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Is crypto-mining changing the data centre?

Written by Fri 11 Feb 2022

Cryptocurrency mining, or crypto-mining, is becoming more popular – particularly in the U.S., is now home to the highest levels of crypto-mining activity in the world. As of August 2021, 35.4% of Bitcoin is mined in the U.S., almost double the currency mined in second-place Kazakhstan. And other popular cryptocurrencies including Etherium, Dogecoin, and Stellar, use a similar process for crypto-mining.

This growth has sparked a debate – across the industry, and across governments and regulators – about the impact that crypto-mining could have on the individual data centre, the industry, and the environment.

 

Consumption of Resources

Cryptocurrency mining is a heavily computational process, requiring excessive resources.

This is, in part, by design: the ‘proof of work’ needed for secure ledger processes is inefficient, which makes it more challenging to manipulate. Crypto-mining draws more electricity than standard processes, because it is highly computational; it generates more heat and therefore requires more efficient cooling systems; and it requires more hardware and processing capacity than other, standard business systems.

A study from Cambridge found that if Bitcoin were a country, it would rank 27th in the world for energy consumption. Bitcoin miners across the globe consume more energy per year than the nation of Argentina.

https://www.bbc.com/news/technology-56012952

 

Or, to put it in very British terms, the power used for Bitcoin mining in one year could satisfy the total electricity needs of the University of Cambridge for 954 years; or power all tea kettles used to boil water in the UK for 29 years.

Increased Activity

Crypto-mining has become an area of extreme interest to investors, in part because the price of cryptocurrency has fluctuated wildly over the past few years. Today, a single Bitcoin is valued at $36,597 USD – nearly half of its peak value of nearly $69,000. Crypto-miners that are producing today can be on future market fluctuations to increase the value of their holdings over time, making it a profitable investment.

And with cryptocurrency pricing spiking and dropping drastically, interest in crypto-mining is likely to continue to grow.

The concern, then, is that crypto-mining could have a disproportionate effect on the data centre and the local environment. If data centres prioritize the needs of crypto-miners, it could become difficult for other consumers to access those services for themselves. Increasing power pulls will stress local infrastructure, including local power grids, putting services for other types of business and residential needs at risk.

Additionally, an increase in consumption means that data centres hosting crypto-mining may have a greater negative impact on the environment. Just last month the U.S. Environmental Protection Agency (EPA) denied motions from coal-powered energy plants that provide power primarily to crypto-miners. This action was seen as an effort to curb the growing trend of utilizing coal as an energy source for crypto-mining.

In a discovery hearing with the U.S. House of Representatives, a panel of tech experts were asked questions to help clarify the state of the industry and potential effect on data centres, power grids, and the environment.

On the pro-crypto-mining side, one representative noted that the best way to clean up the global environmental impact might be to support it in the U.S., where environmental standards can be monitored.

However, the general tone of the hearing was one of concern about the impact of crypto-mining in the U.S. To that end, lawmakers have demanded information from the largest Bitcoin mining organizations. These crypto-miners were asked to provide numbers related to annual electricity consumption, plans for growth, and the impact their activities have had on local power prices.

The request stated, “Given the extraordinarily high energy usage and carbon emissions associated with Bitcoin mining, mining operations raise concerns about their impacts on the global environment, local ecosystems, and consumer electricity costs.”

It is clear that crypto-mining will have some effect on the data centre industry, although how far-reaching that is will remain to be seen. Crypto-mining is currently supporting demand for data centre services, leading to a widening range of investment opportunities – for example, this crypto-focused data centre in Siberia. Regulators are also interested in where the power is coming from, as demonstrated by the recent EPA motions curbing coal-sourced power. This could easily drive increased adoption of renewables across the data centre, as crypto-mining companies strive to lessen the environmental impact of their activities. And because crypto-mining processes run hot, it could also lead to increased investment in newer cooling technologies, such as liquid or liquid immersion cooling.

Written by Fri 11 Feb 2022

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Crypto currency Crypto mining data center data centre
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