Data centers are the future, not the enemy
The US must lead the world in AI technology while mitigating downsides for energy, water
ANOTHER VIEW| BLOOMBERG NEWS
For a bunch of unremarkable warehouses, they're generating a lot of controversy. Data centers — low-slung facilities that house the server racks and energy systems that underpin the digital economy — have become a heated issue on the campaign trail.
Politicians from both parties are pushing bills to restrict them. Some want a nationwide "moratorium." That would be a historic mistake.
About 4,000 data centers now dot the U.S., according to one estimate, with 3,000 more on the way. Global capital expenditure exceeded $450 billion in 2024. Such facilities sustain much of modern life: cloud computing for communications, finance and healthcare; consumer services such as YouTube, TikTok and Zoom; and, increasingly, the training, finetuning and inference processes used by artificial intelligence models.
For the areas hosting them, these centers can be a boon. In Virginia's Loudoun County, they generate nearly half of total revenue, funding schools, tax cuts and more.
More crucially, data centers increase growth and productivity economywide. One study found that they contributed $727 billion to U.S. gross domestic product in 2023, with each industry job supporting 6½ elsewhere.
Data centers have drawbacks. They can be large, loud and ugly. They can consume a lot of water and electricity. They've also become something of a stand-in for broader anxieties about AI. As a result, many are facing protests or lawsuits, while about a dozen states are considering bills to restrict them. By one estimate, such opposition has impeded at least $156 billion in potential investment.
So what should be done? First, do no harm. A national moratorium would only slow growth, hinder innovation and erode America's lead in the AI race. Better to reap the benefits of data centers while mitigating the downsides.
Take water use. Many data centers use liquid-based cooling to alleviate the intense heat produced by high-energy chips.
The objective shouldn't be obstructionism. Policymakers should instead require transparency about water use while encouraging data centers to use recycled wastewater, build on-site storage, experiment with "closed loop" designs and take other remedial steps.
Another reasonable worry is energy. Global electricity demand from data centers rose 17% in 2025, with AI-focused ones increasing fastest. Consumption could double by 2030.
Policymakers should require that companies building data centers pay for related infrastructure upgrades. They should ease the process of connecting to the grid, thereby allowing companies to generate more of their own power, and ensure that pricing reflects fluctuating demand.
In time, as tech companies' goals align with those of the broader public, more people should see the obvious: Data centers aren't the enemy. They're the future.
