By now everyone has heard of bitcoin and cryptocurrencies and most have also heard of the term “blockchain” to describe the underlying technologies. Mainstream financial media has been covering the bitcoin craze for quite some time, and it has already made it in to the “Main Street” vernacular. In the data center industry, however, these terms are not new, and have an undeniably negative connotation. That said, as with most evolving technologies, it is important to revisit your positions as time passes and context is developed.
In the early bitcoin days, data centers felt the boom and bust acutely with multi mega watt deals being signed to great fanfare and then cancelled, leaving abandoned investments and a bitter taste. These bitcoin mining customers only wanted cheap power and ran their gear to failure. Their only objective was and is to reduce cost. As a value added service provider this is a tough realization. As much as we have invested in redundant power, cooling and our network and connectivity services, a bitcoin miner sees no incremental advantage from any of this. Ultimately, the only optimization a bitcoin miner can do is to reduce cost and procure specialized hardware. This has caused bitcoin mining equipment to be manufactured for the exclusive purpose of mining bitcoin or solving the distributed ledger. Arguably, this is wasteful compute, and worse yet the gear can’t be repurposed. In short, a bitcoin miner doesn’t really want to be in a highly connected 100% uptime facility, it wants to run specialized boxes in a remote, Arctic location. There, it can solve the ledger as cheaply as possible with no concern of latency.
While I’m not arguing for or against bitcoin as an asset, I am arguing that the compute required to transact in bitcoin is wasteful, and not accretive to a data center ecosystem. That said, blockchain technology in general is highly promising, incredibly useful and has broad applications beyond a distributed ledger. One such example of the application of blockchain technology is Ethereum. Ethereum is a blockchain network upon which one can run secure, distributed applications. Presently, the Ethereum network is mining and creating the currency which will be used to procure use of its network in the future. Mining is performed using more dynamic GPU compute (same gear used for big data and AI applications), and there is a framework in place that rewards connectivity- in other words, latency matters!
As a data center operator, this is far more encouraging, because the compute is not wasteful- it delivers applications, and most importantly, performance matters, which means the cheapest won’t always be the best. We are seeking customers that will gain value from our service offering, and Ethereum miners are just that type. However, based on an outdated understanding of bitcoin mining and applying that to all blockchain, we might have missed a huge opportunity to be a part of the infrastructure powering an extremely exciting wave of innovation. Like with disruptive new currencies and quickly evolving blockchain applications, it pays to keep an open mind.
Download our free guide 5 Things To Look For in a Data Center for Cryptocurrency and Blockchain Applications to learn more about how a data center can be a crucial part of cryptocurrency mining operations.