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Scrap-Metal Market Targets the Cloud as Its Next Recycling Project

Large data centers are mushrooming in number as global demand grows for storage of everything from emails to videogames. Investment in cloud infrastructure has surged since 2015, and the market for data-center equipment is expected to grow at an average annualized rate of roughly 16% this year and next, according to Citigroup Inc.

Cloud servers, though, typically have a lifespan of only about three years or so, according to experts, meaning that some of the earliest equipment already has passed its use-by date. 

Data-center equipment contains components such as processors and fans that can be stripped out and resold in the electronics market. They also contain metals such as aluminum, copper and steel that many experts think will become more valuable as large economies such as China rely more on consumption and less on exports for growth.

Annual capital spending by Amazon.com Inc., Microsoft Corp. and Alphabet Inc. ’s Google, which run enormous, so-called “hyperscale” networks, increased above $60 billion combined in 2018, up roughly 50% from the year before, according to company data. All are upgrading and expanding their data centers.

Heightened concerns around the security of sensitive data make tech companies wary about how they dispose of unwanted equipment.

Some companies demand that servers be broken up on site, so they can be watched and filmed by employees. Others use armed guards to protect obsolete servers on their journey to scrapyards. The industry also can’t agree with what can be salvaged: Some tech firms demand that all equipment be shredded and melted entirely, even if it contains components that could be used again.

Google, which describes its data centers as being “like small cities filled with servers, drives, routers and other components,” is seeking increasingly to recycle and resell components where it can to keep parts out of landfill, the Mountain View, Calif.-based company says in a post online. Google, along with Amazon and Microsoft, declined to comment on plans to refresh infrastructure.

In 2016, only 20% of all e-waste globally was recycled correctly, according to a report by the United Nations University, the International Telecommunication Union and the International Solid Waste Association the following year.

“Although cloud-computing trends can lead to fewer devices because all services can be accessed from one device, more cloud computing also means more data centers and more e-waste,” the report said.

Still, recyclers seeking to invest now for returns in the future are largely at the mercy of decisions made in Silicon Valley.