Facing Economic Challenges and Reducing Power Consumption

As we approach the end of the year, it’s time to update about energy crisis. We have faced many challenges over ’22 to navigate around.

Economic Challenges

Over the past year, we’ve had to navigate a range of economic challenges that have impacted Pulsed Media.

Energy Crisis

The most significant challenge has been the ongoing energy crisis. This has caused high and unstable electricity prices. Dramatic increases in our electricity costs and potential for further increases. This is very challenging situation for us.

Many businesses in Finland are struggling with these high energy costs, and there have been bankruptcies as a result. While regular citizens in Finland received a small tax cut on electricity rates, businesses do not get any help.

Energy Pricing

You can follow current electricity price in Finland at sahko.tk. Statista also has wholesale pricing averages. This will give you an indicator as to where we are headed. In Finland, electricity contracts for big buildings are typically set with a certain percentage “protected” and the rest drawn from the overall market. Nordea controls all of the electricity pricing in the building where we are located.

How did this really began?

Energy crisis actually began before this year in Finland, but it was unexpected prices would remain high. Helsinki times reported about this as well earlier this month.

Demolitions of coal power plants is partially to blame for the energy crisis. This is part of the green movement’s plans. More closures has already been announced. Helen is on the forefront of the green movement. Our national power company Fortum is also accelerating coal plant shutdowns. Apparently there are plans to get rid of coal completely by 2030, which has been confirmed by Euractiv to happen in 2029.

Earlier tax increases for peat energy, which we have plenty and is renewable, essentially shutdown that energy sector already. This was done rather quickly from plans to action. So now backup power plants has to be operational as so much has been shutdown or eliminated.

Plans for new power generation

The only proper other planned baseload generation Nuclear power plant is in limbo right now and might not be built at all, as it was a joint-venture with Russian Rosatom. In Finnish tradition, it was already plagued with delays. Helsinki is looking to sell their stake too. According to Reuters Fennovoima already ditched their part in Hanhikivi.

We are not aware of any significant base load power generation facilities even in planning stages. Solar is not useful in Finland during the winter. Wind power is very intermittent and unreliable. Hence we do not believe this situation will be fixed anytime soon. We expect energy crisis will continue to fluctuate wildly for many years ahead.

Do you notice the same trend we do? Let us know in the comments.

Inflation

Additionally we’ve also had to contend with high inflation.This has led to increased operational expenses (OpEx). Inflation has caused most costs to increase by at least 9%, with some increases being much higher. CPI Inflation rate is still rising and standing at 9.14% currently. However CPI is misleading and lagging indicator.

Significant changes in the EUR:USD exchange rate this year have caused the cost of purchases in USD to increase by roughly 15%. This is on top of inflation. The exchange rate has recently improved, with 1 EUR now equal to 1.06 USD.

Finally, there have also been supply shortages for some components. This shortage can cause prices to inflate further or make it difficult to find the products we need.

Taxes

We have also faced increased taxes which have further impacted our business. Seemingly Energy Crisis by itself is not enough of disturbance, so a little bit of taxes as seasoning had to be added? 🙂

Business owner taxes will be raised significantly next year, with a transition period fortunately. In future insurance companies and government essentially dictates the amount of this tax, with limited say from business’ themselves. This tax has marginal relation to business profits. Since we are in IT, we expect this tax will increase 4-6 fold over the next 4-6 years. However, this is not the only tax that has increased.

The Finnish government has also implemented a windfall tax to take away the large profits that energy companies are currently enjoying. The windfall tax will discourage energy investments, as it will take some of the profits.

Pain after excellent years

Because 2020 and 2021 were excellent years for our business, we are now facing the highest taxes we have ever faced. These taxes will continue to be a burden for 2023, and there is potential for them to also impact our operations in 2024. This is the biggest impact right now of taxes for us. Taxes is currently having the biggest impact on our budget for hardware investment in 2023 and 2024, as long energy crisis continues.

Reducing Power Consumption

Despite energy crisis causing a lot of challenges, we have made significant progress. By upgrading our servers and taking advantage of less cooling is required during the winter.
We have managed to reduce our metered power consumption by an insane 54.4% from the July average. This has taken a lot of effort in all regards, it’s just the tip of the iceberg that’s seen on shared seedboxes. Switches, routers, cooling etc. add to the below metrics.

Progress

Current figures for our power consumption are as follows, parenthesis says the difference since this detailed tracking began and we publicized the numbers:

• 8.67W/user (-4,7W)
• 2.26W/TiB Storage (-1.13W)
• 3.75W/TiB Allocated storage (+0.34W)

Power per TiB allocation has increased so dramatically due to all the unused capacity right now. As migrations progress, this number will get lower.

Only new server metrics currently, parenthesis is comparison to whole pool of shared seedbox servers:

• 6.85W Per User (-1.82W)
• 1.95W Per TiB of Storage (-0.31W)

Older servers to be migrated metrics, parenthesis is comparison to new shared seedbox servers:

• 11.42W Per User (+4,57W)
• 3.12W Per TiB of Storage (+1.17W)

As you can see, there is still room for improvement for power consumption.

THIS is why we had to adjust pricing

At the current high prices average user’s direct power consumption cost alone is around 1.87€ excluding CapEx & Maintenance for the cooling infrastructure. Since we are now over invested in CapEx for cooling the real cost is more like 3.80€/Month in power alone for average user.

Power costs used to be one of the top factors, not the biggest factor. Previously this same 3.80€/Month in electricity costs would have been more along the lines of 0.90€/Month. That’s an bonkers +422% increase!
Bandwidth used to be the biggest cost, by fair margin. Now energy is multiple times higher than that.

This is why we’ve had to adjust our pricing to match these massive changes in operational costs. Anything else would have been irresponsible and non-sustainable. We are still uncertain if the changes were big enough for the long term, but current predictions are tracking for positive outcome.

What’s Next?

There is still a lot of optimization work to be done. The power consumption of the older servers being migrated is significantly higher than that of the newer ones.

We will continue server migrations in January, just after the holidays. Economizer cooling system overhauls are planned for January-March as well.

There is also software development, and further paradigm changes we are exploring. Researching and testing these will take significant effort and investment.

Server Upgrades Offer HUGE Benefits

We’ve had to make very significant hardware investments to upgrade users to modern, lower power consumption systems. Performance has increased drastically for our users. Infact so much more that we are planning IP Transit, Router etc. upgrades for Q1/2023.

It’s better to spend the budget on something that brings value to our users, such as Yourself. Better spend the budget on transit capacity rather than electricity.

We have upgraded mostly to big AMD EPYC Servers, added SSD caching and other methods. At best cases we have managed consolidations as high as 30:1 while increasing performance. More of these upgrades are coming, along with Ryzen servers. We had to migrate some Ryzen servers as well to move them to the new paradigm. This has somewhat delayed the progress on electricity savings seemingly, making their impact on long term goals.

Conclusion

We’ve had to navigate many economic challenges over the past year: energy crisis, high inflation, exchange rate changes, and supply shortages.

Despite these challenges, we have made progress in reducing our power consumption. We will continue to work on optimizing this and finding ways to adapt and mitigate the impact of these challenges.

If You want to help us out, do let your friends know of our excellent services and ask them to consider our seedboxes or dedicated servers.

Thank You for your continued support in these challenging times.