"And when you start following the money in connection with the AI boom, you can get a sense of the rumblings of an erupting volcano. Lenders and investors are starting to get nervous, which could jeopardize planned funding. We have written before about the risk that current power and data center infrastructure can't support the continued exponential development of AI tools, the fact that the cost of verifying AI outputs is exceeding the savings, and the resulting erosion of trust in historic processes and workflows."
"Thus far, the focus has been on building mega data centers needed for AI to work. These data centers are expensive to build and get permitted. They take five to seven years to build before the power can even be turned on. And the power and energy capacity needed to make these existing and contemplated centers doesn't exist. The power plants needed to supply that capacity have to get regulatory approval and be built. That too takes time."
Rapid AI growth requires massive data centers and substantial power capacity, both of which demand long lead times, regulatory approvals, and high capital. Data centers cost significant money and typically take five to seven years to build before they can be powered. Power plants to supply the necessary energy also require approvals and construction time, and current capacity is insufficient for projected demand. Long-term returns on these investments are years away, making projects sensitive to delays, disasters, and changing risk perceptions. Investor and lender nervousness can lead to loan calls or investment sell-offs, threatening project funding and company valuations.
Read at Above the Law
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