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 all-time high, we receive hundreds of questions on how to use our VPS, Virtual Dedicated Servers and Dedicated Servers for Crypto. Here’s a handy guide.
Bitcoin Mining (and similar)
Mining of Bitcoin or any other coin that utilize 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’s worth pointing out that mining has a huge negative environmental impact.
Proof-of-stake is a different story. Cryptocurrencies utilizing proof of stake approach are welcome at Contabo. As you work on block only when you get selected, staking generates only short-term spike in performance. Theoretically you can use VPS for that, but depending on the coin, size of the block, etc. you might also want to consider a Virtual Dedicated Server for that. Dedicated Servers will also do the work, but most of the time it’s an overkill. It’s also worth noting that in proof-of-stake the probability of you getting selected to work on a block is proportional to the amount of these coins that you have. The more coins you lock in your wallet for the purpose of staking the more probable it is that you will be assigned to work on a block which yields coins as reward. You will have a better return on the investment in the same server if you will have more coins in your wallet for staking.
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’s discuss them separately.
Plotting is the initial phase in proof-of-storage approach. From technical perspective it’s 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 on 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 coin you need to keep them online for months if not years. That is why it’s 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 for to serve as storage for long term Chia farming.
Other Crypto-related Uses Cases
Other Types of Mining
The world of crypto is extremely fast-changing. At Contabo we constantly monitor to adjust to the new developments in this space. Our principles remain unchanged though: we want all people in Contabo community to have good experience, so any mining that makes you a noisy neighbor is not welcome. We also hate waste, so anything that excessively wears and tears hardware is also a bad idea. But as long as these 2 rules are met, you are welcome to do whatever you want with Contabo computing instances.
Hosting Coin Wallets
Hosting Coin wallets is generally allowed as with any other software.
What About Paying with Bitcoin or Other Crypto?
We don’t have plans to start accepting Bitcoins or other cryptocurrencies as a form of payment in Contabo. The main reason is volatility of most coins, which means that we would have to adjust the prices multiples times a day. Second, more important reason is the fact that many coins have a negative impact on the climate. Even Tesla eventually decided to stop accepting Bitcoin.
To learn more about our crypto policy read our post “Ask me Anything with Thomas Noglik” and find out what our CEO shared with the Contabo community.