How Data Centers Actually Work

Lauren Good: Well, they are all interested in growing more. Which one of us, Mike? But hyperscalers refer to the major technology companies or cloud service providers in this category. So Meta, Amazon, Microsoft, Google, they’re all in that category.

Molly Taft: Yes, and I think it’s important to remember that these companies have a lot of money and they have the ability to raise capital like any business. So they’re able to do some really crazy stuff, build fast and build out really, really big. And they’re getting pretty creative, because their goal right now is to quickly build these things and get them up and running so they can basically use this physical infrastructure to compete with each other.

Lauren Good: I think that’s right, Molly. I think there’s a lot of frenemy building going on right now, and I want to be a part of their group chats when all of this is announced.

Michael Calor: Yes, and speaking of frenemies, the other sphere of influence these organizations are wielding is the political sphere. Obviously, to build a massive data center somewhere, you have to have the political will to do it, which means you have to have buy-in from local residents, local governments, states, countries. So what’s happening in the political arena with people who want to build more data centers and those who oppose it, regulation? How does that play out?

Molly Taft: That’s a great question, and I think if you look at the national conversation, it’s quite different from what’s happening at the local level. You have Washington, you obviously have an administration that is very friendly to the idea of ​​an American AI empire. Importantly for the energy conversation, the way the Trump administration approaches this support is through its support of fossil fuels. They really want all data centers to be powered by oil and gas, little nuclear and coal. And it works great for those industries too. If you’re going to have this massive expansion of electricity demand, it’s really great to be in the middle of it and be the direction everyone wants to go for energy resourcing. And then on the other hand, there’s been an influx of local opposition to these data centers for a variety of reasons, whether it’s water use, fear of power rate hikes, noise, and some really big struggles have brought this issue into the national conversation. I’m thinking about xAI in Memphis. When Elon Musk wanted to launch xAI, he installed a bunch of unlicensed gas turbines to make xAI work, which he installed in a predominantly black community in Memphis that already had serious problems with air pollution and asthma. And those people made themselves known. Earlier this year, D.C. attempted to impose a moratorium on any state regulation surrounding AI. It was an incredibly elaborate inclusion on the Big Beautiful bill that was ultimately unsuccessful. But one of those who publicly opposed it was Marjorie Taylor Green, who actually cited data centers in her opposition and compared the AI ​​to Skynet, the fictional AI from the Terminator movie franchise. So, it’s getting some weird bedfellows in league with each other, I think this kind of contrast between what the administration is trying to push and some very powerful energy companies that stand to profit from it, versus some really grassroots local movements and people concerned about the impact of what these things are going to do in their communities.