Robert Reich sees
two information technology bubbles. First up, artificial intelligence. "[It] is worrisome enough as is — its insatiable thirst for energy and water, its capacities to override the wishes of human beings, its potential to destroy the planet."
Think about HAL 9000. Then the crypto-currencies. "It’s growing because investors believe other investors will keep buying it." Tyler "Zero Hedge" Durden, who differs with the diminutive former labor secretary on many other things, also
raises the possibility of such bubbles.
Every bubble has a story at its core. In 1999, that story was the internet: a transformational technology that would reshape commerce, communications, and culture. Investors saw the future, bid prices into the stratosphere, and assumed profits would inevitably follow. In 2025, the story is artificial intelligence, which carries the same irresistible promise of reshaping industries, creating productivity booms, and unlocking new frontiers. The parallels are hard to miss, along with the current price action.
Both posts note people living near existing or proposed server centers
objecting to their presence.
NPR on Tuesday similarly reported that fights over data center construction are happening nationwide, as residents who live near proposed construction sites have expressed concerns about the amount of water and electricity they will consume at the expense of local communities.
“A typical AI data center uses as much electricity as 100,000 households, and the largest under development will consume 20 times more,” NPRexplained, citing a report from the International Energy Agency. “They also suck up billions of gallons of water for systems to keep all that computer hardware cool.”
Data centers’ massive water use has been a consistent concern across the US. The Philadelphia Inquirer reported on Monday that residents of the township of East Vincent, Pennsylvania have seen their wells dry up recently, and they are worried that a proposed data center would significantly exacerbate water shortages.
This is what has been happening in Mansfield, Georgia, a community that for years has experienced problems with its water supply ever since tech giant Meta began building a data center there in 2018.
I'm not sure how much of that processing power is going to solving the problems of the world, and how much is going to solving for the next tranche of cryptocurrency. Recall that Bitcoin credibly committed itself to offering a finite number of coins,
which are mined electronically, in the early days you'd have people leasing some of the processor power on networked desktop computers in return for a piece of the action; these days it's
probably a task for a data center with lots of calculating power.
The mining of any crypto-currency is a canonical example of rent dissipation. At any time there are several mining operations at work attempting to settle the next hash. "It takes trillions of attempts for the network of miners to find the solution." And if the algorithm that creates the next coin raises the level of difficulty as the number of remaining coins dwindle, why,
we're in Zeno's world, where you can get halfway to the final coin, and halfway again, and half of that halfway, ad infinitum, where the total value of the computing power far exceeds the value to be set free, and yet, the race to create the next coin might go on, despite Bitcoin's creators making the challenge more difficult over time. "Due to the halving process and increasing prices, miners want to receive as many bitcoins as possible because the supply of new coins is slowly dwindling. Sometime around 2140, no more new bitcoins will be created."