We lost $500,000
learning these.
In 2022 we sent just under $500,000 of mining equipment to a hosting provider we found online. The machines sat outside in the weather. The company went bankrupt. We recovered almost nothing.
So we wrote them down. Thirty-six questions covering power contracts, insurance, custody, counterparty risk, uptime guarantees, and the specific things that go wrong in this industry and rarely get disclosed until they do.
Bring these to us and to everyone else you are talking to. If a provider cannot answer them cleanly, you have learned something valuable for free. That includes us.
New to this? In one sentence: a Bitcoin miner is a specialized computer, called an ASIC, that verifies Bitcoin transactions and gets paid in new bitcoin for it. “Hosting” means someone else provides the building, the power, and the maintenance, while you keep ownership of the machines. Almost everything that goes wrong in this industry happens in that handoff, which is exactly what these 36 questions are built to protect you from.
36 Questions to Ask Any Bitcoin Hosting Provider
Instant download. We will not call you unless you ask us to.
- What to ask about power contracts and rate exposure
- How to verify insurance actually covers your machines
- Who really holds your equipment, and who is accountable
- What an uptime guarantee is worth without a remedy
- The custody questions most providers hope you skip
Risk rarely comes from where you expect.
Many risks in this space are hidden, sometimes deliberately. Experienced investors get caught out because the failure modes are specific to an industry that is barely a decade old and lightly regulated. Here are eight of them.
01 Power contracts
Power is the largest cost in mining. Without a long-term, fixed-rate contract from a stable source, a rate change can erase profitability without warning.
Is the rate fixed or floating, who is the counterparty, and what happens to my machines if their power cost rises?
02 Insurance that does not cover you
Many policies do not actually cover client machines sitting inside a host’s facility, and some insurers look hard for reasons to deny in this niche.
Show me the policy language covering my specific equipment, at what valuation, with what deductible and coinsurance.
03 Counterparty and white-label risk
Brokers and white-label operators hand your equipment to a third party you have never met. If that party fails, your accountability disappears with them.
Do you own and operate this facility, or are you reselling someone else’s? Can I visit it?
04 Uptime guarantees with no remedy
A guarantee without a stated consequence is marketing. The number matters far less than what happens when it is missed.
What is the contractual guarantee, and what specifically do you owe me when you fall below it?
05 Pool and custody exposure
Your mining pool holds your Bitcoin before it reaches your wallet. Some pools have failed to pay for work performed.
Do I choose the pool? Does the Bitcoin ever touch your balance sheet before it reaches me?
06 Facility quality and machine life
Facility standards vary enormously. Heat, dust, and poor airflow quietly shorten the productive life of equipment you paid for.
What is your maintenance and cleaning schedule, and who pays for repairs and labor?
07 Jurisdictional risk
Regulatory action has stranded mining operations overnight in more than one country. Concentration in a single jurisdiction is a real exposure.
Where are my machines, and what is the plan if that jurisdiction turns hostile?
08 Equipment selection and resale
The wrong machine for the site, or a neglected one, becomes a loss you discover only when you try to sell it.
Why this machine for this facility, and what is the realistic resale path when I am done?
What real oversight looks like: a technician who actually watches your machines, not a dashboard nobody reads.
We lost $500,000 learning this the hard way. This guide is what we wish someone had handed us first.
Beau Turner & Christine Marie, Co-Founders, Abundant Mines
Here is our own answer to these questions.
We wrote these 36 questions because we want you asking them of everyone, including us. Here is where we stand on the eight terms that matter most.
If a provider cannot match this on paper, that is useful information before you wire anything.
- Ownership
- Direct and outright. No revenue share, no partnership interest, no fund structure.
- Operations
- Fully managed. Power, deployment, monitoring, maintenance, labor, and repair under a flat monthly rate per machine.
- Custody
- Non-custodial. Production settles to a pool account and wallet you control. Pool optionality is yours.
- Insurance
- Replacement-value coverage on covered events, included rather than sold separately.
- Uptime
- 95% contractual guarantee, backed by our own fleet redirecting hashrate during service.
- Term
- Twelve-month hosting agreement. After that the equipment is yours to keep, relocate, or sell.
- Horizon
- Roughly a five-year economic life, with residual equipment value at exit.
- Jurisdiction
- Facilities owned and operated in Oregon, with no state sales tax on equipment.
Honest disqualifiers, not a sales pitch.
- You don’t yet own, or plan to own, mining equipment. This is a vendor-vetting checklist, not a getting-started guide.
- You want a purchase with zero diligence. Every legitimate provider, including us, should survive being questioned closely. If that idea makes you uncomfortable, that is itself a signal.
- You’re comparing on price alone. The cheapest hosting quote is disproportionately likely to be the one that goes bankrupt.
We would rather lose to a fair comparison than win by being the only call you took.
Whether you work with us or not, this industry has to get better. That happens when buyers arrive informed and hold everyone to a higher standard. If these questions cost us a deal because someone else answered them better, that is a good outcome.