What Will be the Legal Effect of Blockchain on Data Centers?

CAPRE's Second Annual Greater Boston & New England Data Center Summit was held on June 19 at Harvard University in Cambridge, MA.
Jun 29, 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. Below, we delved into one such aspect of blockchain mining during a panel discussion moderated by Adam Waitkunas, President and Founder of Milldam Public Relations at CapRE’s Second Annual Boston and New England Data Center Summit, titled, Blockchain, Cryptocurrency and Bitcoin: What are They and How Do They Impact Data Center Design & Construction?

data center summitWaitkunas asked Jeffrey Moerdler, Partner at Mintz Levin to respond to 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?”

Replied Jeffrey Moerdler, Partner at Mintz Levin, “The miners aren’t going to be in the kinds of data centers we’re all talking about here. They may, as Terrance has said, acquire old, antiquated Tier I facilities and use them, but they’re not going to be in the state of the art facilities that we’re all talking about – whether they’re single tenant or multi-tenant facilities.”

After all, Moerdler has done a bunch of these transactions, and he thinks that it’s interesting to see the evolution. “The traders and custodians and other parties doing these transactions have a lot of interesting, specific concerns,” he explained. “They’re very concerned about the protection of their security for their facility. Each one thinks that they have a secret sauce as to how they operate their servers – no different than how Facebook and LinkedIn and a lot of others think that their servers are kind of unique and specialized.”

According to Moerdler, they often also try to get some preferential or exclusive rights stipulating that they’re going to be the only one in that multi-tenant facility. “They think that that reduces competition,” he shared. “I don’t see it as a huge value-add for them, but as a restriction on the owner that’s unnecessary. Speed-to-market — no different than for most other users of data center space – is a huge issue for them. They want everything over-night.”

“They typically have an extremely fast ramp-up period to get out there and use the facility and many times they don’t meet it,” he shared, wrapping up his response. “Just like other users of data centers. They fight with the owner or operator about the rent for a period and then are unsuccessful in meeting their own timetable. It’s a new market. It’s another potential user for data center space that we all have to cater to.”

Banner Photo: Jeff Moerdler, Partner, Mintz-Levin. For more from this panel, check out a previous CapRE Insider Report: How Can Crypto-Mines Serve as “Recycling Centers” for Other Data Centers?

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