I have a dedicated machine. 

HP proliant DL360 G7

dual Xeon x5660s 2.8ghz 24 threads

32 GB ecc ram

windows 10 PRO

We are also running a 1GB LAN and no other things on my network have any issues.

I have the server allowed to use 12 threads. Every time I get the message "Autocompaction running" There is a huge spike in lag that lasts for several seconds. The sound stops and so do all visual effects of blocks being broken. After up to as many as 20 seconds it returns to normal. It does this incredibly frequently and it is making the game unplayable. 

My question is: What is autocompaction and how do I make it stop?