Hytale Cobalt is an odd ore among all the others you can collect. It's technically the next metal up from Hytale Thorium, after Iron and Copper, but I'm struggling to see exactly what the real benefit is to getting it and using it to craft things. Tools and armor both seem to have similar durability, while a Thorium's Cuirass swaps a hefty 27% poison resistance for a 6% increase in signature attack damage with a Cobalt one. Similarly, a Cobalt Longsword has 20 more durability over a Thorium one (140 to 120) but that's it.
This is an early access game, so it seems that Cobalt is still being balanced and hasn't entirely found its place yet. I've seen talk about how eventually there will be some sideways progression where some ores will have similar values but improve different character facets - magic or damage builds for example. For now Cobalt is just blue, and not really much of an improvement on Thorium, but if you want some then here's where to look.
Where to find Cobalt in Hytale
You can find Cobalt in the icy regions of Hytale, called the Whisperfrost Frontiers. So to start looking for it, head to the snow covered parts of the map. Because this is technically Zone 3 of the world you'll want the best weapons, armor, and gear you can muster, plus some Hytale Repair kits to keep it in good condition as you explore.
The obvious way to find Cobalt in Hytale is to head underground. However, unlike Copper, Iron, and Thorium, you might not have to dig as I found plenty of large, icy caverns accessible easily from the surface. These can be large, treacherous spaces full of ice water and lengthy sections, making it easy to get lost in. If you do get lost, there's an Unstuck option in the Hytale console commands that will teleport you to the surface.
This is what you're looking for - a dull blue grey ore lump in the blocks:
However, I did not find it in much abundance underground. I did find a ton of Hytale Iron clusters, but only the odd, single Cobalt ore lump here and there.
Where you might increase your chances of finding Cobalt is by scouring the mountainsides. If you can climb up to the top the mountains you will see the odd lump of Cobalt ore sticking out the sides here and there - you'll find a lot of random ores high up as well like Hytale Copper, Gold, and Silver. When I found some this way it tended to yield more ore overall, exposing a small vein to mine, rather than the single pieces I was finding underground.
I also seemed to be find the most Cobalt on the less snowy sides of mountains, at the edge of the Whisperfrost Frontier areas. That could just be luck, but the main thing here is you can see it fairly clearly from a good distance where it sticks out, so you can cover a lot of ground quickly - which does at least make up for it being harder to find in quantity.
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