When thinking of cryptocurrencies, Bitcoin is usually the first thing that comes to mind. But the world of crypto is way more robust than that. People mine not only Bitcoin, but also coins like Dogecoin, utilize proof-of stake concept for Ethereum 2.0, or engage in plotting and farming Chia. All of the above requires servers in one form or another. And with crypto hype being at an all-time high, we receive hundreds of questions on how to use our VPS, Virtual Dedicated Servers and Dedicated Servers for Crypto. Here is a handy guide.
Bitcoin Mining (and similar)
Mining Bitcoin or any other coin that utilizes proof-of-work concept is generally not a good idea on Contabo servers. It is prohibited on Virtual Private Servers (VPS) as constant high CPU load caused by mining makes you a noisy neighbor and affects the experience for other people in our community. You can mine Bitcoin or other cryptocurrencies on our product lines with dedicated resources like Virtual Dedicated Servers and Dedicated Servers, but honestly speaking we don’t recommend that, because your chances of success are pretty low. Proof-of-work concept is tilted toward big mining pools, as the coins are awarded to the first one to solve the block. So, unless you can be the first, all your computing power does not yield coins and all your investment in servers will be wasted. On top of that, it is worth pointing out that mining has a huge negative environmental impact.
Crypto Staking at Contabo
In the world of cryptocurrency, two primary mechanisms exist for validating transactions and maintaining the integrity of the blockchain: Staking (Proof-of-Stake) and Mining (Proof-of-Work). While both are pivotal in the crypto ecosystem, they fundamentally differ in approach and impact.
Proof-of-Work (PoW), the mechanism behind the likes of Bitcoin, involves solving complex mathematical problems. This requires extensive computational power and energy, making it resource intensive.
Proof-of-Stake (PoS), on the other hand, offers a more energy-efficient alternative. In PoS, validators are chosen to confirm transactions and create new blocks based on the number of coins they hold and are willing to “stake” as collateral. This not only reduces the energy requirement but also democratizes the process of transaction validation.
At Contabo, we are aligned with the future of cryptocurrency and fully support the Proof-of-Stake methodology. Our services are designed to facilitate users who wish to engage in crypto staking, regardless of the currency. Whether you are staking Ethereum, Horizen, Flux, or any other cryptocurrency, our servers are optimized to provide you with a seamless staking experience.
We understand that setting up a staking operation can be complex, which is why we offer pre-made configurations specifically tailored for popular cryptocurrencies like Ethereum and Horizen. Our dedicated Ethereum Staking page and Horizen Staking pagebundles provide detailed guides and resources to help you start staking on our servers with ease.
For a broader perspective on how Contabo can facilitate your crypto ventures, visit our dedicated Crypto Page. Even if no predefined bundles are available, you can customize your VPS according to your cryptocurrency staking needs.
Crypto Node Hosting at Contabo
A Crypto-Node is a critical component of any blockchain network. It is a computer that contains a full copy of the blockchain and, in some scenarios, processes transactions. These nodes are the pillars of blockchain’s decentralized nature, ensuring transparency and integrity across the network.
Crypto-Nodes vs. Consensus Mechanisms
It is important to distinguish between Crypto-Nodes and consensus mechanisms like Proof-of-Work (PoW) and Proof-of-Stake (PoS). While PoW and PoS are methods used to validate transactions and, in PoS’s case, to create new blocks, Crypto-Nodes are responsible for storing and disseminating the blockchain data. Essentially, PoW and PoS build and maintain the blockchain, whereas nodes store and distribute its contents.
Crypto-Node Hosting at Contabo
At Contabo, we fully support the hosting of Crypto-Nodes, recognizing their essential role in the blockchain ecosystem. Our servers are optimized to host various types of Crypto-Nodes, ensuring reliability and efficiency.
For those in the Bitcoin network, our dedicated Bitcoin Node page provides specialized configurations for hosting Bitcoin Nodes, crucial for the operation of the Bitcoin blockchain.
Hosting services for Horizen Nodes, known for their privacy features and sidechain technology, are also available. Detailed information and services can be found on our Horizen Node page.
We also cater to those interested in the InterPlanetary File System (IPFS) by offering hosting solutions for IPFS Nodes. These nodes are part of a peer-to-peer network for data storage and sharing, which you can explore further on our dedicated IPFS page.
Lastly, our hosting solutions extend to RunOnFlux Nodes, part of the decentralized RunOnFlux computational network. Comprehensive hosting options for these nodes are available on our RunOnFlux page.
Contabo stands as more than just a hosting provider; we are a facilitator in the decentralized digital landscape. By offering versatile and robust hosting solutions for a variety of Crypto-Nodes, we empower our clients to be an active part of the ever-evolving blockchain ecosystem.
Chia Farming & Plotting (and similar)
Chia and similar coins utilize a proof-of-space concept where the blocks (called here plots) require huge amount of storage instead of computing power. There are two stages of the process: plotting and farming, which have different characteristics, so let us discuss them separately.
Plotting is the initial phase in proof-of-storage approach. From a technical perspective it is a massive number of read and write operations on a drive. Usually, fast SSD or NVMe SSD are used. The process is so intensive that the disks run off warranty and often even break completely after 1-2 months of use. Breaking an SSD used as shared storage could result in a disruption for other users on a given host system. That is why plotting is strictly prohibited on VPS or Virtual Dedicated Servers. Plotting on Dedicated Servers could potentially be allowed at a special rate which includes hardware degradation, but the current hardware availability makes it impossible.
The so-called farming is nothing else than just storing the plotted data (most often on hard drives). Farming Chia (or other coins) is allowed on all Contabo products except VPS. Please keep in mind though, that for your plotted plot to yield coins you need to keep them online for months if not years. That is why it is essential to secure the right budget in advance and plan how many plots you will plot, so that you can afford to farm them later. It’s also important to look for storage solutions which are really cheap long term. Our 10-core Dedicated Servers are ultimately positioned to serve as storage for long term Chia farming.
Hosting Coin Wallets
Hosting Coin wallets is generally allowed as with any other software.
Providing resources for any decentralized infrastructure service, like pocket network, Presearch, Fleek network, RunOnFlux , meson.network is allowed. Be aware that these services could utilize your server resources to behave against our terms and conditions. For example tunneling harmful VPN traffic.
We highly recommend reading documentation of any applications before installing/running and applying extra security layers when needed.
So… Can I Pay with Bitcoin or Other Crypto?
We do not have plans to start accepting Bitcoins or other cryptocurrencies as a form of payment in Contabo.
To learn more about our crypto policy read our post “Ask me Anything with Thomas Noglik”.