Data centers and this winter’s competition for energy resources

Data centers in the United States and Europe are facing soaring energy costs. They will have to compete with miners from Bitcoin and other industries for increasingly scarce energy in the markets of North America, Europe and Asia. Data centers will also have to compete with residential customers, who face higher energy bills and potential outages in some U.S. states this winter if supplies do not increase.

Higher costs and stress come at a bad time for data centers. Server farms have already been built and expanded at record rates in 2020 and 2021, as cloud computing and cloud consumer services explode. And like the COVID-19 pandemiclockdowns stimulate the use of all types of online services.

The rising energy costs and supply constraints facing data centers are further exacerbated by the high power consumption of Bitcoin miners, who earlier this summer were banned from China as the government seeks to save energy for critical industries.

The Japan Times reported that “… from aluminum smelters to textile producers and soybean processing plants, factories are being ordered to reduce activity or – in some cases – to shut down altogether. half of China’s 23 provinces have failed to meet the energy intensity targets set by Beijing. “

A few days ago, China made all crypto activity illegal to ensure it covered all aspects of the use of crypto energy.

However, China has not eliminated the energy-intensive tasks of mining bitcoin, but simply moved them to someone else’s power grid, like Texas, where part of the crypto industry moved due to lower energy costs. But Texas has a large population of low-income residents. Bitcoin miners and other industries have the money to pay higher prices, which increases costs for everyone.

If the power supply situation worsens, U.S. state and national regulators will be forced to sort out the power supplies and decide which is a priority.

For example, will Facebook’s data centers deserve the priority? Can the world survive with less social media, with slightly less online access to billions of photos of friends and family? Should Netflix’s server farms be given priority? Or TikTok? What about banking services, information services, online games, education and health information?

A massive digital economy needs power to function and thrive. Will it soon have to justify itself and compete for its place in the energy pipeline?

The easiest solution, for now, is to delay such a scenario and do what China did first: cut out the biggest energy guzzler and the one that contributes the least to daily life and the economy: crypto mining and its associated activities. Such a move would also remove the upward pressure on energy prices from the wealthy crypto industry, making it a very tempting move.

But if that doesn’t improve the energy supply, then every data center and every business will have to justify its energy consumption. Good luck with that.

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