The fast-growing cryptocurrency mining industry could shape the future of data centers. Right now, data is more important than ever – pushing businesses of all kinds to invest in data storage, cloud computing, and data centers.
However, crypto mining operations – the computer-driven process of creating new crypto tokens – are particularly CPU-intensive. As a result, crypto miners often invest significantly more in data centers and data center hardware than comparable businesses outside the industry.
The outsized impact of crypto on data centers could be forcing the industry to change course in response to miners’ needs.
Why Crypto Miners Need a Strong Data Center Industry
Through crypto mining, it’s possible to generate new crypto tokens – like Bitcoin – by using high-powered computer hardware to solve cryptography problems. The mining process is necessary for the upkeep of most major cryptocurrencies, but it demands massive investment in computing power.
To secure the power they need for mining, most miners will either procure their own computer hardware or turn to data centers that already have the infrastructure necessary to support mining operations. In the past, home mining rigs accounted for a large portion of the industry’s mining hardware
Today, these rigs have been mostly displaced by “hyper-scale” server farms that are among the largest data centers anywhere in the world. Currently, the U.S. is a major hotspot for crypto server farm growth, owing to cryptocurrency bans elsewhere in the world, particularly in China. China, however, still hosts a large underground crypto mining industry.
Trends in crypto mining server farm design – including strategies for data center layout, organization, power supply, and cooling – could soon have a major impact on the broader data center industry.
Data Center vs. Crypto Mining: What Kind of Server Farm Does a Crypto Miner Need?
Server reliability isn’t as important for crypto miners as it is for other businesses. If a crypto mining farm goes down, the miner will lose money, but there are typically fewer consequences for outages compared to a data center that hosts essential websites or critical business cloud applications.
Not requiring reliability allows crypto mining farm owners to focus on prioritizing other server characteristics. Datacenter density and power, for example, are both extremely important for crypto miners. Power correlates directly with a farm’s earning potential and density makes it possible for crypto miners to utilize limited storage space and farm real estate as efficiently as possible.
Typically, crypto miners, regardless of their size, need to lease or own at least 1-5 megawatts of data center power to mine effectively. However, more power in less space is always desirable.
As a result, miners with enough capital to invest will often rely on data centers with powerful equipment and innovative racking, cooling, and power systems that allow them to pack more hardware into less space than data centers that rely on conventional data center technology.
The Future Tech That Crypto Servers Are Using to Increase Profitability
Crypto server farms are power-hungry as a rule. To meet the energy needs of these server farms, new business models are required. An industry of turnkey crypto power supply solutions has emerged over the past few years. This industry is comprised of electrical equipment companies that offer crypto mining-specific services to data center and server farm owners.
Other sectors supporting the crypto mining industry include cooling systems suppliers that have enabled some of the earliest immersion-cooled server farms, which are capable of cooling mining hardware up to 10 times more efficiently than air cooling systems.
Bespoke power supplies and cooling systems designed for crypto mining farms, along with related or future innovations, could influence the hardware used in data centers at large.
Right now, most data center customers don’t need the same kind of power and efficiency that crypto miners need to turn a profit. However, data centers are generally under pressure to become more efficient and support growing demand for storage space and computing power.
The advances in data center efficiency that new crypto server farm systems offer could help these centers prepare themselves for accelerating storage and compute power demand over the next few years.
How Crypto’s Future May Influence the Data Center Industry
The cryptocurrency mining market is currently estimated to be worth around $2.3 billion and is on track to grow at a compound annual growth rate of around 28.5% over the next five years. By the end of 2028, the industry may be worth more than $5 billion.
Crypto mining has grown at a rapid pace despite the instability of crypto prices over the past few years. While a major crypto crash would likely threaten the future of the crypto mining industry, the sector has so far proven resilient to crypto market shocks.
The growth of the crypto mining industry is threatened, however, by the same roadblocks that the data center industry faces right now. These include a tight labor market and shortages of key computer components, particularly GPUs and specialized crypto mining devices.
The ongoing semiconductor chip shortage has led to delays and price increases for almost all kinds of computer hardware. Demand for GPUs, driven in part by the growth of crypto mining, had also outstripped hardware manufacturers’ production capabilities even before the pandemic – and now, the computer hardware industry faces even greater barriers to meeting demand.
The crypto mining industry may also be vulnerable to changing corporate preferences and needs. The growing importance of environmental stewardship and ESG principles to the global business community may discourage investments in power-hungry sectors like the new crypto mining industry.
If current market trends hold, however, crypto mining is on track for accelerated growth, which could increase the industry’s already-large influence on the data center industry.
Data Centers May Benefit From Crypto Mining Farm Innovations
The growing value of Bitcoin and related cryptocurrencies has driven major growth in the crypto mining industry over the past few years. Despite crypto market instability and challenges like the rising price of GPUs, the crypto mining industry is on track for accelerating growth over the next few years. According to some analysts, the industry’s value may as much as double between now and 2028.
The unique needs of the crypto miners could prompt major changes in the data center industry. In the near future, data centers may adopt innovations that have enabled greater power and density in crypto mining server farms – like immersion cooling and bespoke power supply solutions.
