How Crypto Data Centers Work: Technology, Requirements and Challenges

Although crypto mining has been quite a thing recently, the infrastructural aspects of this whole industry have been uncharted waters for me, until the discussion with Denis Slabakov.

Denis is a distinguished leader, globally recognized in the crypto mining sphere, and serves as the CEO of New Mining Company. With 15 years of experience, the company specializes in creating turn-key cryptocurrency mining data centers and distributing server hardware and data storage systems.

The remarkable vision and relentless dedication Denis brings to the table have not only propelled New Mining Company to unparalleled heights but also significantly contributed to advancing the broader cryptomining industry.

In this enlightening conversation, we’ve covered a few “hardware” issues pertaining to the crypto industry.

Drawing from your extensive experience in the industry, could you explain what the major differences between a crypto data center and a conventional one are?

Well, the main difference lies in the applicable standards. When it comes to a regular data center, industry standards have already been established, and all developers of data centers must adhere to them. On the other hand, the crypto industry is relatively young, and there are currently no established standards for building a crypto data center. Each player tends to come up with their own innovative approaches.

The technologies used to build a regular data center might be suitable for a crypto data center, but using them as-is can be quite costly. This is due to the specific usage of crypto equipment.

For instance, there is a nuance related to heat dissipation. In ordinary data centers, we seldom use equipment with such high heat output per unit. Therefore, the heat dissipation technologies available for regular data centers would be too expensive if directly applied to a crypto data center. That's why all crypto data centers employ their own custom solutions, as cost-cutting measures.

Another important distinction between a crypto data center and a regular data center is the server density per unit area. In a classical data center, you may find 10 to 20 servers in a rack, while in a crypto data center, you can expect five times more servers. This results in an increased load on the network infrastructure and requires a different management structure due to the higher density of nodes and elements in a crypto data center compared to a conventional one.

Is then the primary challenge with crypto data centers related to heat management?

I wouldn't necessarily classify it as a challenge; it can be resolved quite easily. As mentioned earlier, the methods used for heat dissipation in conventional data centers can also work for crypto data centers. However, implementing these methods directly would result in high operational costs. While the technology is available, its cost-effectiveness is inefficient, prompting crypto miners to opt for more affordable alternatives.

For instance, one option is using traditional air conditioning to cool the equipment, while another is employing adiabatic cooling. Adiabatic cooling involves passing incoming air through a system of water-filled radiators, where cooling is achieved through water evaporation. This cooling method is not commonly used in regular data centers but has become a de facto standard in many crypto data centers due to its ability to efficiently cool large volumes of air.

While adiabatic air cooling is feasible for crypto data centers, it is highly unlikely to be employed in regular data centers. There are similar technologies, such as immersion cooling, which can be utilized in both crypto and regular data centers. However, immersion cooling is rarely seen in conventional data centers as it involves fully submerging computer equipment in a dielectric fluid. Regular data centers typically employ more traditional means of heat removal to create suitable working conditions for servers, rather than relying on immersion cooling methods.

What factors should be taken into account when selecting a location for a crypto data center?

First and foremost, it is crucial to assess the legal landscape of the jurisdiction, city, or municipality in which you plan to establish the crypto data center. Understanding the local authorities' stance on crypto mining and gaining consensus from residents is essential. While rural areas may pose fewer challenges, technology parks or more populated regions might raise concerns. Thus, ensuring compliance with legal requirements and community acceptance is a primary consideration.

Economic factors also come into play. Sufficient and affordable electricity supply is a fundamental requirement for operating a crypto data center. Evaluating the availability and cost of electricity in the chosen location is vital for the viability and profitability of the project.

Furthermore, the noise factor must be carefully considered. If the data center employs immersion cooling, the noise levels are relatively low, akin to those of a large shopping center. However, air cooling methods generate significant noise. Therefore, selecting an industrial area without 24/7 noise restrictions becomes crucial. Noise regulations, especially during nighttime, can pose challenges in Europe and other regions, impacting the choice of location.

Security is another important aspect to bear in mind, particularly when considering emerging mining locations. For example, Paraguay emerged as a mining destination a few years ago. Presently, Guatemala and certain African countries are trying to establish themselves in the market as potential mining locations. So, building a data center in less straightforward jurisdictions may entail substantial security and safety costs. Thoroughly evaluating the security measures and associated expenses is essential in the location selection process.

What are the benefits of mobile data centers for mining? How do they differ from stationary data centers beyond size and mobility?

Well, as we can see from the term "mobile," a mobile data center offers the advantage of easy transportation to different locations. Let me begin by outlining the pros and cons of both mobile and stationary data centers.

In comparison to traditional data centers, mobile data centers typically have two primary areas where they fall behind. The equipment density in a mobile data center is much lower than in a stationary one. Designing a building allows for more equipment per unit area, whereas mobile data centers require ample land for installation. Although it may seem like a drawback, it is not necessarily an issue for certain projects.

The second area is heat dissipation and equipment heating. Operating equipment indoors is easier than in a mobile data center, especially during shutdowns and restarts in extremely cold temperatures. Starting up equipment in a mobile data center demands more effort and expertise compared to a stationary data center. The risk of equipment damage is higher in mobile data centers under sub-zero conditions.

Based on experience, owners of extensive equipment fleets, managing tens or hundreds of megawatts, typically refrain from using mobile data centers. The risk of equipment failure during farm outages is a concern. Addressing condensation issues and carefully handling equipment are crucial. Mobile data centers require a startup checklist, particularly in sub-zero temperatures, to prevent equipment damage.

The parameters of a mobile data center may not allow you to install some additional means to filter electricity to protect your equipment, while in a building you can do this. The cooling and ventilation system, which can be done in a classic data center, will almost always be more sophisticated and suitable for the operation of equipment.

That said, it's not always possible to build a stationary data center in some location that has very favorable electricity rates. So this is where mobile data centers come in. Let’s say, you have a small hydroelectric power plant somewhere in the mountains, with 2-3 megawatts capacity, which is no longer in demand. You can get mobile data centers and install equipment there. It would be a very efficient use of electricity, because there's no one there to sell it to, but it can be used for mining.

What can be done to reduce the environmental impact of data center construction and operation?

There are several key points worth highlighting here. Firstly, I’ve just given you an example of a hydroelectric plant that's off the grid. In principle, this could refer to any power plant that is disconnected from the grid for one reason or another. These plants require resources for construction, and if abandoned, they can have a negative effect. However, when utilized for mining purposes, they generate added value to the economy, resulting in a positive impact.

Secondly, addressing surplus electricity supplies can contribute to reducing the ecological footprint. Electric networks are intentionally designed with excess capacity to ensure continuous power supply. There are planned surpluses and unplanned surpluses. So, there can emerge a surplus of 15 megawatts in the township that will not be used for 5 years. These surpluses can be effectively utilized rather than wasted.

And if we used that electricity, we would get some added value in the form of expenses, taxes, etc. This allows us to indirectly reduce the burden on humanity and on the ecology.

Next, let's consider more direct approaches. Air cooling in data centers tends to generate noise. You can build a noisy data center, or you can spend some effort and make it quieter. It's basically available, and some data centers do it, while some don't.

Additionally, the substantial heat produced by data centers can be repurposed. The heat can be harnessed for various applications, such as wood drying, greenhouse heating, or water heating for technical purposes, demonstrating a practical means of utilizing the excess heat.

In countries like Finland, there is a notable commitment to complete heat recycling in data center design. Given the climate and the constant demand for heat, these recycling initiatives play a crucial role. Thus, reducing the environmental impact is closely tied to a country's overall approach to waste management and heat recycling in industrial settings. If a country recycles all of its garbage and takes care of recycling the heat produced by its industrial plants, cryptominers will also strive for that.