Dave Perrill opened his evening session at Mining Disrupt Miami 2019, held July 23–25, 2019, with a question for the data center industry: do all applications require the redundancy and reliability that modern facilities are built around? Perrill, then CEO of Compute North, said they do not, and that bitcoin miners were already building the alternative. He called it the tier zero data center.
He introduced Compute North as a company focused on infrastructure and development solutions for miners and any type of high-performance computing, headquartered in Minneapolis, with operations in three states. What set it apart, he said, was working to be trusted and credible, driving cost out of everything it did, and moving with urgency for its clients.
What tier four redundancy costs
Perrill gave modern data centers their due. The large buildings have no single point of failure, he said, because the fiber, the electrical systems and the cooling are all redundant, and from the end user's point of view applications simply work. That, in his description, is the promise of the cloud. The problem is the price.
For a tier four data center, seven to twelve million dollars per megawatt.
Dave Perrill · 1:29
On top of that capital cost, he said, every dollar spent on energy for the computing equipment brings another 80 percent to another hundred percent in spending on ancillary systems such as mechanical cooling and the other subsystems that run the environment. Operating expenses are high as well, and he put the time needed to bring such a facility online at more than two years.
Napster and the case for best effort
To make his point about centralized control, Perrill showed a picture of Shawn Fanning, the creator of Napster, and recalled his own college dorm days, when anyone could search for music and download it from anywhere on the web with no central control. Napster was eventually shut down, he noted, but it was a massive success as a peer-to-peer network. Crypto and blockchain share some of those traits, he said, but with differences that matter for infrastructure.
He listed three. Mining runs on specialized hardware: ASICs are not found in an office, a home or a standard computing environment. The industry has reached industrial scale, with the size of mining different from what it had been even 18 months earlier. And miners have to be careful with costs to get through the downturns he called winters.
Data centers as they are built, he argued, do not fit those needs. Their economics do not line up, from capital expense to PUE. They are designed for much less dense loads than the 30kW or more per rack that mining runs. And many large REITs and data center operators will not underwrite crypto customers because of the credit risk they see.
Defining tier zero
Data centers are classified in four tiers, Perrill explained, and each step up adds redundancy, infrastructure and reliability, along with cost. What miners were building, in his account, sits below tier one: a best-effort facility where the aim is to get the computing done rather than to guarantee that it happens.
So we are proposing, and what we're starting to see is the innovation of what we consider the tier zero data center.
Dave Perrill · 3:37
And that's again, the tier zero, where we see cost being the name of the game, much more versus the redundancy.
Dave Perrill · 4:06
Energy, he said, is 80% of the company's operational costs, so Compute North went to the source of the power rather than bringing power to a building, and worked to keep PUE and other operating costs as low as it could. That meant no external cooling and nothing beyond, perhaps, immersion. The applications themselves, he said, have to be built with redundancy so they can run in that kind of environment.
The numbers he put on tier zero
Perrill said miners in the room would recognize his figures. The capital expenditure for a tier zero facility, in his numbers, is about 3% of a tier four data center, at $150k to $250k per megawatt. He put the overhead from ancillary systems under 5%, meaning only a small part of each energy dollar goes to systems that add no value. Operating costs are much lower, he said, and such sites come online in a much shorter time.
And again, the miners in this room will recognize a lot of these slides, but this, or the economics here, that the capital expenditure is about 3% of a tier four data center,
Dave Perrill · 4:47
Beyond mining
Blockchain and proof of work were already the main use case, Perrill said, but he named other workloads the company was watching. The first was machine learning and deep learning, where training is computationally intensive but does not have to sit in a mission-critical facility. He was careful about the label: he said he had left AI off his slide because it was still a little far out at the time.
but can be done in a best effort scenario, make a lot of sense.
Dave Perrill · 5:48
He also listed projects involving NVIDIA, graphic rendering for films and online video, grid computing, where he said DFINITY was leading, and storage, naming Sia among the company's partners.
His four takeaways
Perrill closed with four points. Modern data centers carry a great deal of waste. The industry is full of smart people doing more with less, which he said always humbled him. Some applications being designed do not need the scale and redundancy of today's data centers. And the tier zero data center, he said, is poised to change much of the ecosystem as it exists.
Compute North later filed for bankruptcy protection, according to The Block. Perrill now leads Backbone Digital as CEO. When this session was recorded, Bitcoin traded at $9,770; on October 17, 2026, it was $81,466.