in quality. Nigeria or Kazakhstan are the cheapest at hosting, but there are problems with the quality of maintenance (which miners need), the condition of the infrastructure and the availability of electricity at all times. There is no need to mention things like availability of spare parts and professionals.

Instability is another huge problem. The states with the cheapest electricity are usually in the early modernization stages and have an uncertain legal framework. If you can't enforce your rights, you probably shouldn't invest hundreds of thousands in such a location. For example, neither Nigeria nor Kazakhstan are officially dictatorships, but they rank high on corruption rankings. If you are going to have a few machines in such regions after all, it should mainly be a tool for diversification.

The provider's aim is to find the best balance between electricity price and risk. That's why at Coin Factory we have datacentres in the US.

Sacrifice the credibility of a partner for a more financially advantageous offer

Short-term financial savings with a less credible provider can lead to serious long-term problems that exceed any initial savings. This is a very similar point to the one above, but deserves its own consideration. As with choosing a location, quality and credibility decrease with cheaper prices.

At Coin Factory, we treat the miners we host as equal partners. But unfortunately, some hosting providers use a variety of unfair tactics.

Frankly speaking, from our wide experience, it would take a whole book to list them all - so let's have at least a short selection:

• Security risks - Cryptocurrency datacenters, especially those that are cheap or run by untrustworthy companies, used to have lower security standards. This increases the risk of hacking or theft of equipment or mined coins.
• Fraud and loss of investment - It is not controversial to say that the world of cryptocurrencies is full of fraudsters. It's always worth thinking about whether an offer is “too good”. Personally, we recommend working with companies from the Czech Republic - you have open communication and the opportunity to enforce your rights. In addition, the EU provides significantly better consumer protection than most countries outside of it. To find Kazakh hosting and lose your entire investment is really not worth it.
• Hidden costs - Classic: fees, surcharges, absurd service charges. Very similar experience to shady financial institutions.
• Lack of customer support- Low price often means worse service and zero support in case of outages or technical problems.
• Reputational damage - If you are in the mining business, a bad experience can damage you not only financially but also reputationally.

By choosing a trusted partner, you protect the long-term profitability and stability of your business. Short-term savings with an unreliable host, on the other hand, can mean significant financial and time losses.

Underestimating the flexibility of contract terms

We all know this - contracts can be a very flexible tool for providers to squeeze the most money out of a partner. You can never expect such a trick with Coin Factory. Rather than sell you an unsuitable miner at any price, we'd rather go through the other options with you in detail.

Anyway, back to the contracts:

A lot of beginners completely neglect what they are actually signing when choosing a hosting service and forget to check the flexibility of the contract terms. Hosting contracts in cryptocurrency mining can be complex and contain various restrictive clauses. This can cause unexpected complications.

One of the most common problems is the long termination notice period - which can be up to one year. Or, to the contrary, it may not exist at all, because the contract is signed for a fixed period with a termination fee of such a high amount that it discourages everyone. If the hosting doesn't meet your expectations, you could be locked into an unfavourable contract for months or years.

Some contracts also have a fixed capacity that makes it difficult to react to market changes. This is a particular problem for industrial miners who scale their business the year after halving - the most profitable time to enter mining.

There are also some hostings with non transparent pricing structures - for example, variable electricity prices or different service fees - which can dramatically change the overall profitability of the investment. If you choose to sign up for dynamic electricity pricing, you can easily put yourself at a disadvantage. Yes, the price of electricity can change due to geopolitical difficulties, for example - it happens. But hosting should always communicate such a change clearly.

Finally, don't forget about fines and penalties. There is no need to say anything about that.

Summary

Beginners often underestimate the choice of hosting. If you want to start mining, it's a good idea to spend enough time choosing a hosting. From CoinFactory you can expect only fair and active communication. If you would like to ask any questions about our services or offer, please do not hesitate to contact us at info@coin-factory.cz or +420 777 007 685.