Data Centers Need More Power

Daily Data: AI is consuming huge amounts of energy, and the creativity is just getting started

In today’s dispatch:

• bubble or not, AI has a bottleneck

• who will sell picks n’ shovels to AI’s picks n’ shovel salesmen?

• the answer lies on the Susquehanna

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Daily Data: Data Centers Need More Power

Random Walk doesn’t have terribly evolved views on whether AI is a bubble or not.

It’s an important question, insofar as huge investments have been made (and are anticipated) based on the commercial utility of LLMs. If there was any hint of “actually, the juice isn’t worth the squeeze,” it would be ruinous to Nvidia’s revenue forecasts, and that would be ruinous to many a 401(k).¹

Anyways, assuming for a moment that AI is not a bubble, it does nonetheless have a known bottleneck: energy costs.

GPUs need a lot more energy than data centers are used to

Everyone wants Nvidia’s GPUs to run their LLMs, which means everyone wants data centers to run those GPUs, which means everyone needs energy to run those data centers, and it’s a lot more energy than data centers are used to needing.

The lack of energy is becoming a concern.

Here is just an example (via

The Transcript

)

So, over the next ~5 years, data centers might need an additional energy boost that would be enough to power every light in every business and factory in the country. Sounds like quite the boost.

Take these forecasts with grain of salt, but that’s a steadily compounding increase in energy demand:

Again, it’s an energy company talking its book, but still.

This too, straight from the horse’s mouth:

Nvidia Corp. Chief Executive Officer Jensen Huang has said AI has hit a “tipping point.” He has also said that the cost of data centers will double within five years to power the rise of new software.

“Double-the-cost” of running data centers. Hmm.

It’s more power than we can currently expect to provide

Forecasts are mostly worthless, and necessity is the mother of invention, but there’s a lot riding on the ability to source all this new energy.