Another Tik Tok Trend – Why Your Data Should be Stored in the Nordics

By Eyjólfur Magnús Kristinsso

The velocity of digitalization is only increasing as many companies embrace AI or automation solutions to optimize business processes and this has led many businesses to reevaluate their IT infrastructure. This piece outlines the top considerations for businesses looking for a data center solution that can hyperscale effectively.

The recent announcement that TikTok is planning to hyperscale its data center operations in the Nordic region has highlighted a future opportunity for businesses that deal in big data. The social media platform follows Apple and Google, in addtion to  other international enterprises such as BMW and BNP Paribas that have built massive data centers in the area. 

From financial forecasting and engineering simulations to machine learning or predictive modeling, the velocity of digitalization is only increasing as many companies embrace AI or automation solutions to optimize their business processes. These types of computing rely on highly modular and flexible tech architecture so that compute and storage resources can be scaled up and down as required without changes to the underlying physical infrastructure. As a result, many businesses are having to reevaluate their IT infrastructure and look for a data center solution that can hyperscale with demand.

Additionally, an increase in abundance of ESG initiaitves, a scarcity of energy and ever increasing energy prices have supported this trend of locating state of the art data centers in the Nordic region. The cooler climate and capability to provide high density liquid cooling solutions is also a distinctive benefit of the location.

Choosing a data center provider is a long-term decision, and businesses needing to hyperscale have very specific requirements – access to land vs proximity to markets, abundance of power vs low energy pricing to name a few. This coupled with rumored changes in EU regulations around data location and potential sustainability standards it is essential that businesses make an informed and future proof decision.

Cushman & Wakefield’s latest Global Data Center Market Comparison Report identifies what factors data center occupants value. From the obvious – connectivity and infrastructure to political stability and the cost of power, there are many components to be considered.  In this piece we discuss the key issues for  hyperscalers when choosing a data center location.

Agility and scalability

In order to hyperscale your data center effectively the first consideration is access to land. Data centers require huge sites to house their computing equipment, which includes servers, storage devices, networking equipment, cooling, power, and security systems. 

A suitable geographic location needs to have proximity to the necessary markets depending on the genre of the business and should benefit from a low latency network and fully redundant connectivity to ensure consistency of service. This refers to the practice of having multiple, backup connections in case one of the primary connections fails. Many Nordic countries benefit from this high speed performant infrastructure – . Iceland, for example, has invested heavily in redundant connectivity to ensure the reliability of its telecommunications infrastructure and to attract tech investment in the region. It now boasts multiple undersea fiber optic cables connecting the country to the UK, and mainland Scandinavia which in turn allows a connection with North America and beyond.

Further geographical considerations include the political and economic stability of the location – rated as a ‘mid-weight’ factor in Cushman and Wakefield’s report – as well as a prosperous economy, a beneficial climate and low environmental risk. Additionally, businesses should consider the accessbility to a skilled workforce in order to address the reported ‘skills gap’ in the technology sector.

The energy conundrum

The hyperscaling of data centers is a process that requires an extraordinary amount of energy usage and so businesses looking to hyperscale will need to balance the increasing need for power with skyrocketing energy costs. Energy prices make up a very large percentage of OPEX and fluctuate globally which makes them difficult to forecast.

Many Nordic countries, for example, benefit from a surplus of renewable energy sources. Iceland in particular has an energy supply run on a closed grid that is powered by 100% renewable hydro and geothermal energy sources. The result is stable long term power that is significantly cheaper compared to mainland Europe and benefits from fixed purchase agreements with no price volatility – making long-term energy cost forecasting easier.  

Similarly, locating data centers in countries with a cool and more consistent mild climate will ensure that steady temperature and humidity levels within the data center are maintained more efficiently, reducing energy outputs and pollution, and ultimately decreasing the overall carbon footprint and financial impact to the business. 

Sustainability and future proofing

This colossal requirement for energy to power high-performance data centers is at odds with any ESG and related sustainability targets a business might have. The cooling of tech infrastructure alone is responsible for 40% of the total electricity cost of most data centers. This means it is equally important that organizations consider not only the abundance of power where their data center sites are located but also the location’s climate.

Similarly, if your data center is purpose built , designed with heat capturing technology capabilities and is located in a cooler climate, it is possible to utilize primary cooling systems designed for heat recovery. This means that all warm air exhaust from the data center is recycled and the excess heat can potentially be used by local energy providers to heat local communities. This is a highly energy efficient process and will go some way to future proof businesses against any sustainability or carbon reduction standards that may be introduced in the future. Sweden’s capital, Stockholm, for example, has a well-established heat reuse system and works with local data centers to reuse excess energy to heat local housing as part of their circular economy principles.

Bottom line impact

Choosing a data center is a long-term investment and businesses navigating a digital explosion in economic uncertainty are having to make careful decisions to future proof their success.  This coupled with a global increase in awareness of sustainability suggests that businesses wishing to hyperscale their tech infrastructure will have to carefully consider the financial and ecological implications of the location of their data center in addition to ensuring the technology itself can scale with the changing needs of high performance computing.

Locating a data center in a cooler climate can result in a significant reduction in energy consumption and CO2 output and so, businesses that consider the environmental and geographical benefits of their data center location will not only reap the rewards of high functioning, scalable and sustainable infrastructure but benefit from the substantial financial impact afforded by low cost energy and state of the art cooling systems.

The Nordic region has become increasingly popular for the location of state-of-the-art data center facilities in recent years – in fact Copenhagen has been listed as the second most interesting data center market to watch in 2023. The cooler climate coupled with availability of land, low political and environmental risk factors and of course access to top quality infrastructure and related services make it an ideal choice for businesses wishing to effectively hyperscale their compute.

About the Author

Eyjólfur Magnús Kristinsson is the CEO of atNorth, the leading Nordic colocation, high-performance computing, and artificial intelligence service provider. He is responsible for the significant expansion of the business in recent years as the industry responds to the growing demand for high-performance infrastructure and is committed to atNorth’s vision to providing scalable, best in class solutions that are truly sustainable and future proof.