Mobs repetitively despawn and respawn rapidly at high Y coordinates (causing lag)

Hostile mobs rapidly despawn and respawn repetitively when you're about 125 blocks from the ground. This is easiest to see in the End.

Video: 0:52~0:58 https://www.youtube.com/watch?v=UgiTzg2jr_A

Squid spawning causes server to lag.
Steps to reproduce:
Render Distance > 16 chunks
1. Fly high above an ocean around height of 200.
2. Wait at least a minute.
3. Fall down and see squid spawning and despawning rapidly everywhere
At height 200 above a level 46 ocean, the server becomes laggy. The longer you stay above the ocean, the more the squid lag seems to "accumulate". Eventually the lag will dissipate and the squid spawning will go back to normal. An aqua affinity helmet will help you see all the squid spawning/despawning

These error messages start to pop up if you stay at the 200 height for a while(10 minutes or greater). While an indicator of general lag, the server is fine any other time except when at 200 height above ocean.

31.12 06:09:28 [Server] INFO [06:09:28] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2414ms behind, skipping 48 tick(s)
31.12 06:09:09 [Server] INFO [06:09:09] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2180ms behind, skipping 43 tick(s)
31.12 06:09:03 [Server] INFO [06:09:03] [Server thread/INFO]: Saved the world
31.12 06:09:03 [Server] INFO [06:09:03] [Server thread/INFO]: Saving...
31.12 06:09:03 [Server] INFO [06:09:03] [Server thread/INFO]: Saving is already turned on.
31.12 06:09:03 [Multicraft] Auto-saving world...
31.12 06:08:51 [Server] INFO [06:08:51] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2156ms behind, skipping 43 tick(s)
31.12 06:08:36 [Server] INFO [06:08:36] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2383ms behind, skipping 47 tick(s)
31.12 06:08:21 [Server] INFO [06:08:21] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2091ms behind, skipping 41 tick(s)
31.12 06:08:06 [Server] INFO [06:08:06] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2775ms behind, skipping 55 tick(s)
31.12 06:07:49 [Server] INFO [06:07:49] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2298ms behind, skipping 45 tick(s)
31.12 06:07:46 [Server] INFO [06:07:46] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 14709ms behind, skipping 294 tick(s)
31.12 06:07:15 [Server] INFO [06:07:15] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 4657ms behind, skipping 93 tick(s)
31.12 06:07:10 [Server] INFO [06:07:10] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 19226ms behind, skipping 384 tick(s)
31.12 06:06:37 [Server] INFO [06:06:37] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 7385ms behind, skipping 147 tick(s)
31.12 06:06:22 [Server] INFO [06:06:22] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 10029ms behind, skipping 200 tick(s)
31.12 06:05:55 [Server] INFO [06:05:55] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 5317ms behind, skipping 106 tick(s)
31.12 06:05:33 [Server] INFO [06:05:33] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2275ms behind, skipping 45 tick(s)
31.12 06:05:11 [Server] INFO [06:05:11] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2067ms behind, skipping 41 tick(s)
31.12 06:04:49 [Server] INFO [06:04:49] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2003ms behind, skipping 40 tick(s)
31.12 06:04:17 [Server] INFO [06:04:17] [Server thread/WARN]: Can't keep up! Did the system time change, or is the server overloaded? Running 2059ms behind, skipping 41 tick(s)