Bitcoin mining infrastructure has very quickly (over the course of only the past couple of years) grown into a substantial market niche for data center providers. It is a tricky business, however, and not every provider can make the math of providing a fairly bare-bones space-and-power product to Bitcoin mining companies work.
CenturyLink Technology Solutions has become the latest provider to take a crack at this market. The company recently signed with Austin-based CoinTerra, a major player in the Bitcoin-mining-infrastructure ecosystem, as a tenant starting with four of its data centers.
According to CoinTerra, about 15 percent of the global Bitcoin network runs on its hardware. The company’s CEO Ravi Iyengar said this estimate was based on the number of mining servers it has shipped to customers or deployed in its own data centers and the total mining performance of the network.
CoinTerra’s main revenue stream is the Bitcoin value mined by its own servers, but the company also provides mining as a service to others and sells mining hardware. It currently has about eight data center locations, all in North America, including the four it has leased from CenturyLink.
Location, power requirements kept close to vest
Other than CenturyLink and C7 Data Centers, Iyengar was reluctant to disclose the names of CoinTerra’s other data center providers for security purposes. It is safer to disclose the names of companies like the ones he did disclose, since they operate in multiple locations, and it is impossible to deduce which locations the mining servers live in. The other providers, he said, were single-location data center companies.
Iyengar also declined to disclose the exact amount of power the company’s infrastructure uses or has contracted for with CenturyLink, saying only that it was north of 10 megawatts but that it would be north of 20 megawatts “very soon.”
Mining capacity is a trade secret in the world of mining companies, and the total amount of power a company consumes could easily be used by a competitor to calculate, with reasonable accuracy, how many servers it is running, Iyengar explained.
Very unusual data center tenants
At least $600 million is expected to be spent on Bitcoin mining infrastructure in the second half of this year, according to a recent estimate. That is a huge opportunity for data center providers, but not an opportunity all of them are in the position to capture.
Around-the-clock uptime is not as critical to mining operations as it is to most typical data center customers. A few seconds of downtime don’t really make a big difference, Iyengar said.
For mining companies like CoinTerra the most important attributes of a data center are extreme power densities and short deployment timelines. Since data center providers draw the bulk of their profit margins from providing redundant, reliable infrastructure, they cannot necessarily keep those margins and remain attractive to mining firms.
C7 CEO Wes Swenson told us in an earlier interview that his company has designated space in its data center portfolio designed specifically for Bitcoin. It is high-density, low-reliability space, and the provider offers it with no service-level agreements.
CenturyLink took a different approach with CoinTerra – its first Bitcoin customer. Drew Leonard, the provider’s vice president of colocation product management, said the company managed to sell CoinTerra a fairly standard product, including an SLA for cooling (a guarantee to maintain a certain ambient temperature).
Iyengar said CenturyLink did have to modify the solution to a certain extent. “They all had to customize their solution to reduce the cost,” he said about his data center providers. The traditional approach was too expensive for providers to be able offer the level of operational expense CoinTerra had asked for.
‘Move at Bitcoin speed’
Ultimately, CenturyLink won the contract because it was able to accommodate the power densities, the cooling efficiency and the extremely tight deployment deadlines CoinTerra required. “They’ve shown that they can move at Bitcoin speed, and that’s what we like about them,” Iyengar said.
CenturyLink installs the equipment for the customer. One of the environments it stood up for CoinTerra in one week after it received the shipment of the TerraMiner boxes. Speed of deployment is crucial, since, as Leonard put it, every day a server sits somewhere in a loading dock is a day of lost revenue for the mining company.
CoinTerra was a good match for CenturyLink because of the provider’s traditional focus on high power density in data center design. “The reason this type of customer is ideal is because they are very dense,” Leonard said. “They don’t require a lot of space. We can put a lot of power in it.”
Current-generation TerraMiners can take anywhere between 20 kW and 25 kW per rack, Iyengar said. “Mining machines consume more power than any of the traditional severs, by a big margin.”
Besides power density, however, cooling the load efficiently is also a big deal for this kind of equipment. The better it is cooled, the more Bitcoin value it can generate. “The way you cool them basically allows the machines to perform better,” Iyengar said. “Cooling directly impacts the revenue.”
Because cooling is so important to the business, CoinTerra is exploring non-orthodox options, such as immersion cooling. Some vendors, such as Green Revolution Cooling, offer cooling solutions that submerge server motherboards in dielectric cooling to take advantage of higher cooling efficiency of using liquid versus air as the medium.
In the near future, CoinTerra may be using CenturyLink’s data centers to house such immersion-cooling systems. The next-generation of TerraMiner technology will feature a mix of air and immersion cooling, Iyengar said.
Big enough for own data center
As it grows, CoinTerra is expanding its data center footprint aggressively. In addition to using service providers, its data center strategy also includes construction of its own dedicated facilities. The company is currently fitting out a data center in Canada that will provide more than 20 megawatts of power for bitcoin mining, Iyengar said.
It is also exploring a build-out of similar scale in the U.S., potentially contracting with CenturyLink, he said, but that project is still in very early stages, and no decisions have been made.
CoinTerra is the first customer in the Bitcoin ecosystem for CenturyLink, but public announcement of the deal indicates that the provider is interested in doing more business in this space. “We are seeing a definite up-swing in the trend and the opportunities with some of these companies,” Leonard said.
It is too early to tell whether the niche represents a major growth opportunity for a provider like CenturyLink, however. “There’s an opportunity there,” he said. “Whether it’s major growth or not, it really depends.”
Visit the dedicated Bitcoin data center market section on Data Center Knowledge for more coverage of this space.