'Data Center Voodoo Economics' by Steve

3D Artwork of EVE from WALL-E by Aman Pal is licensed under unsplash.com

“Today, a new frontier of scientific discovery lies before us, defined by transformative technologies such as artificial intelligence… Breakthroughs in these fields have the potential to reshape the global balance of power, spark entirely new industries, and revolutionize the way we live and work. As our global competitors race to exploit these technologies, it is a national security imperative for the United States to achieve and maintain unquestioned and unchallenged global technological dominance. To secure our future, we must harness the full power of American innovation.” Donald J. Trump 45th and 47th President of the United States America’s AI Action Plan
 
China estimates from late 2024/2025 ranging from around 381 to over 600 facilities

India has a rapidly growing data center market, with estimates varying but pointing to over 270-400 operational facilities as of late 2025

The Middle East is experiencing a data center boom, with estimates ranging from around 283 to over 300 existing facilities across 17-18 countries.

A medium-sized data center can consume up to roughly 110 million gallons of water per year = 1300 centers (some small, medium and huge) x 110M = 143BLN gallons a year or 400M a day.

The U.S. has over 4,000, with figures varying slightly by source, but estimates consistently place the number between 4,000 to over 5,400 operational data centers, leading the world - Virginia, Texas, and California as key hubs. That’s 4x so we’re looking at 1.6bln gallons a day of American water used.

By way of comparison Nashville's Metro Water Services treats and distributes roughly 109 to 180 million gallons of water daily to 700,000 people.

71 percent of the Earth's surface is covered with water. About 97 percent is in the ocean. So we aren’t going to run out, but where people live, on land drinkable water: Groundwater,: 0.61 percent I’d love it if they did like the raft in Avengers movies, or Deep Horizon and built them way out there in the ocean instead of where people live and need water for drinking and farming for food. But again, Most of the water used by humans comes from rivers. 0.0001 percent of Earth’s water.

Texas is looking for over 200 GW by 2030, There are about 600 megawatts of critical IT load for data centers under construction in the market, which is 95 percent preleased. That would eventually render Dallas a 1.5 gigawatt market. Dallas has another 2.2 gigawatts of capacity in the planning and design phases.
One gigawatt-hour (GWh) is equal to 1 million kWh. So, a power plant with a capacity of 1 GW could power approximately 876,000 households…that’s growing to the equivilant of 1.6-1.7M households and for what? Storage of kid photos and tiktok dancing cats, and that’s just Dallas?

The US grid is not expanding fast enough and electricty prices have doubled in some places. The average energy bills in the US have increased 13% since Trump took office.

T
he Energy Department says the cost of gas used to generate power jumped more than 40% in the first half of this year. 

As of December 9, 2025 approximately 44% (118591 square miles) of Texas is under drought conditions and 27% (72112 square miles) is Abnormally dry.

Aquifers hold about 30% of the world's freshwater, dwarfing surface water

The Memphis aquifer (also known as Sparta aquifer because it’s ancient perfect pure water) is the primary water supply, its declined approximately 125 ft since its first well was drilled in 1886…it has Google on one side and xAI on the other now. It’s now accelerating and I’ll mention the black community there has been complaining: Boxtown, Memphis, a 90% Black working-class neighborhood has Colussus require 1.1 gigawatts of power, about “40% of the energy consumption of Memphis on an average summer’s day,” leading to a public health crisis in Memphis by releasing nitrogen oxides — pollutants known to directly harm the lungs Time Magazine reported. I was just there, hard to tell in just a few hours, but if you live there 24/7 with low water pressure constant hum and light pollution you start to feel it.

Tigers Against Pollution marched in front of the Shelby County Health Department, holding signs that read “our lungs / our lives / NOT FOR SALE”

At least 36 states give the subsidies, but only 11 reveal which businesses receive the benefits.

A study by GoodJobsFirst.org examined a lack of transparency in data center deals, sometimes getting tax exemptions promising jobs including sales tax and utilities tax exemptions so the municipality doesn’t even benefit economically. Virginia, the largest data center market in the world, forgoes nearly $1 billion in state and local sales taxes. With federal cuts looming that will strain state finances. Plus water, plus the air quality, noise pollution, light pollution, etc. I don’t want to live on a barren planet.

5G needs more towers since the signal waves are shorter, but are great at fast data transfer. Nobody wants to live next to one, but they’re coming if we don’t stop it.

On 12/11 Trump's executive order 'Ensuring A National Policy Framework for Artificial Intelligence:
 
  •        Sec 8: The Special Advisor for AI and Crypto and the Assistant to the President for Science and Technology shall jointly prepare a legislative recommendation establishing a uniform Federal policy framework for AI that preempts State AI laws that conflict with the policy set forth in this order. That’s not very states’ rights issues, not very maga, in my opinion. A bureaucrat in DC doesn’t know the issues in Chetham County TN or Dallas TX. That’s federalism 101, not very America First or even Republicanism in red states. The House of Representatives approved the SPEED Act, which would reform U.S. permitting law to speed up the build-out of infrastructure key to artificial intelligence.
The Senate is in the early stages of its own permitting talks.
All the EO does is speed up the water use. And not just water. A conventional data center uses between 5,000 and 15,000 tons of copper, about $11k a ton or $165M of just copper. Imagine how many potholes, electric busses, if that’s important to a town, or jobs on the police forces that could pay for? And again, besides making the copper miners rich, what for? According to recent McKinsey reports, over 80% of companies are not yet seeing significant financial gains or return on investment from AI investment, yet we want more of these resource hogs? Make it make sense… 
Like any business the two biggest input costs are labor and energy, so with governemetns subsidizing the energy it comes down to jobs. In China, Huawei has deployed employees to offices, fabrication plants, and research centers across the country for the effort. Employees assigned to semiconductor teams often sleep on-site and are barred from returning home during the work week, with phone access restricted for teams handling more sensitive tasks, according to the people. Folks at Intel making a million a year don’t put up with that so like Boeing vs. Airbus we’ll always be behind the manufacturing race with our unions and Equal Opportunity Employment rules.

And that’s a good thing. And that’s what makes the Fed’s heavy handed rules about cutting out state and local voices from decisions on where to put these things and use their resources. It should be people first not high speed internet first.

China told the United States on Thursday to "immediately stop" arming Taiwan after Taipei said Washington had authorised a $11 billion weapons package to the island. Approved by the State Department but awaiting congressional approval, the sale would take effect in about a month, according to Taiwan's Defense Ministry. I don’t have ww3 on my bingo card for 2026 so I really hope we don’t go blindly into that sale just for the money and don’t seriously think about the consequences. The weapons race is much more consequential than the AI race nobody wins. 

Editorial comments expressed in this column are the sole opinion of the writer.

 
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