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Jeff Moerdler: Most Data Centers Are Analogous to Other Types of Real Estate, But Blockchain Changes the Game

CAPRE's Second Annual Greater Boston & New England Data Center Summit was held on June 19 at Harvard University in Cambridge, MA.
Jul 3, 2018
by Josh Anderson

CAMBRIDGE, MA – Many in the data center industry still have a lot to learn about crypto-currency mining and its underlying technology of blockchain, especially since most of the emerging technology is controversial. In previous CapRE Insider Reports, we’ve delved into one such aspect of blockchain mining covered during a panel discussion at CapRE’s Second Annual Boston and New England Data Center Summit, moderated by Adam Waitkunas, President and Founder of Milldam Public Relations titled, Blockchain, Cryptocurrency and Bitcoin: What are They and How Do They Impact Data Center Design & Construction?

data center summitWaitkunas asked panelist Jeffrey Moerdler, Partner at Mintz Levin, & Terrence Thurber, CEO of OregonMines to discuss a straightforward but complex question: “Can you talk about the effect blockchain will have on data centers from a legal perspective? How will SLAs be different when looking at blockchain?” After some initial back and forth, Moerdler acknowledged that he analogizes a lot of data center tenants and customers to what he has seen on the general real estate side.

Began Moerdler, “So an office tenant leasing a bunch of space gets an architect and engineer to design their space. And that architect or engineer says the tenant needs five watts per square foot of electric capacity for a typical office buildout. Well if you’re not including HVAC equipment in it, almost no office tenant has used that much capacity at any point in time in the last twenty or thirty years. They’re using one and three quarters or two watts a square foot.”

However, according to Moerdler, the engineers don’t want to be second-guessed and criticized later, so they spec five watts per foot, because they don’t know what will happen during the ten or fifteen-year term of the lease, and they don’t want their client-tenant coming back and criticizing them. “You have the same kind of thing in the utilization of data center space. the tenants and their engineers think that they can ramp up faster,” he explained.

Added Moerdler, “They’re building for peak usage, the time in which a majority or close to all of their servers are operating, which doesn’t happen 24 hours a day, 7 days a week, unless you’re Facebook or LinkedIn, which has done an extraordinary level of optimization to get all of the servers working at once, and I’m not sure that I believe they are really working at that level of utilization. So those are systemic issues.”

“The issue on the blockchain side is, the amount of redundant computing power being used by so many miners to validate one single block all at the same time and only one of them succeeds and gets paid a fee and then they all turn to the net one,” he concluded. “So I think it’s a little different of an analysis in terms of the design of the system, and there’s been a couple of companies out there talking about better optimizing how blockchain validation is done, to reduce the power usage. Though I’m not one of those geeks – maybe Terrance is – maybe he can tell us if that works and maybe how it works.”

For more from this panel on blockchain technology, check out previous CapRE Insider Reports:

Banner Photo: Jeffrey Moerdler, Partner, Mintz Levin

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