Cloud vs. Colocation TCO.
The cloud wasn't built for HFT. Why companies like Dropbox, X, and high-frequency traders are repatriating workloads to bare metal.
The Cloud Premium
AWS and GCP offer incredible elasticity, but they charge a premium for it. For sustained, high-throughput workloads (like a validator or a sequencer), the unit economics of the cloud break down. Specifically, Egress Fees and vCPU markup act as a tax on scale.
TCO Crossover Calculator
Adjust the sliders below to see where the crossover point lies for your infrastructure. Pay attention to the Break-Even Month—this is typically faster than most CFOs expect.
Interactive TCO Calculator
Adjust your infrastructure scale to see the cost comparison
Equivalent: m5.2xlarge (8 vCPU, 32GB RAM)
EBS gp3 vs Enterprise NVMe
Internet data transfer out
Colo saves $121,715 over 3 years
Monthly Cost Breakdown
The 'Remote Hands' Factor
One hidden cost of colocation is ops. In AWS, you click a button to reboot. In a colo, you verify a ticket with a human technician ("Remote Hands") to physically reboot a server. However, modern Bare Metal Cloud providers (like Equinix Metal) bridge this gap by offering API-driven provisioning on dedicated hardware.
Latency: The Hidden Cost of Virtualization
Beyond price, the cloud imposes a "Virtualization Tax". Hypervisors (Nitro, KVM) negotiate resources between tenants ("Noisy Neighbors"). This introduces jitter.
In High Frequency Trading, average latency is irrelevant. Tail latency (p99) is what kills alpha.
Visualizing the Data Path
Network Path Simulator
Simulation Controls
Performance Analysis
✓ Standard: Acceptable for most web apps, APIs, and streaming.
When you rent an EC2 instance, you are renting a slice of a CPU. When other tenants on that physical host burst their usage, your L3 cache get evicted. This causes micro-stalls in your signing execution.
Architecture Comparison
| Feature | Public Cloud (AWS/GCP) | Bare Metal / Colo | Impact on HFT | | :--- | :--- | :--- | :--- | | Tenancy | Multi-tenant (Noisy) | Single-tenant (Quiet) | Critical (Cache Eviction) | | Network | Virtualized (Overlay) | Direct NIC Access | High (Packet Jitter) | | Clock | NTP (Variable Drift) | PTP / GPS | High (Ordering Accuracy) | | Cost Model | OPEX (Pay-per-hour) | CAPEX + OPEX (Lease) | Medium (Unit Economics) |
The Nitro Hypervisor Tax
Our benchmarks show a 14-20µs overhead introduced by the AWS Nitro hypervisor compared to bare metal execution of the same code. In a race where margins are measured in nanoseconds, this is unacceptable.
The Decision Matrix
When should you stay on AWS, and when should you move to a cage in NY4 or TY3?
Until your AWS bill hits >$10k/mo or latency loses you >10% of trades, the flexibility of the cloud outweighs the TCO savings.
If you are running a sequencer, solver, or heavy validator, bare metal is mandatory for unit economics and competitive latency.
Next Steps
If you decide to move to colocation, you will need a strategy for Hybrid Deployment. You don't move everything at once.
- Move the Validator/Sequencer: Put the latency-critical component in the colo.
- Keep the Indexer/API: Keep the bursty, high-availability components in AWS.
- Establish Direct Connect: Link them with a dedicated 10G fiber cross-connect.
Ready to Optimize?
Check out our Deployment Guide for specific hardware recommendations for ZeroCopy Sentinel on bare metal.