Jumping on the blockchain bandwagon
Updated: Aug 1, 2018
Blockchain promises to disrupt not only the banking sectors, but energy, the smart grid, healthcare and many others. What does it mean for data centres?
Although bitcoin may be considered by some to be recent buzzword, along with IoT and big data, it’s bigger brother – blockchain – certainly looks like it’s here to stay.
In its basic form, blockchain is an incorruptible digital record distributed across the internet.
It allows two users to conduct a transaction, without the need for a third party or central server, such as a bank. As the name suggests, a “chain” is made up of “blocks” of data, all spread across a myriad of nodes, in the process providing security.
Although blockchain could initially be perceived as a hipster, rebellious middle finger up to ‘the man’ to exclude establishments between payments, it is now being taken seriously across the world.
Headlines continue to tell us that blockchain will disrupt not only the banking sectors, but energy, the smart grid, healthcare and many others. Corporations at the highest level are working on blockchain strategies and how it will impact their services and supply chains.
In its 2017 FinTech report, PWC said that 77 percent of those surveyed expect to adopt blockchain as part of an in-production system or process by 2020. Furthermore, 50 percent of large companies identified blockchain as an emerging technology to invest into within the next 12 months.
The biggest question is that if blockchain is the enabler, the network and backbone needed for cryptocurrencies to exchange hands, what is behind blockchain and where do data centres come into the equation?
Some believe that demands from blockchain/cryptocurrency activities are sparking a reversal in data centre engineering.
“Certain companies have reverse engineered some of their Tier 3 capacity to turn it into what can best be described as Tier 1, so they can sell twice as much capacity at half the price and make it economically viable,” says Mark Collins, CEO of Fortuitus, which has been involved in data centre infrastructure for bitcoin mining, including a 5MW plant in Norway.
Whereas factoring in high levels of redundancy is seen as fundamental for Tier 3 and Tier 4 data centres, this isn’t the case here, he says.
“It’s totally overkill to have any form of redundancy for cryptocurrency,” he adds. “When you are talking about the uptime differences of a couple of percent, it’s not worth double the CAPEX because you don’t have a customer on the end who’s going to get disconnected from the service so will take his business elsewhere.
“For blockchain, no-one is waiting. You don’t need super lower latency, you just need a general internet connection. You can run a megawatt off a 4G connection, for example.”
In recent months, Norway has been a magnet for data centres. The combination of low cost land, a stable geo-political climate and access to cheaper, green energy has created a perfect storm for providers to tap the market. Not only is 96-98 percent of the country’s energy provided by hydropower but in 2015 Norway generated 15 TWh of electricity more than it consumed.
“What we see now is there has been a tsunami of big players in bitcoin and GPU mining that have established operations in Norway over the last 12 months,” says Kristian Osestad from HPC Nordic. “It went from zero to hundreds of megawatts in a matter of months – it was mayhem for a while. These are massive operations with very high ambitions.”
Osestad believes the demand from blockchain and cryptocurrency mining will increase the speed to market being offered.
“The impact of bitcoin on the data centre market is potentially very high,” he adds. “The traditional data centre model is a massive project with lots of planning time and investment. Now you will see faster, smarter, greener and more agile data centres and they will be at the lower cost.”
Polymorphic data centres, as covered by Future-Tech previously, will be important in providing a flexible approach to these markets, says Osestad.
“It’s about a combination of data centres that can do one of two things: either be converted to handle mining activities, or more high performance, such as Big Data. That is where the big players in the market will head – they will design facilities able to do more than one task.”
Collins is involved in a 15MW dedicated centre to support cryptocurrency in Norway. Under the name Project Odin, the container-based approach is an air-cooled unit designed to be rolled out quickly and support crypto equipment.
From an energy point of view, he says that the data centre is using local hydropower, which was initially set up for an industry not running anymore. “Economically there’s no way of using that power for anything else – it’s excess. You might as well open the sluice gates and let the energy escape – it has no purpose. That’s the power we go for,” he adds.
Taking advantage of excess, green energy could be one way to improve the footprint and image of new mining operations. The reason cryptocurrency is so energy intensive is that miners must comb through millions of combinations of letters and numbers to identify their ‘winning ticket’, according to Jeff Klaus, general manager for data centre solutions at Intel Corporation. He told Data Economy that, as a result, “cryptocurrency mining and the use of blockchain technology demand a large amount of power.”
Furthermore, in a paper published in the journal Joule, a financial economist predicted that bitcoin could soon consume as much energy as Austria by 2019.
Commenting on the Austria comparison, Collins adds: “Tell me how much of that is bad energy? Blockchain is a new technology and it is genuinely disruptive and revolutionary. The applications for it are just phenomenal. So, let’s fix the energy part of it now. Let’s make it that there is no mining done using fossil fuels.”
(This article was written for Future-tech and the full length version appears on the company's website here: https://www.future-tech.co.uk/jumping-on-the-blockchain-bandwagon-how-will-it-affect-data-centres/)