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The Cybersecurity Boom

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The Cybersecurity Boom

How Investors Can Play the Global Explosion in Cyberattacks and Cybercrime

Thanks to Purefunds Cybersecurity ETF (HACK) for helping us put this together.

In 1983’s WarGames, a young Matthew Broderick unwittingly hacks into military central computer while searching for video games and almost inadvertently starts World War III. This film is classified on IMDB as in the “Sci-fi, Thriller” genres.

While the prospects of cybercrime and cyberterrorism are certainly thrilling (and scary), the descriptor of “Sci-fi” for the movie may no longer be necessary. In the last calendar year, there’s been dozens of high-profile cybersecurity incidents that are not a far cry from the geopolitical near-miss in WarGames.

The United States government and the country’s largest bank have both had serious security intrusions as of recent. This summer the United States Government revealed it had over 20 million records stolen by hackers allegedly based in China. Just as concerning, it was exactly one year ago that J.P. Morgan was compromised with records stolen from over 76 million households and 7 million small businesses. The company has now vowed to spend $250 million a year in preventing such incidents.

Most recent of all is this week’s hack of the popular adultery site Ashley Madison. The leak of sensitive information on potentially 37 million customers isn’t a potential geopolitical concern as the above cases, but it does have business implications: the website’s plan to raise $200 million in an IPO in London has now been kiboshed for the foreseeable future.

If big organizations like Sony, Target, Google, and Home Depot can’t do anything to stop cybersecurity incidents, what chance do the rest of us have?

And that’s the problem with cyberattacks. Detected incidents have skyrocketed over the last five years, soaring from 3.4 million to 42.8 million from 2009-2014, and they now cost the global economy an estimated $400 billion a year. Every day these incidents happen on a small scale, but today’s hacking technology and sophistication allows for much more. Exploitation of big cybersecurity vulnerabilities could cause financial chaos, destroy reputations of entire companies, expose business and state secrets, and even shut down moving vehicles remotely. This is not science fiction. This is reality – and we haven’t even gotten into the hypothetical potential damage that hackers could cause if they had even more resources or resolve. People’s lives and money are at stake.

Systems are more sensitive and hyperconnected than ever before, and hackers are deploying more sophisticated tactics to take advantage of them for personal or organizational gain. Luckily, there is also an entire industry of engineers, programmers, analysts, designers, cryptographers, and other professionals trying to build the walls and moat around the castle. Cybersecurity, as we depict in this infographic, is a booming industry with hundreds of companies scrambling to protect us from having intellectual property, health records, financial information, and other vital data compromised.

That’s why by 2020, the cybersecurity market is expected to be valued at $170.2 billion, which implies a 9.8% CAGR (compound annual growth rate) from today’s estimate of $106.3 billion. Businesses and governments are spending more on cybersecurity: even the Whitehouse announced this year that in its 2016 fiscal budget that it would aim to spend $14 billion on additional measures. Fifteen years ago, cybersecurity was only a blip on the US government’s radar at $938 million in spending.

The private sector is in the same boat, as 69% of business executives see cyberattacks as a threat to their growth. This is a fair statement since Verizon estimates in its 2015 Data Breach Investigations Report that the average cost of a cyberattack to a business ranges between $475,000 to $9 million depending on the number of records stolen.

Among the companies that are benefiting from the surge in cybersecurity spending include those building firewalls, secure servers, routers, anti-virus software, and malware detection tools. Firms that specialize in consulting and solving related security problems are also getting plenty of interest. Investors can potentially profit from this sector as well by identifying companies and funds that will gain from booming activity and spending in the sector.

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Can Data Centers Be Sources of Sustainable Heat?

Data centers produce a staggering amount of heat, but what if instead of treating it as waste, we could harness it instead?

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Diagram showing how waste heat from data centers could be recaptured and recycled to provide sustainable heat in residential and commercial settings.

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The following content is sponsored by HIVE Digital

Can Data Centers Be Sources of Sustainable Heat?

Data centers support the modern technologies on which we rely, but also generate incredible amounts of heat as waste. 

And since computers tend to be very sensitive to heat, operators go to great lengths (and expense) to get rid of it, even relocating to countries with lower year-round average temperatures. But what if instead of letting all that heat disappear into thin air, we could harness it instead?

In this visualization, we’ve teamed up with HIVE Digital to see how data centers are evolving to recapture and recycle that energy.

How Much Heat Does a Data Center Produce?

To get an idea how much heat we’re talking about, let’s imagine a mid-sized cryptocurrency operation with 1,000 of the most energy-efficient mining rigs on the market today, the Antminer S21 Hydro. One of these rigs needs 5,360 watts of power, which over a year adds up to 47 MWh.

Multiply that by 1,000 and you end up with over 160 billion BTU, which is enough energy to heat over 4,600 U.S. homes for a year, or if it happens to be Oscar season, enough heat to pop 463,803 metric tons of popcorn. Less if you want melted butter on it. 

How Waste Heat Recycling Works?

At a high level, waste heat is recaptured and transferred via heat exchangers to district heating networks, for example, where it can be used to provide sustainable heat. Cool air is then returned to the data center and the cycle begins again.

Liquid cooling is by far the most efficient means of recapturing and transporting heat, since water can hold roughly four times as much heat as air.

Data centers around the world are already recycling their waste heat to farm trout in Norway, heat research facilities in the U.S., and to heat swimming pools in France.

A Greener Future for Data Centers?

Waste heat recycling has so far been voluntary, led by operators looking to put their operations on a more sustainable footing, but new regulations could change that. 

Amsterdam and Haarlemmermeer in the Netherlands require all new data centers to explore recycling their waste heat. In Norway, they require it for all new data centers above 2 MW, while Denmark has taken a carrot approach, and developed tax cuts and financial incentives. And in late 2023, the EU Energy Efficiency Directive came into force, which will require data centers to recycle waste heat, or show that recovery is technically or economically infeasible. 

With Europe leading the way, could North America be very far behind?

HIVE Digital Provides Sustainable Heat

HIVE Digital is already recycling waste heat from its data center operations in Canada and Sweden. 

Their 30 MW data center in Lachute, Québec, is heating a 200,000 sq. ft. factory, while their 32 MW data center in Boden, Sweden, is heating a 90,000 sq. ft. greenhouse, helping to provide sustainably grown local produce, just one degree short of the Arctic Circle.

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Learn how HIVE Digital is helping to meet the demands of emerging technologies like AI, sustainably.

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