Monthly Archives: March 2014

Life as a Service – Part I

The topic for this post came about as more and more stuff gets virtualized and offered as a service. Software was my first foray into *aaS and I worked at a managed services company in the forefront of the transition from site licensed software to paying for it as a service. I can remember the pricing gyrations we would go through because the architecture didn’t exist to support shared servers in the early days so we had to figure out the license (usually an unlimited version) then add in hardware, bandwidth, and some labor, and come up with a price that made money. 

Fast forward 10 years and the software models I grew up with are all but gone. Enterprise Software Licenses and even sales people to a large degree have had to scale and become integrated with the stacks they are now selling as cloud. Even Microsoft came around to some degree and paying for experiences and application functionality has become the norm versus paying for stuff (products usually). People want to pay for functionality and usefulness and we finally understand that it can change, so flexibility is key.

Zoom out to other industries – the automotive industry as an example. In the car business 20 years ago leases were new, and now it’s leases with maintenance thrown in – one monthly payment to just drive a car. You still need to pay for gas, but it’s sign and drive and pay for the car’s functionality and usefulness. I think there are huge market shifting opportunities to go even further in integrating the ‘stack’ even for cars. Imagine a car as a service. The car, the features you want, built for you in your color. The payment (assuming you have one) includes the car, the insurance, the scheduled maintenance, wear and tear items that are part of whatever driver type you are and for the mileage that you want. We have the sensors in the vehicle and the big data mining to stay on top of the trends. Variable costs like insurance – accidents, DWI, and other risky issues, are one time corrections assuming the car is OK and drive-able. Gas you still have to pay for. Or imagine if Tesla, GE, Allstate, and jiffy lube (figuratively anyway) decided to band together and create the experience of just using the car – driving as a service. That would be pretty amazing. 

What else? How about home ownership? What if there was a company that provided houses as a service? All of the components exist, they just aren’t integrated. What if I want to live in Sedona AZ for a couple of years, then Kennebunkport Maine, then Austin TX while kids were at school and then find a cool place to retire and everything was provided as a service? My alarm system, keyless entry, lawn mowing, maintenance, wifi, TV and even furniture were offered as a service? Is this where the Internet of Things is headed?

What about airlines? What if each airline has its own experience. Business travelers fly one airline – no kids, families, or bags too big to lift over your head into the overhead compartment.  You can’t lift the bag, see you at baggage claim pal for that amateur move. Or one that does cater to kids – tv’s and plugs for tablets & devices to charge and no sugary snacks or juice for flights over an hour with extra time to wheel a house full of stuff brought ‘just in case’ down the aisle. Or the airline that only flies NYC to LA airports but really fast. Each with a different price for each experience and functionality.

Things change over our lifetimes – income, jobs, relationships, health, members of the family, you name it. What if we could roll with those changes better if we just had to live?

What if we just went through life paid for as a service?


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The Math of Bitcoin III

Blunt Hammer has been looking at and working through the math of Bitcoin as it relates to data centers over the past several weeks and the more we dig, the more we see Bitcoin working the way it should and also how there are several cracks in the system. Many news stories, especially the one by Newsweek trying to relaunch itself – apparently into oblivion – have added more stories about Bitcoin that are for the ‘standing in the checkout line’ crowd vs. people who want to understand its potential as currency for their business.

‘The Face of Bitcoin’ story threw the media into a frenzy because they thought there was finally a man, one human, who was allegedly behind it and would have answers. It reminded me of the running segment in Forrest Gump when reporters are running next to him with cameras asking him why he does it, and people thinking he was some kind of messiah or had answers. Nope. Newsweek got Gumped. The math analogy here is Bitcoin = 1, Newsweek =0. In fact, had Newsweek done even some basic research they would have found what I did – a link to a bunch of quotes from Satoshi Nakamoto going back to January of 2009. More than 5 years ago. Take a look and you may see as I did, the guy created something, opened it up to a community of other smart people and left it to go do something else not knowing if what he had created would have the impact or value it does today.

The real math I was doing however in spite of the riveting OJ-esque white bronco chase was related to the additional load the Bitcoin and crypto mining in general will add to the current electrical system worldwide. The rigs have the same electrical draw of an entire 42 U cabinet. In 4u of space. The rigs are chips and fans, a board, and case. The power supplies don’t ship with most of them, so like we used to say – batteries not included. So data centers where 2.5 KW were taken up by entire cabinets, now will have that inventory sucked up by something 1/10th the size. Said another way – it’s a 10x rise in density. That is an incredible amount of heat to add to a data center, especially ones that can’t handle a 2-3x increase from 2.5 up to 10 Kw/cabinet

Satoshi Nakamoto posted this on Aug. 9, 2010: ‘If you’re using electric heat where you live, then your computer’s heat isn’t a waste. It’s equal cost if you generate the heat with your computer. If you have other cheaper heating than electric, then the waste is only the difference in cost. If it’s summer and you’re using A/C, then it’s twice. Bitcoin generation should end up where it’s cheapest. Maybe that will be in cold climates where there’s electric heat, where it would be essentially free.’

Satoshi knew that heat was the issue four years ago when rigs were no where near the power they are today. In fact the hash rate was at 3GH back in August when he made that statement, and now it is at 40.8 MILLION GH! The computing power and electricity required to sustain and grow the hash rate is the Achilles heel of the entire network’s profitability because of the heat. When we use A/C to manage it, the cost of Bitcoin production doubles, and that doesn’t take into account any efficiency factors in a data center. As we have said many times, computers turn electricity into heat which is great if you live above the Arctic Circle 12 months a year, however for most of civilization that is not the case and A/C will be used to manage the heat that is produced from mining rigs. If the power costs are higher than the ability to make money making Bitcoin, there is no profit.

Here is a real world example of costs for a 1.0 MW Bitcoin mining operation:

1 MW IT load = 1,000 Kw

Cost per Kw (rent) = $100/kw 

Cooling ‘uplift’ = 50% (assumes a PUE of 1.5) 

Cost of power = .10 per Kwh

1,000 Kw (load) * 730 (hours in a month) * .1 (price per Kwh) = $73,000 for IT load power. Add 50% for cooling

Power =$109,000 per month at full load plus $100,000/rent = $209,000 per month = $2,514,000 per year for a 1 MW mining operation.

 As hash rates go up and the math gets harder and reinvestment in faster rigs is required just to keep up, you MUST eliminate costs of mining, which is all about managing power costs. Cut power costs, find efficient ways of cooling, and buy the most efficient rigs you can find. This is an arms race for the next 16 years, and you cannot bring bullets to gunfights.

If you want us to help you model out a successful mining approach of your own, email mark AT We are working on several game changing technologies…


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Bitcoin and Crypto currency in general just got real

My first reaction to the news about Autumn Radke may have been a bit of an over reaction, but it has sent shockwaves through the crypto currency world that could be as much an aftershock from the MtGOX implosion and bankruptcy as anything.

I hope you’re in a better place Autumn. Rest in Peace.


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Air cooling’s demise?

I have been watching the developments with a company – Allied Control – for the past several weeks. The reason they intrigue me is that yes, they have an interesting technology, but more importantly they fundamentally change the approach of how to approach managing heat from computers. They have developed a liquid cooling solution that removes the thermal ceiling for chip design. This is important because it means that the ability to to cool chips is no longer a factor in design. Sure there are other factors to contend with, but a significant one is removed.

The total addressable market just ballooned because enterprises can now build and ultimately run more powerful computers in smaller spaces more efficiently and without the worry of burning a data center or office building down. The ancillary benefits are that it will not take tons and tons of air conditioners to cool lots of these hotter boxes which amounts to significant energy savings on top of technology that is far less expensive to deploy in the first place.

The other thing I find compelling is that their solution is attainable. I just saw this article over at Gizmodo and while impressive as far as computational speed and coolness factor go, the DWave2 at $15M is impractical for most organizations and besides you need to have an environment 150 times colder than deep space (and two degrees above ABSOLUTE ZERO) and a vacuum that is 10 billion times less than atmospheric pressure which I also thinks means stronger than a Dyson vacuum. I live in New England and own a Dyson and even if I had the $15M I am sure I would still not have the right environment to run it in, aside from the $15M being able to buy a lot of chum for bluefin tuna fishing this year.

Keep an eye on Allied Control – it changes the game fundamentally like when props were replaced by jet engines. This is a new jet engine for computing and data centers, and while it may or may not be the demise of air cooling, the only time a see a biplane is at an airshow. Well before the Blue Angels take to the skies…

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