I am in the process of building a structure high up in the middle of a deep ocean on a multiplayer server. At Y:245, I built a small platform and a nether portal and set down some chests. From here I began to experience extreme server lag, being unable to open chests, go through the portal, or break blocks.
The debug screen also showed the entity count jumping all over, despite there being no entities at this height. I am also the only one of the server at the time of this report, and the bug is still occurring.
Disconnecting and reconnecting at this height does not solve this problem, though disconnecting while inside the portal did put me in the nether, and disconnecting at sea level fixed the lag as well. However, climbing back up consistently recreates this problem.
It seems that at roughly Y:185 The entity count starts fluctuating and the server lag begins.
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Crash report as requested.

This ticket is invalid as it relates to a modified or 3rd party client, server, or launcher.
Any non-standard client/server/launcher build needs to be taken up with the appropriate team, not Mojang.
Any plugin issues need to be addressed to the creator of the plugin or resource pack.
This site is for addressing issues related to the base unmodded Minecraft; Bukkit, Spigot, Forge, Optifine, or any other modded system invalidates your ticket, unless it can be shown to happen in Vanilla.
Additionally, if you have problems on large-scale modded servers, please report it to their site. It's probably not a bug in Vanilla Minecraft.

This is a crash report after experiencing the same problem in Vanilla. The server is also running Vanilla Minecraft.

Got it.
While having this issue:
Please force a crash by pressing F3 + C for 10 seconds while in-game and attach the crash report (
[minecraft/crash-reports/crash-<DATE>-client.txt|http://hopper.minecraft.net/help/finding-minecraft-data-folder]
) to this ticket.