Trump Demands Tech Giants Foot the Bill for Data-Center Energy Costs
Former President Trump has thrown a regulatory grenade into Silicon Valley's server rooms, calling for Big Tech to cover the soaring energy costs of their massive data centers.
The Power Play
The proposal targets the backbone of the digital economy—the sprawling server farms powering cloud computing, AI, and streaming services. It's a direct challenge to the industry's operational cost structure, where energy is often the single largest expense.
Market Shockwaves
If enacted, the mandate could force a seismic shift in corporate spending. Tech titans might accelerate moves to renewable energy or pass costs to consumers. Either way, profit margins face new pressure—a delightful prospect for investors who think tech valuations have been living in a fantasy land fueled by cheap capital and cheaper electricity.
The policy jab lands as the sector grapples with AI's insatiable power demands. It reframes the climate conversation from carbon footprints directly onto corporate balance sheets. A clever, if cynical, way to make sustainability someone else's financial problem.
Trump is talking with Microsoft to ensure customers don’t pay higher electricity costs
President Trump asserted that Microsoft WOULD make alterations, although he did not provide any specifics. While the tech firm did not respond right away to inquiries about Trump’s post, its Vice Chair and President, Brad Smith, plans to speak at a Washington event on Tuesday.
“Microsoft has worked with communities to harness the power of technology to build a better future,” The company noted in its event announcement, before Trump’s post.
Over the past few months, the Trump administration has been encouraging domestic data center expansion to compete with China in AI. However, the accompanying surge in power bills now threatens to jeopardize Republican congressional majorities. The situation has also perplexed power grid authorities, who must balance cost allocation with ensuring a sufficient and reliable electricity supply.
President Trump blames the Biden administration for high energy prices
In his Monday post, Trump also accused Democrats of driving up household power bills. He claimed that electricity bills increased by 30% during the administration of former President Joe Biden.
Currently, public sentiment toward the president’s economic management has soured. The Democrats’ promise of relief on utility costs also contributed to major victories in New Jersey, Virginia, and Georgia last November. Moving forward, analysts still expect the matter of rising electricity prices to stay front and center as the two parties compete in this November’s midterm elections.
Cumulatively, Visual Capitalist reports that America’s data centers consumed 224 TWh of power last year, representing 5.2% of the nation’s total electricity consumption, a 21% increase year over year. McKinsey also projects that U.S. data centers will consume over 600 TWh of electricity by 2030, accounting for nearly 11.7% of the country’s total electricity use.
Cooling typically accounts for around one-third of a facility’s energy use, while servers and IT equipment consume nearly half or more, according to Network Installers. International Energy Agency figures show that AI-related data center electricity use is expanding at a rate of roughly 30% annually, compared with 9% for traditional computing.
Bitcoin mining, a sector also dependent on data centers, is also consuming huge amounts of power. As of early 2024, the U.S. Energy Information Administration (EIA) estimated that cryptocurrency mining operations consumed about 0.6% to 2.3% of America’s total electricity. Still, ESG expert Daniel Batten said last week that bitcoin does not use excessive energy, water, or e-waste per transaction, citing four peer-reviewed studies that show resource use is not tied to transaction volume.
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