Crypto and AI: A Forcing Function for Data Center Evolution

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Perhaps you’ve heard that we’re in the business of creating data centers that run on sustainable power, with PUE at 1.10 or below, without water consumption, and at higher densities per rack than nearly any commercial data center provider.

But perhaps you haven’t heard why.

We’re doing what we can to help the planet, solve the digital divide, reduce pressures on power grids and water supplies. All those motives are real, and we’re committed to them.

But atop all the possibilities for environmental and social advantages in what we do, we’re focused on our customers. And our prospects are signaling the need for radically new data center designs and capabilities. We’re seeing a new wave of workload innovation that will force data center providers to rapidly change what they do or, to put it simply, be left behind.

It’s easy to dismiss what we’re saying since we’re a small startup. However, you need to keep in mind that long-standing innovators in data center design founded Nautilus Data Technologies. We designed and built many of the data centers in Silicon Valley, built data centers for the biggest social media platforms globally, and built data centers in places others would consider impossible. We’re well aware of what’s possible in the data center world — and what customers demand — and we’re very good at looking into the future of the data center business and technologies.

Here’s what we’ve learned. Today, dozens of prospects need data centers that offer:

  • No physical redundancy in the data center — not even a UPS
  • PUE of below 1.10, and 100% use of sustainable power
  • Rack densities in the 40-50kw range, with a roadmap to 100kw per rack and beyond.

And they’re willing to pay, in advance, for up to five years of service from providers who can match these requirements.

Who are these prospects? Cryptocurrency companies.

Ah, cryptocurrency. It’s a dirty word in some circles. After all,  it’s an unregulated wilderness with vast fortunes being made and lost. And understandably, many data center providers don’t want to be involved. Crypto seems too volatile, too risky.

But here’s the truth. Crypto is at an inflection point. Until recently, cheap power, cheap hardware, and a relative lack of regulation led crypto miners to set up in China. Still, China’s recent moves to expel them force companies to set up shop in places with more stability and a less arbitrary rule of law.

Combine that development with global moves to regulate cryptocurrencies, and suddenly, data center providers are becoming credible prospects. Already, companies are airlifting bitcoin mining equipment, crammed with GPUs, into the United States, and municipalities like Miami are working to position themselves as centers for crypto mining.[1]

However, even though there’s demand from crypto companies, can today’s data center colocation providers take advantage of the demand?

We think the answer is yes and no.

We’ve had conversations with crypto companies, and they’ve told us that they need data center capacity TODAY, NOW, and they’ll take what they can get. After all, there’s money to be made, and time is of the essence. Crypto companies will, in the short term, start sucking up available capacity where they can.

We’re told that cryptocurrency companies are willing to pay for data center capacity in advance, in cash. That’s going to be a hard offer for data center providers to turn down. We think, over the next two years, we’ll see shortages in some markets as cryptocurrency companies fill racks with mining equipment, pushing out other buyers who can’t or won’t pay in advance or pay inflated prices.

However, over the longer term, cryptocurrency companies will be putting pressure on their partners for a different kind of data center supply. Their demands will include:

  1. No redundancy. Cryptocurrency companies tell us short term power or network outages simply don’t matter to their business model. They’re willing to tolerate those trivial impacts because, over the long term, they’re not interested in paying extra money for generators, UPSs, or N+2 reliability. They don’t care.
  2. Massive density. Crypto companies need to cram as many GPUs into a rack unit, and the more GPUs they can support in a rack, the more money they make. Ideally, they want power and cooling that meets or exceeds 40kw per rack, and they want to know what the roadmap is for 100kw per rack.
  3. Sustainable and cheap power. Cryptocurrency mining companies understand the path to credibility goes through public relations, and already, talk about electricity utilization, and pressure on already stretched grids are driving cryptocurrency companies to explore sustainability. Data center providers will be under pressure to power crypto mining with sustainable and renewable energy. They’ll also be under pressure to ensure that their data centers are as efficient as possible.
  4. Rapid deployment of new sites and new capacity. The traditional multi-year process of commissioning a data center isn’t agile enough for cryptocurrency companies. They’re willing to think outside the box — putting hardware on bread racks — if it gives them a market advantage.

 

The problem is that many current data center providers won’t be able to meet these requirements. To be honest, retrofitting existing facilities to meet these demands won’t be quick enough or cost-effective enough for many data center providers to achieve a positive return on investment. Instead, we’re likely to see new, scrappy, aggressive data center providers who can meet these challenges through a combination of lateral thinking and new technologies. Some approaches will include:

  • Choosing anything that accelerates data center design, deployment, and provisioning. Data centers will become more modular, more prefabricated, and will utilize brownfield sites with easy access to power and cooling.
  • Investment in owned renewable energy and water supplies. Hyperscalers are doing everything they can to purchase renewable energy, and there isn’t enough to go around.[2]
  • New tech that supports unprecedented density, efficiency, and future proofing. 40kw per rack is going to be the new status quo. This requirement will push liquid cooling, in all its forms, into mainstream acceptance. Customers will demand lower and lower PUE, they’ll demand more and more density, and they’ll demand designs that give them headroom to accommodate future technology change.

 

Of course, it’s easy to think that these changes will be niche changes. After all, there won’t be ten thousand cryptocurrency mining companies globally, so these pressures might only impact a few data center providers.

However… there’s another workload coming. It uses the same underlying technology as cryptocurrency. It will be ubiquitous in five years. And every data center around the world will have to support it…it’s AI.

Artificial Intelligence and the Impact on the Data Center

AI’s impact on the data center will be enormous but will emerge at a more measured pace. AI infrastructure, built on GPUs and other specialized silicon, puts intensive demands on data center power and cooling. The Tier 1 server manufacturers are putting dual 2400w power supplies in their 2U servers to accommodate GPU power demands, and we’ll see those power demands grow and grow as more workloads require specialized silicon.

Right now, AI infrastructure deployment is being slowed by the growth of cryptocurrency, as they both compete for an essential resource, the GPU, during a time of silicon shortages and supply chain disruptions. But over the long term, we see supply catching up. We’re also seeing that organizations are under pressure to add artificial intelligence and machine learning capabilities to more and more applications, a trend that is only accelerating due to customer demands, shortages of important skill sets, and competitive pressures.

Once AI becomes more mainstream, more and more data center providers will be forced to either retrofit existing sites or build new sites to accommodate demands for higher density and greater efficiency. You could say that cryptocurrency mining is the vanguard for a radical shift in what it means to be a data center provider, and AI will make that shift a universal one. Every single data center provider will be forced to change or become obsolete. That’s a challenge the industry has never faced, and it’s a challenge that will accelerate growth for some providers and leave others behind.

What is AI infographic

Fortunately for cryptocurrency companies, companies building AI infrastructure, and the entire data center industry, we’re working hard to solve the problems cryptocurrency and AI bring to the data center density. Our proven data center designs already provide over 55kw per rack, zero water consumption, and a PUE below 1.15. To learn more about how we do it, you can check out our technology page.

 

 

[FEATURED IMAGE] Photo by André François McKenzie on Unsplash

[1] https://www.forbes.com/sites/zinnialee/2021/06/23/bitcoin-mining-companies-exiting-china-as-authorities-crackdown-on-cryptocurrencies/?sh=192ee98b3983C

[2] .https://www.wsj.com/articles/amazon-and-other-tech-giants-race-to-buy-up-renewable-energy-11624438894

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Chad Romine

Chad Romine has over two decades of experience in technical and strategic business development. As Vice President of Business Development for Nautilus Data Technologies, Mr. Romine brings global connectivity to some of the most prominent global influencers in technology. Mr. Romine has led startups and under-performing companies to successful maturity built largely upon solid partnerships. Proven results in negotiating mutually beneficial strategic alliances and joint ventures. Outside of work, Chad has invested time fundraising for the American Cancer Society. Mr. Romine recently helped secure funding and led marketing for the completion of a new private University.

Ashley Sturm

Ashley Sturm is a marketing and strategy leader with more than 15 years of experience developing strategic marketing initiatives to increase brand affinity, shape the customer experience, and grow market share. As the Vice President of Marketing at Nautilus Data Technologies, Ashley is responsible for all global marketing initiatives; she integrates the corporate strategy, marketing, branding, and customer experience to best serve clients and produce real business results. Before joining Nautilus Data Technologies, she served as the Senior Director of Marketing Brand and Content for NTT Global Data Centers Americas, spearheading marketing efforts to open two out of six data center campuses. Prior to NTT, Ashley led global marketing through the startup of Vertiv’s Global Data Center Solutions business unit, where she developed the unit’s foundational messaging and established global and regional marketing teams. Ashley’s career experience includes extensive work with the US Navy through the Clearinghouse for Military Family Readiness as well as broadcast journalism. Ashley earned a bachelor’s degree in journalism with an emphasis in converged media from the University of Missouri’s School of Journalism.

Paul Royere

Paul Royere is Vice President of Finance and Administration at Nautilus Data Technologies. For more than twenty years, he has specialized in finance and administration leadership for emerging technology companies, guiding them through high growth commercialization. In addition to senior team roles guiding strategic business operations, Mr. Royere has directed cross-functional teams in implementing business support systems, designing and measuring business plan performance, leading pre/post-merger activities, and delivering requisite corporate, tax and audit compliance.

While at 365 Data Centers, Mr. Royere served as Vice President of Finance leading a multi-discipline restructuring in preparation for the successful sale of seventeen data centers. As Vice President and Corporate Controller at Reliance Globalcom, Royere led the finance and business support teams to and through the conversion from a privately held company to a subsidiary of an international public conglomerate.

Arnold Magcale

Arnold Magcale is founder and Chief Technology Officer of Nautilus Data Technologies. As a recognized leader and respected visionary in the technology industry, he specializes in data center infrastructure, high-availability networks, cloud design, and Software as a Service (SaaS) Technology.

While serving on the management team of Exodus Communications, he launched one of Silicon Valley’s first data centers. Mr. Magcale’s background includes executive positions at Motorola Mobility, where his team deployed the first global Droid devices, and LinkSource Technologies and The Quantum Capital Fund, serving as Chief Technology Officer. He was an early adopter and implementer of Cloud Computing and a member of the team at Danger, Inc., acquired by Microsoft.


Mr. Magcale had a distinguished ten year career in the United States Navy Special Forces. His military and maritime expertise provided the foundation for inventing the world’s first commercial waterborne data center.

Patrick Quirk

Patrick Quirk is a business and technology executive who specializes in operations management, strategic partnerships, and technology leadership in data center, telecommunications, software, and semiconductor markets. Prior to joining Nautilus, he spent the past year working with small businesses and non-profits on survival and growth strategies in addition to PE advisory roles for critical infrastructure acquisitions. Quirk was the President of Avocent Corp, a subsidiary of Vertiv, the Vice President and General Manager for the IT Systems business, and the VP/GM of Converged Systems at Emerson Network Power, providing data center management infrastructure for data center IT, power, and thermal management products. He has held numerous global leadership roles in startups and large multinational companies including LSI and Motorola in the networking and semiconductor markets.

Rob Pfleging

Most recently, Rob was the Senior Vice President of Global Solutions at Vertiv Co, formerly Emerson Network Power. Vertiv Co is an international company that designs, develops and maintains critical infrastructures that run vital applications in data centers, communication networks and commercial and industrial facilities. Rob was responsible for the global solutions line of business at ​​Vertiv, which serves the Americas, Europe and Asia. Prior to Vertiv, Rob was the Vice President of Expansion and Innovation, Datacenter Engineering at CenturyLink, where he was responsible for 55 datacenters across North America, Europe and Asia. Before working for CenturyLink, Rob was the Executive Director of Computer/Data Center Operations at Mercy, where he led datacenter engineering and operations, desktop field services, call center services, and asset management and logistics for more than 40 hospitals. Before fulfilling this mission at Mercy, Rob held various engineering management and sales positions at Schneider Electric. Rob Pfleging additionally served for 6 years in the United States Marine Corps.

James Connaughton

James Connaughton is a globally distinguished energy, environment, technology expert, as both corporate leader and White House policymaker. Mr. Connaughton is the CEO of Nautilus Data Technologies, a high-performance, ultra-efficient, and sustainable data center infrastructure company powered by its proprietary water-cooling system. Before joining Nautilus Data Technologies, he served as Executive Vice President of C3.ai, a leading enterprise AI software provider for accelerating digital transformation.

From 2009-2013, Mr. Connaughton was Executive Vice President and a member of the Management Committee of Exelon and Constellation Energy, two of America’s cleanest, competitive suppliers of electricity, natural gas, and energy services. In 2001, Mr. Connaughton was unanimously confirmed by the US Senate to serve as Chairman of the White House Council on Environmental Quality. He served as President George W. Bush’s senior advisor on energy, environment, and natural resources, and as Director of the White House Office of Environmental Policy. During his eight-year service, Mr. Connaughton worked closely with the President, the Cabinet, and the Congress to develop and implement energy, environment, natural resource, and climate change policies. An avid ocean conservationist, Mr. Connaughton helped establish four of the largest and most ecologically diverse marine resource conservation areas in the world.

Mr. Connaughton is a member of the Advisory Board of the ClearPath Foundation and serves as an Advisor to X (Google’s Moonshot Factory) and Shine Technologies, a medical and commercial isotope company. He is also a member of the Board of Directors at the Resources for the Future and a member of the Advisory Boards at Yale’s Center on Environmental Law and Policy and Columbia’s Global Center on Energy Policy.