The amount of money being spent is frightening. There will be losers in this and really big ones at that. While I doubt I'll be affected directly, indirectly everybody is going to get hammered as money goes up in smoke and companies are reduced to puddles of superfund goo.

It's DotCom all over again with higher prices. When your local electricity hardware entity (not billing companies) that invested loads of money into substations and wires to feed these massive DC's suddenly have no customer, everybody's bills are going way up or government will have to step in with rescue money, or both. There will then be a giant building that's fit for little else with a massive power feed slowly being spray painted and vandalized. All the copper going first.

I'm going to pick up another 1kW of solar panels next week while they are still super cheap to match what I have. When the bell tolls, I don't want to get the bill.

"your local electricity hardware entity ... that invested loads of money into substations and wires to feed these massive DC's"

I'd hope that the substations and wires are paid for up-front by the DC owners.

You'd hope but you'd often not get what you hoped for. DCs ask for a lot of subsidies for these things and sometimes get them, but even when they don't, they sometimes make agreements, agreements that take the form of electricity supplier builds the infrastructure which the supplier prefers so it's done well and can be managed in the same way, the DC commits to buying a certain large amount of power at a certain price that would make that profitable, sometimes very profitable, for the supplier, the supplier announces this to reassure regulators and average customers that bills won't be affected. If AI makes tons of money, that happens. If the DC company goes bankrupt any time before five years after the DC is completed and starts operating, the electricity supplier gets the bill and has to do something to cover it.

It doesn't always work that way, there are some examples of builds where, if it fails, the DC company is on the hook. Unfortunately, that's far from the norm, and often when someone says the DC is paying for all the new build, they mean "in the future if everything goes well".

> The amount of money being spent is frightening.

Yes indeed.. Stocks are down, gold is down, oil is down, crypto is down.. So where has all the money gone?? I fully expect a bank crash this year and I have no idea what anyone can really do to ride it out.. It is terrifying to think about.

> I'm going to pick up another 1kW of solar panels next week while they are still super cheap to match what I have.

I might do the same. I have 1kW of panels (realistically 600W, they are laid flat on a flat roof in sunny Britain). But from the grid's point of view, this is pure delinquency. It steals the lunch of the energy suppliers, while at the same time making blackouts much more likely. The inverters require a stable reference signal to operate, any transient disturbance will temporarily trip them off, and the combined effect of that would cause such a rapid change in load that any grid would struggle to cope with. On top of that, you have interesting resonant behaviours with a grid dominated by grid-following inverters causing oscillations in grid voltage and frequency.. Prime suspect in the Iberian blackout last year.

Assume for the sake of argument there is scope for this to turn into something viable in the long run. Is there any way that there is sufficient income that could be raised from this to provide sufficient return to pay off all of their investments? If not does this mean that the least well funded fold, leaving just one or two standing or do they all fail anyway before they start to recoup?

That depends on how we assume it works. If we assume that AI becomes competent and can successfully do lots of jobs cost-efficiently, then there's plenty of money to be spent and the DC makers will be able to cover their investments. If any of that isn't true, and none of it is, then the DC companies will have more problems.

Likely a couple DCs will survive by being bought up by hyperscalers who have already committed to using it, they move their GPU workload machines into them and use more CPU workload machines in their old DCs, and the rest fail. It's also likely that many fail without getting built in the first place. The big cloud providers do have a lot of money and they'll likely have to pay big chunks of that to get out of obligations they've signed up to without thinking it through.

I am certain this ding·a·ling circus can sort out among themselves who is going to be War, Famine, Pollution † and Death.

† following Good Omens but with the connivance of another clown show under RFKjr Pestilence is making comeback tour.

For some strange reason, the scale of the AI expenditure and build-out discussed in the article brought this to mind...

Imagine if you own all companies involved in these transactions.

Numbers are getting more ridiculous, general public is poorer and tax man is asleep.

I don't understand much about economics. But this feels... bad. Wrong. The kind of thing that goes down in history books as "the period immediately preceding...". There is no way that sentence ends well.

> But this feels... bad. Wrong.

Let me add "surreal"

> The kind of thing that goes down in history books as "the period immediately preceding...". There is no way that sentence ends well.

True.

AI is still unreliable and non-deterministic 2 years after they pretended to sell "PhD-level"-AI. Making models larger so far only resulted in more subtle hallucinations.

Adding additional layers (agentic AI, orchestration) just adds non-deterministic control to already non-deterministic processes.

AI output still presents a bell curve from occasional perfect gems, over many quite good results with errors mostly correctable by a human expert to total fails.

Probabilistic results from a probabilistic process.

At present, the state of the AI industry reminds me at the period immediately preceding the sub-prime crisis ~2007, when many market participants already had understood the system would hit a wall soon, but continued to promote it anyway, as they themselves were heavily invested. Taking a cold, hard look at reality and shift their public stance would have devalued their own investment immediately.

So, pretending all was going really awesome as long as possible seemed like the only way forward.

Avoiding pain as long as possible is pretty human, after all.

>” but continued to promote it anyway, as they themselves were heavily invested.”

You can see why so many believe and promote sunk costs even though we know it’s a fallacy..

The more you save!

This will go pop. Nobody is going to spend enough money on AI for it to ever turn a profit. If you are an investor, get out now whilst you still can. As with a duff firework, everyone stand well back.

It's a pity they didn't spend the money on healthcare, water infrastructure and climate-proof homes, but stupid is as stupid does. It's their money. They can waste it on whatever they want.

Most of the data centre stuff won't happen. It will all go pop before it does. Big tech will ride it out with smaller cash piles and buy the wreckage of anyone daft/greedy enough to get in too deep.

Worry less, but insulate yourself from the inevitable damage as best you can. We have experienced the dot com bubble and sub prime mortgages. There is no excuse for getting caught up in a repeat of that.