Power

power-iantoons

“Power” – a cartoon that illustrates the electrical cost that is going to be needed to power up our brave new world.

Eric Schmidt recently remarked that building the new generation of AI data centers could set Big Tech firms back as much as $300 billion.

Meanwhile, a report by Goldman Sachs forecasts that $1 trillion will be spent over the next few years on data centers, semiconductors, grid upgrades, and other AI infrastructure.

These are big numbers and, rather uniquely for the technology industry, are early in the evolution cycle. While many talk about AI being as revolutionary to our lives as the Internet, the Internet started off as a low-cost technology solution that enabled e-commerce to replace costly brick & mortar solutions.

As we wait for the $1 trillion killer apps that will see the payback from this infrastructure investment, today consumers are starting to see the negative trickle down impact of this in their lives.

On average, a ChatGPT query needs nearly 10 times as much electricity to process as a Google search and, with the growth of other electricity hungry applications like blockchain, Goldman Sachs Research estimates that data center power demand will grow 160% by 2030.

For consumers, this will require electrical companies to invest more in their grid, both pushing up costs and seeing huge anonymous data centers constructed in their cities.

As an example, Tesla is building supercomputers that use Advanced AI to teach its vehicles how to drive themselves, but has now attracted the ire of locals in the Silicon Valley town of Palo Alto who complain about the upgraded unsightly building.

In a public/private partnership, Palo Alto is building a new $24 million substation upgrade, with the costs being shared between Tesla and the city, for which 9,000 kilowatts of electricity is exclusively reserved for Tesla.

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“Ian Foley always has an interesting take on technology, its evolution and impact. His commentary paired with funny, smart cartoons is always a good read”.
Vrushal Dongre
Strategic Alliances | BizDev | Product Management | UCLA Anderson
“Nice illustration and insights!”
Renier Bleeker
Partnerships @ Hivello | Simple mining for Web3
“Seems like an inflection point, where the drivers for ‘zero cost’ power are the irresistible force. Will it be green? Buy stock in power companies!! ?”
Ramesh Rao
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Sources:

Matt O’Brien, Hannah Fingerhut (Sep 9, 2023) – A.I. tools fueled a 34% spike in Microsoft’s water consumption, and one city with its data centers is concerned about the effect on residential supply – Fortune

Peter Cohan (Nov 9, 2023) – As ChatGPT And Other AI Tools Increase Energy Demand, Here’s What Investors Need To Know – Forbes

Christiaan Hetzner (Apr 16, 2024) – AI could gobble up a quarter of all electricity in the U.S. by 2030 if it doesn’t break its energy addiction, says Arm Holdings exec – Fortune

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