Data Centers and Cryptocurrency Mining – Two Worlds Colliding

What will the dramatic rise in cryptocurrency mining mean for Data Centers?

In 2016 the total cryptocurrency market was valued at $284 million and is expected to reach almost $3 billion by 20203.  Brian Armstrong, the SEO of Coinbase stated that in the next five years over 1 billion people will be using cryptocurrencies.  About 18% of all college students today own some cryptocurrency. Cryptocurrencies and tokens are being heavily used across the globe resulting in the dramatic increase in the demand for miners.

Correlated with this increase, the global cryptocurrency mining market has been witnessing explosive growth too. This has resulted in increasing business opportunities for data centers.  And some companies have answered the call. They have their ear to the rail. For example

• The Chinese bitcoin mining firm, Bitmain is building a $500 million blockchain data center and mining facility in Texas as part of its expansion into the U.S. market.
• Another Chinese company, Wuhan General Group is currently working on plans to repurpose a US Defense Department data center in Nevada for its crypto mining operations.
• US firm Bcause, LLC is looking to invest 65 million dollars in Virginia Beach mining data center facilities making it one of the largest data centers in North America.

Unfortunately, most US Data Centers are not prepared to capitalize on this new booming market.  Historically the US mining market has been small scale in-home mining operations. However, increased competition are driving these home-based mining operations out of business.  The only way for them to survive is to consolidate into mining pools in hosted data centers. So, miners go searching for data centers to find new homes. The problem is that most Data Centers are not configured to support them.  The reason is that traditional data centers have catered to high-end customer requirements. These high-end requirements also come with a high-end price tag. Miners require far less support and consequently do not want to pay high-end prices for low end support.

What this means is that foreign companies and small start-ups will fill this space and threaten the traditional data center market leaders.

Find Out More

Data Center Management Teams that want to learn more about bridging the gap between traditional data center hosting and mining support services are encouraged to contact the Government Blockchain Association (GBA) Mining & Cryptocurrency Working Group led by Nabeel Malik.  He can be reached at nabeelmalik07@gmail.com.