Let’s Answer Your Cryptocurrency Mining & Colocation Questions

Whether you’re new to mining or already have a fleet of miners and looking to maximize your investment, COINMAXX can help you get started and rapidly scale your operations. Here are a few things you should know first:

What is cryptocurrency and how does mining work?

Cryptocurrency is a digital currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation. This network of high powered computer, called miners, compete with each other to solve complex mathematical equations to secure transactions. The transactions are bundled into a “block,” which the cryptocurrency miner digitally verifies to assure the validity of all transactions. The mining machine computes a “cryptographic hash,” a computerized method to ensure the block’s validity and prevent invalid block construction. Blocks are accumulated and accounted for in the blockchain, functioning as digital ledgers. Miners are rewarded for their transactions with a set amount of cryptocurrency. Currently for bitcoin, that reward is 6.25 bitcoin.

What are the long-term projections for cryptocurrency?

The cryptocurrency market is projected to grow ten-fold by 2025. This decentralized form of money does not require a processor like a bank or credit card company (and their fees), offering major benefits over fiat currency or credit systems. Values may fluctuate, but they have continued to generate excellent value returns. There are so many different experts out there that make predictions of where the market will be this year and the next 5. One article that is helpful is by Investinghaven. It’s author cites the reason for the predicted value of bitcoin to well exceed $100,000, is:

a. The vast amounts of institutional capital that is currently pouring into crypto investments.

b. Big banking is going blockchain and crypto.

c. Central banks of major nations are on the verge of using a cryptocurrency to digitize their national currency. 

d. Blockchain’s integration with real world applications.

e. Mass adoption is just beginning with companies like Paypal and Venmo offering crypto services.

What are the advantages of cryptocurrency over fiat money or a credit card?

Because the cryptocurrency system is a “peer-to-peer” transaction, there is no middle institution involved, like a bank or credit card company, which means no third-party fees. You’re also assured of privacy since there is no way for the seller and purchaser to identify one another. And you aren’t charged any account fee just for keeping your currency in your digital ledger.

What cryptocurrencies can I mine with COINMAXX’s colocation services?

Our facilities and the facilities we partner with are built specifically for cryptocurrency mining and can handle virtually any coin. Initially, we see the potential for the following: Bitcoin, Litecoin, Ethereum, and Monero (XMR). However, we are constantly evaluating other coins, and you can mine virtually any cryptocurrency with us.

What are the advantages of colocation over cloud mining or running my own equipment?

Colocation is by far the most cost-effective way to mine cryptocurrency. The increasing complexity of mining operations requires far too much power for at-home mining to be profitable. Also, if your machine goes down, you most likely don’t have the certifications , knowledge or time to fix it and get it back up and running quickly. Any time your machine is down, is costing you possible revenues.

iCloud mining requires high upfront costs that may never be returned. You are basically renting existing mining equipment for 1 year for nearly the same price as if you purchased it. And then, they own the equipment and continue to mine for the life of the machine.

Colocation mining gives you the best opportunity to enter the market and scale your operations quickly and profitably.

How does COINMAXX help me collect, trade, and spend cryptocurrency?

Your machines are connected to GreatPool. All of your mining profits are directly deposited into your personal bitcoin wallet. From there you have the ability to hold it, transfer it or cash it out into whatever currency you desire.

What type of mining equipment can COINMAXX operate?

COINMAXX partners with the most well-known brands including Bitmain, AvalonMiner, DragonMint, WhatsMiner, TrueNorth, Innosilicon, and more. Our colocation facilities are built with the power and resources to handle almost any mining equipment.

How much does it cost for colocation services?

COINMAXX has two different options for our colocation clients. We offer either a profit sharing rate or a flat rate for all-inclusive services. The flat rate is anywhere between 6¢ to 7.25¢ a kilowatt/hour, depending on the amount of miners and amount of electricity you will be deploying. We can give you an exact quote based on the types and quantity of equipment you plan to collocate with us.

What is cryptocurrency’s legal status?

Cryptocurrency is legal in the U.S.. Other countries like Russia and Argentina do have restrictions on foreign currencies. The United States Treasury Department has issued non-binding guidance on how it perceives certain cryptocurrency activities. FinCEN (Financial Crimes Enforcement Network) does not consider cryptocurrency “money transmitters,” as it relates to money laundering and terrorist financing.

Is cryptocurrency taxed?

Different jurisdictions have different regulations regarding payrolls, income, sales, capital gains and other aspects involving cryptocurrency. Investors are responsible for reporting and dealing with taxes in their local jurisdiction.