Ask HN: How can DigitalOcean be so cheap?

I've been trying to understand how can they offer for 10USD: 1Core, 1GB 20GB disk. I've been looking for massive dedicated servers in different providers but their prices are not even close. Even the spec of servers does not fit the needs for DigitalOcean service.

A machine with 8GB/2 cores can cost more than 100USD in almost any provider, but they need to virtualize 8 cores (I imagine they virtual core in DigitalOcean doesn't map to a real one), even using machines with 32GB/64GB the prices are extremely biased from DigitalOcean prices.

Just a little example:

- Softlayer: http://www.softlayer.com/dedicated-servers/all-servers

   4 cores/4GB: 160USD
   32 cores/32GB: 1699USD (DigitalOcean charges around 320 usd for something similar)

- http://www.servercentral.com/cloudbuilder

14cpu/112GB: 1990USD (DO charges around 1120 for this) I imagine the 14cpus expand to more cores in this case.

Almost any other provider: Linode, gogrid, gandi, rackspace.

I was looking for companies in Amsterdam and I couldn't find enough info, softlayer has servers in there.

I just want to figure it out how can they provide such nice service at this prices, do you know of any other provider with cheaper prices for dedicated servers? Can you tell me a bit more about the possible infrastructure they are using? I don't know the full details in cost of a data center, but just compared with other companies it seems really amazing. Not even serverstack which is the former company of DigitalOcean CEO can make it.

Bye.