2 player server with 1gb still lag?

[Spencer14]

I just bought a 1gb server for me and my friend to play tekkit. when i started mining for ores it started lagging, i break something then it reappears ten it takes 10 seconds for it to break again. or i click on a chest, nothing happens so i walk outside then the chest menu pops up. it really getting annoying. Has anyone else had this problem? The only people who go on the server is me and my friend. Also i looked at my cpu usage when it was lagging and it was at 10%. my friend was also having problems logging on to the server. Is it the hosting?

[CoolBeans]

It could be your internet connection. Whats your connection to the server like?