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When I hear the assertion that we are in a race with China to build up our artificial intelligence capacity it makes me wonder where this level of concern was when we were handing over the keys to the electric car and the renewable energy that powers it to China. In recent weeks I've tuned in to various business news television programs and have found that AI has dominated the business world and in fact is propping up the economy as wealthy investors reap healthy rewards from what some refer to as the AI boom, which is returning record profits on investment. This AI boom requires data centers to handle an immense amount of data, and the data centers enable other data intensive processes such as bitcoin mining and Flock videos. Meanwhile the largest electric vehicle manufacturer in the world, BYD (a Chinese company) cannot build cars fast enough to meet world demand - BYD is prohibited from entering the U.S. market by a 100% tariff.
Although renewable energy investment is highly profitable it cannot compete with AI and many of the reasons are because of input costs. AI data centers and renewable energy are not playing on a level playing field, although I will argue that the field should be leveled.
During the infancy of renewable energy there were growing pains. Renewable energy sources were not reliable and not nearly as efficient as they are now, were costly to employ and not cost-effective. Over time, renewable systems improved in reliability and cost-effectiveness and now renewable energy is cheaper to produce than fossil fuels even though the U.S. taxpayer provides approximately $50 billion in direct subsidies for fossil fuels annually. Because of the advances in renewable energy and battery storage over the years, most of the new electrical production worldwide is now renewable. Changing the U.S. electric grid to operate with renewable energy is not easy, but it has been and continues to migrate in that direction, albeit slowly.
The U.S. electrical supply has been placed under demand by the proliferation of data centers, so much so that in many places the electrical grid cannot meet the demands. Also, energy costs are typically the largest cost input for data centers, some of the new data centers are expected to use as much as 4,000 megawatts of electricity (equivalent to 3 million-4 million homes usage). Some data center companies are going off the grid and building their own power supplies. Typically, the fuel for these power plants is gas and they are placing data centers in areas where there is an ample supply of natural gas, but gas is not the clean energy source it was once heralded to be, emitting carbon, methane and other harmful pollutants and that's after the environmental destruction caused in the gas extraction. Also, they are targeting rural areas where there is less organized resistance to their installations.
One thing that never comes up in the business news coverage of the AI boom and all the profits that wealthy investors are making from it is the impact that the proliferation of data centers is having on largely rural America. Cloaked in secrecy these behemoths move into rural America, get non-disclosure agreements with county or city officials and start buying up property. Often, local residents have no knowledge of the threat until it is too late. I don't want to rehash the effects of data centers that has been well documented by myself and others in this column, I simply want to point out that the people who stand to profit from the AI boom are only a few landowners who sell their property for development and wealthy investors who will not be living with the harmful impacts. Few jobs will be created. Meanwhile, the harmful impacts from data centers will continue and likely grow as the demand for energy and water grows. One of the unfortunate outcomes of the AI boom is that in their urgency to produce electricity to power these data centers most companies are not investing in renewable sources and going the quick and easy route of gas power plants, some even looking to bring old retired nuclear plants back online. Adding concern is that while renewable energy projects go through the normal process to meet environmental compliance standards, data centers are given a green light to avoid many of those standards meant to protect ourselves and the environment.
I can't help but think that if the industrial complex had put as much effort into developing this country's renewable energy infrastructure over the last two decades or more as it has at building data centers in the last 2 years then we would be in a much better position to provide the needed energy without raising rates and without the environmental consequences. But I am not thinking with my wallet, and I am not already heavily invested in fossil fuel production.
To make things worse, many financial experts are growing concerned about an AI bubble, similar to the real estate bubble that burst in 2008 except about 4 times the size. I'm no financial wiz, but best I can synopsize this is that several companies are fighting to be the dominant players in the AI data center race and between investors and borrowing, there is in the order of trillions on the line and currently the demand for the AI is not backing up what's being invested. This may lead to a financial collapse that leaves all of us paying the bill and data centers abandoned on the landscape.
I have no concerns about AI done responsibly and wealthy people who consider how their actions impact others. We can always do better, but if the power of the dollar is the only thing with meaning, then we are doomed to be subservient to it. As the saying goes, "The love of money is the root of all evil." I think that many of us should take stock in what is really important.
Vic Elam is an avid outdoorsman and contributor to organizations that share his concern for our environment, including Mid-Ohio Valley Climate Action.