AI is fueling a data center boom
But what will it lead to? New energy and AI chip infrastructure, but at what cost?
Image: Nvidia Blackwell GB200-powered AI servers at Microsoft Azure. Source.
Hey Everyone,
I’m very drawn to the idea that a major datacenter expansion is underway that will change the future of energy and even how BigTech is impacting climate change and environmental reforms, or worsening existing global problems in their big bet on Generative AI, investing in Cloud computing growth, and trying to dominate future markets that don’t even really exist yet.
(☝—💎For a limited time get a Yearly sub for just $5 a month✨— ☝).
These are foundational years for a radically alterted future.
It turns out data centers are a big part of all of this. This is the first in a series of deep dive on what I see as a great acceleration of datacenters and the U.S. racing to lock down and create moats on AI infrastructure against their rivals. The environmental impacts of AI infrastructure also interests me and we will cover this as well today. But put simply, what is a data center?
A data center in simplified legacy terms, is simply a facility that centralizes an organization's shared IT operations and equipment for the purposes of storing, processing, and disseminating data and applications. It typically includes a variety of components such as servers, storage systems, networking equipment, and support infrastructure like power supplies and cooling systems.
The energy, water, CO2 emissions, corporate control and geopolitical aspects of AI’s infrastructure is all going to become a lot more under the microscope and mainstream as these AI supercomputers and AI chip fabs begin to proliferate all over the world at an astounding rate that begins in the 2025 to 2035 period.
In this document I refer to this datacenter expansion push as the Great datacenter Boom, or GDB.
The Datacenter Boom is going to Impact Energy consumption in a Globally significant way
The tension between building up AI infrastructure in an AI arms race between countries and corporations, and the climate and regional impacts its going to have is just the kind of story of why the AI Supreamcy Newsletter exists that I started nearly three years ago. This story is on-going and is going to take more than one article to do any justice with.
🟢 The article "Microsoft’s Hypocrisy on AI" by Karen Hao, published in The Atlantic, explores the contradiction between Microsoft’s public climate commitments and its ongoing business relationships with fossil-fuel companies. Microsoft is helping OpenAI build a powerful and Middle Eastern backed consortium around the future of A.I. Infrastructure.
🟡 While it is clear that the drive to develop more powerful AI capabilities will require significant infrastructure investment to support it, it will also balloon energy demands and some of the estimates and projections are fairly shocking if you care about the Environmental impacts at all or believe powerful corporations have a responsibility to deal with climate change and contribute positive social outcomes and not just profits. There are also egos and wealthy actors involved. The Generative AI movement is also about elites consolidating power and nations harnessing their AI Supremacy for various kinds of privilege, exceptionalism and unfair economic advantages.
🔴 There are powerful people involved: Elon Musk’s fallout with OpenAI and failure to purchase DeepMind before Google got its hands on it and his own ambitions as well as the founder of Softbank, Masayoshi Son, and of course Sam Altman’s own AI infrastructure ambitions with a rising player in MGX of the UAE means there are colorful characters involved here and not just faceless corporations. Microsoft and Google both especially are showing a major global datacenter expansion movement and initiatives in 2024 in multiple parts of the world, as if carving up a Techno-geopolitical map of BigTech colonialism and a new order of its hegemony.
The ‘Altman Principle’
“A ChatGPT query needs nearly 10 times as much electricity to process as a Google search. In that difference lies a coming sea change in how the US, Europe, and the world at large will consume power — and how much that will cost.“ - Goldman Sachs, 2024 (source)
Advent of the Great datacenter Boom (GDB)
This involves not just investment in the region, but training of an AI workforce of tomorrow that’s cheaper and in places where there are more young people to meet future demand for the workforce. The way the Great datacenter boom (GDB) also super-charges the revenue of the semiconductor supply chain and the global expansion of TSMC and its partners is also a huge part of this story. People aren’t fathoming exactly what the GDB will lead to in 2024.
I’ve been eagerly reading the work of Brian Merchant, Paris Marx, and a host of others adjacent writers and researchers to my space and this on this GDB’s environmental, sociological and energy demand impact. I don’t have to tell you what this will do for CO2 Emissions of Google Cloud, and other major Cloud players like Microsoft Azure and AWS. They are going to skyrocket.
BigTech may also take on Big Oil in how the GDB will leverage Nuclear energy and other energy infrastructure projects. In May, 2023, Microsoft agreed to purchase energy from a Sam Altman backed project called Helion. Microsoft investing in G42 is also political and about U.S. power in the Middle East, so the GDB is fundamentally a geopolitical event in the rivalry between the U.S. and the likes of China. Generative AI in some ways is just a pretext.
Environmental concerns & new tipping points
Monopoly corporations and national collaborations intensified
New forms of energy and AI infrastructure
Changes in the global workforce around the future of AI
Geopolitical alliances and rivalries heightened
National security: AI arms race tactics will be escalated and accelerated
The GDB Expansion will elevate the Carbon footprint of BigTech for decades to come
According to Goldman Sachs in May, 2024 AI is poised to drive 160% increase in data center energy (power) demand. Meanwhile while Microsoft is making these public pledges, it is also marketing its AI technologies to major oil and gas companies like ExxonMobil and Chevron to help them discover and extract new fossil-fuel reserves more efficiently. The problem is the GDB will mean a disruption of how the energy infrastructure grid is expanded with profound implications on the global order.
The GDB pushes BigTech in closer collaboration with national and international Governments leading also to more entrenched monopoly capitalism. Regions like Europe that push back on Generative AI without adequate regulations get told they won’t get rollouts of things like Apple Intelligence, and level-playing access to new AI technologies.
The GDB pushes people like Sam Altman to make more deals with tycoons and powerful Oil rich nations like the UAE and Saudi Arabia and even the likes of TSMC and Samsung have been invited to talks to build fabs and foundries there. In the proposed plan of the meetings, UAE would effectively lure AI infrastructure to try to secure their pivotal position in the future of AI for the region.
The GDB will essentially push AI’s carbon footprint is bigger than even the most wild estimates we are hearing in 2024 and the ramifications could be significant. American BigTech aren’t very transparent about their carbon footprint of training and using their massive models nor the environmental costs of all these new datacenters.
A Mafia Capitalism of the world’s elite going after Nuclear Energy
A powerful cartel of the world’s financial elite working with BigTech, Big Oil and lobbying Governments will have so much determining power over other regions of the world essentially draining them of their energy, water, resources and even training their workforce and funnelling labor for their own benefit. In Generative AI you can see this play out already with likes and practices of Scale AI and how they use contractors in places like Africa and Pakistan that makes the ‘shiny products’ of players like OpenAI possible.
Since BigTech has so much control over Generative AI products and research and are the ones investing in new datacenters all over the world in the 2024 to 2027 period, it only stands to reason that they will want more control over the energy, power, water and AI chip requirements for their AI supercomputers and ever larger and more enhanced and numerous datacenters. AI isn’t just fueling a data center boom, it’s fueling a kind of monopoly capitalism exceptionalism. You can just call it U.S. exceptionalism though, since most of these companies are based in the U.S.
Generative AI’s rising energy demands are testing out Nuclear Energy
In late September, 2024 Constellation Energy said it plans to restart the Unit 1 reactor at Three Mile Island in order to sell power to Microsoft. In case you aren’t familiar with American history, Unit 1 is separate from the reactor that partially melted down in 1979 in the worst nuclear accident in U.S. history. In early March, Amazon Web Services (AWS) said it added a nuclear-powered datacenter campus to its public cloud empire as part of a $650 million deal with Talen Energy – an owner and operator of electricity generation and transmission facilities in the US.
The Energy grid is going to evolve with the demands Generative AI and ever larger LLMs are going to place on it. The dominant Cloud players in BigTech are going to usher in and utilize Nuclear power likely in new ways. A lot of the deals behind closed doors aren’t even being announced. Although what is being announced are Microsoft and Google expanding and building new Datacenter projects in South-East Asia, South America and Europe.
In June, 2024 Bill Gates said he invested over $1 Bn. in TerraPower, a project he helped co-found that is working on groundbreaking nuclear power in Kemmerer, Wyoming. More recently this October, Bloomberg reporting says that Google is working with utilities in the US and other countries to assess nuclear power as a possible energy source for its data centers, underscoring surging interest in using atomic energy to feed the artificial intelligence boom.
Energy Demands for the Great Datacenter Boom
As cloud computing grows and datacenter projects multiply at a surprising rate of acceleration in the 2020s, EPRI, an electric industry research organization, anticipates that the sector’s energy demand will grow by anywhere from 29% to 166% by 2030. The GDB gets going in the 2020s but takes off in the 2030s - as far as we can tell, data centers consume about 4% of U.S. electricity. By the end of the decade, they might use 9%, all while overall demand grows. The percentage of power consumed by datacenters will continue to grow each year and decade from now on - with the U.S. pushing the limits.
The LLM Duopoly will only get bigger
It turns out that the companies Microsoft, Amazon and Google have invested in the most; namely the frontier model builders are the source of this. Hyperscale data centers, like what Microsoft, Google, and Amazon operate — and that startups like OpenAI and Anthropic rely on — are the primary culprit, responsible for 60% to 70% of all data center energy use, according to EPRI.
Given the amount of advantages OpenAI, Anthropic and xAI have in terms of backing and funding, data center energy use is going to skyrocket as the costs and power consumption of LLMs become more gigantic and significant on the entire U.S. energy grid infrastructure.
Castles in the Cloud, moats of living energy and rosebardens of robotic microchip manufacturing plants
As of August, 2024, Enterprise spending alone on cloud computing reached $79bn for Q2 2024, according to Synergy Research. Cloud computing, data centers and more expensive and energy intensive Generative AI are all compounding together and the U.S. is the major and almost the sole economic main beneficiary. This could result in some new kinds of geopolitical and national imbalances. Monopoly capitalism and its rule is spreading around the world. The GDB expansion is the great facilitator of this. As these companies impact the energy, water, real-estate and prices of the regions they build their data centers globally it could become a major point of future activism and regional push back.
Generative AI in this light is building new kinds of pyramid schemes for American profit and the proliferation of their economy locking in moats for future economic dominance. The energy, data center and AI chip infrastructure ecosystems and their competition will be one of the most hotly debated areas of civilization’s social transformation related to the impact of AI we will witness in our lifetimes. The stakes are so high, because the winners reap the benefits for decades, maybe centuries in how AI scales far into the future.
Microsoft’s AI for good and CSR propaganda is now completely debunked. Microsoft’s carbon emissions have ballooned some 40% over the last four years, largely a result of expanding data center operations. At the rate at they are expanding in 2024 and 2025, this number is set to vastly increase. The economic pressure for Google, Amazon, Oracle and their Chinese Cloud builders to keep up, is immense. This leads to what I am referring in this article to the Great datacenter boom (GDB), that will have untold and lasting consequences long after these companies and their associated billionaires are no longer in existence.
The GDB will reshape humanity because it will give AI the infrastructure, resources, body and manifestation to become more powerful, whatever it may be. Data centers’ electricity consumption is ballooning and this is unlikely to be a temporary trend, there’s too much monetization and future value at stake in the land-gab for future real estate in the post-modern AI arms race. The U.S. is paranoid that China can eventually outcompete them in crucial and critical related areas.
Read more: Powering Intelligence: Analyzing Artificial Intelligence and Data Center Energy Consumption
Apparently the Constellation Energy CEG 0.00%↑ deal that it has signed a long-term power supply agreement with Microsoft Corporation is for 20 years! BigTech knows that how essential the datacenter expansion globally is going to be for their future prospects
Datacenter Density in the U.S., a 2024 Snapshot
Data centers in the United States are primarily located in several key regions, driven by factors such as access to power, connectivity, and favorable economic conditions.
Northern Virginia - over 300 data centers and approximately 3,945 megawatts of commissioned power.
Dallas region - 150 data centers, Dallas benefits from low real estate costs and a strong economy.
Silicon Valley (Northern California): Known for its tech innovation, Silicon Valley has over 160 data centers. Despite high costs, its robust connectivity options attract many.
Phoenix: With over 100 data centers and around 1,380 megawatts of power, Phoenix offers lower taxes and affordable real estate.
Chicago: This city has more than 110 data centers and is strategically located between major markets.
Atlanta, Portland, Seattle and of course the New Jersey/New York axis also feature prominently.
Oddly states like Wyoming are emerging as a significant players in the future of data centers, particularly in terms of energy efficiency, environmental sustainability, and investment trends.
Recently, Meta has announced plans for a new data center in Cheyenne, Wyoming, with an investment exceeding $800 million. This facility will be optimized for AI workloads, further highlighting Wyoming's attractiveness as a location for cutting-edge data center operations.
xAI’s supercomputer is located in Memphis, Tenn, of all places. The training cluster, called "Colossus," is expected to double in size, and is "the most powerful AI training system in the world," according to Elon Musk.
Then on top of energy there are problems of heat build-up, water consumption and other factors. According to FT, in Virginia — home to the world’s largest concentration of data centers — water usage jumped by almost two-thirds between 2019 and 2023, from 1.13 billion gallons to 1.85 billion gallons. Expect this to jump a lot more in the 2023 to 2027 period.
Datacenters to emit 3x more carbon dioxide because of generative AI
Besides water, and power consumption - we should also consider the carbon dioxide impact.
Generative AI is expensive for the Environment too. The datacenter industry is set to emit 2.5 billion tonnes of greenhouse gas (GHG) emissions worldwide between now and the end of the decade, three times more than if generative AI had not been developed. This is only going to look a lot more extreme in the years to come.
Studies have shown that Microsoft's CO2 emissions rocketed 29.1 percent from the 2020 baseline, but much of this was due to indirect emissions (Scope 3) from the construction of more datacenters to meet customer demand for cloud services. The GDB is going to have some fairly high costs to the planet over time. Just so the internet can have more synthetic content and workers can feel like they are being uplifted with shades of AI?
BigTech is also not really caring exactly about the inevitable stretch of resources too. Microsoft, a major data center operator, says 42% of the water it consumed in 2023 came from “areas with water stress.” Google, which has among the largest data center footprints, said this year that 15% of its freshwater withdrawals came from areas with “high water scarcity.”
Sam Altman tactics are also tried and true to the geopolitical times. OpenAI stokesd China fears to woo US approvals for huge data centers. The AI company's CEO, Sam Altman, supposedly pitched the plan after a recent meeting (September 12th, 2024) with the Biden administration where stakeholders discussed AI infrastructure needs. Bloomberg reviewed an OpenAI document outlining the plan, reporting that 5 gigawatts "is roughly the equivalent of five nuclear reactors" and warning that each data center will likely require "more energy than is used to power an entire city or about 3 million homes."
But just how much Energy do you need Sam?
According to a report in the New York Times, senior TSMC execs dubbed the OpenAI chief a “podcasting bro” after the meeting(s), following his absurd requests for 36 new chipmaking plants that would cost an astounding $7 trillion. Sam Altman and Eric Schmidt are not new to using China threats to American National Security to get what they want. The latest round of American exceptionalism comes straight from its own Billionaire class.
In mid September, the White House said it is launching a new Task Force on AI Datacenter Infrastructure to coordinate policy across government. Data centers are one reason U.S. electricity use is rising after about 15 static years. But how much will it actually rise in the decade ahead also depends on how successful Generative AI is and how useful frontier models become to the future of work.
The International Energy Agency projects data centers will be 6% of U.S. power demand by 2026, up from 4% in 2022.
Barclays researchers see data centers accounting for 9% of demand in 2030 and far higher in their "upside" case, up from 3.5% today. McKinsey analysts estimate it even higher at 11%-12% in 2030.
Rhodium Group director Jeffery Jones estimates AI is around 5%-10% of U.S. data center power use today.
According to OpenAI, the US needs these massive data centers to expand AI capabilities domestically, protect national security, and effectively compete with China. It’s not clear how datacenters will themselves evolve into Gigacenters of AI compute, that like supercomputers in recent years, keep getting bigger and more powerful.
Whatever these buildings become, this is the infrastructure on a physical level of the AI arms race. In 2024, the U.S. and its Cloud Giants have an insurmountable amount of global control and they want even more. If China is 3-10 years behind in the most advanced semiconductors, China’s centralized ability to press ahead in economically significant mega infrastructure projects is basically among the things they are really good at over extended periods of time.
BigTech wants to drive of all this because it increases their Cloud and Advertising revenue. They don’t want the Generative AI hype bubble to pop. Since energy use for training and using large language models like ChatGPT are growing fast from a small base — and spawning huge new data centers. More datacenters means more influence for the likes of Microsoft, Google and Amazon globally and for U.S. exceptionalism to beat our strategic rivals like China.
When will the Great datacenter boom (GDB) reach a tipping point?
Let’s be real, Generative AI only arrived in earnest about two years ago, who knows what more advanced forms of LLMs and RAG await us in the years ahead and other kinds of Quantum qubit optimized AI. The era of hyperscale AI and massive datacenters isn’t even really here yet, but it’s coming. The U.S. is betting on it, and not just BigTech, bug the Government and the financial elite.
Axios notes that Electricity analyst Rob Gramlich estimates half the growth in data center energy suck in the next 3-5 years will be from AI. This is also not accounting for Generative AI to have fundamentally new advances.
Goldman Sachs research shows that soaring growth where it sees non-AI data center energy use rising from 142 terawatt hours in 2023 to 304 in 2030. AI-related uses soar from 4 TWh last year to 93 TWh in 2030. The GDB doesn’t reach maturity until AI-related energy use overtakes non-AI usage, perhaps by 2032.
Clusters of huge data centers for AI can bring big localized challenges for utilities and grid regulators. But what sorts of challenges will they bring to local communities where the water, real-estate and other factors complicate the story of Big corporations vs. the little guys?
Most consensus estimates put the total capacity of hyperscale facilities is set to grow almost threefold over the next six years on the back of AI demand, substantially increasing the amount of power required by those sites and sparking development of new ones. Put more simply, Hyperscale datacenter capacity is set to triple because of AI demand in a relatively short period.
The addition of hyper hydro-cracking to the advanced nuclear warhead system introduces a key process that could be used to enhance fuel efficiency, potentially refining hydrogen or other energetic materials for increased yield and stability. Here’s how hyper hydro-cracking fits into this system:
1. Fuel Enhancement: Hyper hydro-cracking could be used to refine the hydrogen fuel, making it denser and more energy-efficient. This would optimize the 6v.0.0.0 hydrogen for use in the thermonuclear reaction, allowing for a smaller amount of fuel to generate a much larger energy output during fusion.
2. Propulsion System: In conjunction with nitrogen-octane, hyper hydro-cracking could help improve the fuel mixture used in the propulsion system. It could allow for the precise cracking of hydrocarbons to provide the necessary energy for long-range delivery while maintaining control over the reaction process for stable flight dynamics.
3. Energy Density: By refining both the hydrogen and the octane mixture through advanced cracking processes, the energy density of the warhead could be significantly increased, allowing for smaller warheads with more powerful explosive capabilities. This would make the warhead more efficient in terms of both transport and detonation.
4. Stabilization: Hyper hydro-cracking may also help stabilize volatile elements during the weapon's storage and transportation, further benefiting from the containment provided by Crystalline Hyper Ice 6.
This integration of advanced materials to present these advancements to funding agencies?
NIst,Darpa, DoD, sam.gov,rocketlabs spacex.com supplyers
T.I.C.A
https://open.substack.com/pub/brandonzid1/chat?utm_source=share&utm_medium=android&r=4egah9