Can We Afford to Power AI?

 

That is the question posed by Stephen Witt's article in this week's New Yorker, "Information Overload."  Witt, a biographer of Nvidia founder Jensen Huang, has toured several of the giant data centers operated by CoreWeave, the leading independent data-center operator in the U. S.  He brings from these visits and interviews some news that may affect everyone in the country, whether or not you think you use artificial-intelligence (AI) services:  the need to power the growing number of data centers may send electric-power costs through the roof.

 

Witt gives a fascinating inside view of what actually goes on in the highly secure, anonymous-looking giant buildings that house the Nvidia equipment used by virtually all large-scale AI firms.  Inside are rack after rack of "nodes," each node holding four water-cooled graphics-processing units (GPUs), which are the workhorse silicon engines of current AI operations.  Thousands of these nodes are housed in each data center, and each runs at top speed, emphasizing performance over energy conservation. 

 

Gigawatts of power are used both in the training phase of AI implementation, which feeds on gigabytes of raw data (books, images, etc.) to develop the weights used by AI networks to perform "inferences," which basically means answering queries.  Both training and inference use power, although training appears to demand more intense bursts of energy. 

 

The global economy has taken a headlong plunge into AI, making Nvidia the first company worldwide to surpass $5 trillion in market capitalization.  (Just in case anybody's thinking about a government takeover of Nvidia, $5 trillion would pay off only about one-eighth of the U. S. government's debt, but it's still a lot of money.)  With about 90% of the market share for GPU chips, Nvidia is in a classic monopoly position, and significant competitors are not yet on the horizon.

 

Simple rules of supply and demand tell us that the other commodity needed by data centers, namely electric power, will also rise in price unless a lot of new suppliers rush into the market.  Unfortunately, increasing the supply of electricity overnight is well-nigh impossible. 

 

The U. S. electric-utility industry is coming off a period when demand was increasing slowly, if at all.  Because both generation and transmission systems take years to plan and build, the industry was expecting only gradual increases in demand for both, and planned accordingly.  But only in the last couple of years has it become clear that data centers are like the hungry baby bird of the utility industry:  mouths always open demanding more. 

 

This is putting a severe strain on the existing power grid, and promises to get worse if the rate of data-center construction keeps up its current frenetic pace.  Witt cites an analysis by Bloomberg showing that wholesale electricity costs near data centers have about doubled in the last five years.  And at some point, the power simply won't be available no matter what companies like CoreWeave are willing to pay.  If that happens, the data centers may move offshore to more hospitable climes where power is cheaper, such as China.  As China's power still comes largely from coal, that would bode no good for the climate.

 

Witt compares the current data-center boom to the U. S. railroad-building boom of the nineteenth century, which consumed even more of the country's GNP than data centers are doing now.  That boom resulted in overbuilding and a crash, and there are signs that something similar may be in the offing with AI.  Something that can't go on forever must eventually stop, and besides limitations in power production, another limit that may be even harder to overcome is the finite amount of data available for training.  Witt says there are concerns that in less than a decade, AI developers could use up the entire "usable supply of human text."  Of course, once that's done, the AI systems can still deal with it in more sophisticated ways.  But lawyers are starting to go to work suing AI developers for copyright infringement.  Recently, one AI developer named Anthropic paid $1.5 billion to a class-action lawsuit group of publishers whose material was used without permission.  That is a drop in the bucket of trillions that are sloshing around in the AI business, but once the lawyers get in their stride, the copyright-infringement leak in the bucket might get bigger.

 

The overall picture is of a disruptive new technology wildly boosted by sheep-like business leaders to the point of stressing numerous more traditional sectors, and causing indirect distress to electricity consumers, namely everybody else.  Witt cites Jevons's Paradox in this connection, which says increasing the efficiency with which a resource is used can cause it to be used even more.  A good example is the use of electricity for lighting.  When only expensive one-use batteries were available to power noisy, inefficient arc lamps, electric lighting was confined to the special-effects department of the theatrical world.  But when Edison and others developed both efficient generators and more efficient incandescent lamps, the highly price-sensitive market embraced electric lighting, which underwent a boom comparable in some ways to the current AI boom. 

 

Booms always overshoot to some degree, and we don't yet know what overbuilding or saturation looks like in AI development.  The market for AI is so new that pricing structures are still uncertain, and many firms are operating at a loss in an attempt to gain market share.  That can't go on forever either, and so five years from now we will see a very different picture in the AI world than the one we see now. 

 

Whether it will be one of only modest electric-price increases and a stable stock of data centers, or a continuing boom in some out-of-the-way energy-rich and regulation-poor country remains to be seen.  Independent of the morality and social influences of AI, the sheer size of the hardware footprint needed and its insatiable demand for fresh human-generated information may place natural limits on it.  After the novelty wears off, AI may be like a new guest at a party who has three good jokes, but after that can't say anything that anybody wants to listen to.  We will just have to wait and see.

 

Sources:  Stephen Witt's article "Information Overload" appeared on pp. 20-25 of the Nov. 3, 2025 issue of The New Yorker.  I also referred to an article from the University of Wisconsin at https://ls.wisc.edu/news/the-hidden-cost-of-ai and Wikipedia articles on Nvidia and Jevons Paradox.

Should We Worry About the Chip Shortage?

 

A recent article in Wired goes into the reasons for the current worldwide integrated-circuit shortage, which is affecting everybody from videogamers to drivers who want to buy new cars, but can't because the automakers can't get enough chips.  Reporter Eric Ravenscraft says there are several interrelated reasons, starting with COVID-19.  But underlying them is a more structural problem:  the fact that over 60% of global semiconductor manufacturing revenue comes from factories in Taiwan, and a good portion of the rest comes from mainland China.

 

The economists will tell you that shortages happen when demand outpaces supply so fast that producers can't keep up with consumers.  As millions around the world transitioned to working from home, the demand for more laptops, webcams, and associated equipment soared.  At the same time, manufacturers were dealing with COVID-19 shutdowns and absent workers, although Taiwan managed to keep their total number of reported coronavirus cases under 1000—until about a month ago, when their numbers shot up to the current figure of 12,000, according to the Worldometer coronavirus website.  This does not bode well for the near-term future of chipmaking.

 

So even if semiconductor manufacturing had continued at its normal pace, we would have seen prices rise and supplies shrink simply because of increased demand. 

 

Ravenscraft then turns to the fact that the Trump administration in particular enacted policies that are consistent with trying to start a trade war with China.  The details are complicated, but the net effect on availability of chips was negative.

 

And because semiconductors are some of the most complexly-engineered things on the planet, you can't just stop making one kind of processor one day and start making a different kind the next day.  Millions of coordinated process steps, masks, and other details have to change for yield on a new product to rise into the profitable range, and that can take weeks or months.  Here in Texas where our Big Freeze in February knocked out power to a Samsung semiconductor plant in Austin for over a week, it took them on the order of two months just to get things going again.  So chipmaking is not a turn-on-a-dime industry.  Sudden increases in demand cause big problems with supplies that can last months or longer, as these seem to have done.

 

Looking at the big picture, the semiconductor industry has become as essential to the world economy as oil or even food.  People can't eat chips (not the silicon kind, anyway), but they are nonetheless vital to the way we live now.  I have dabbled in the history of technology from time to time, and now and then the occasion arises to determine the relative importance of a given technology to a given culture at a given time.  The following thought experiment is useful:  Suppose everyone woke up one morning and the technology in question had vanished off the face of the earth.  How disruptive would that be to normal life?

 

Some technologies would not be especially missed:  dental floss, for example.  But as we found out in Texas last February, electric power is pretty necessary to normal life for most of us, and if all the semiconductor chips vanished out of our devices one fine morning, we would be arguably worse off than we were without electric power.  Cars newer than 1960s models wouldn't run, nobody's phones would work, businesses from mom-and-pop stores to Amazon would freeze up instantly and lose most of their records (how's them apples?), and, well, it's starting to sound like some descriptions of the consequences of an electromagnetic pulse that would result from detonating a nuclear weapon above the atmosphere, only worldwide.

 

Fortunately, short of divine intervention, we won't have to suffer theglobal disappearance of semiconductor technology.  But this little thought experiment shows how crucial it is to modern life, and how even a mild thing like a chip shortage can have extensive and surprising ripple effects.

 

The other factor that makes a chip shortage serious is the rapid pace at which new products overtake old ones.  This is largely a circumstance of the industry's own making, because anybody with billions of dollars tied up in a semiconductor manufacturing plant has to keep it running at a profit or lose their investment.  So markets have to be found for all those chips, and that is why you have to turn loose of your old electronics even if you like it, because the rest of the world moves beyond it and you have to keep up or else just quit.  And sometimes "old" means only a year or two. 

 

Of course, the manufacturers would say that they're just trying to make their customers happy, and there is some truth to that.  But let me bring in a different voice from a different tradition.

 

Paul Kingsnorth is an environmental activist and writer who, after thirty years of activism and dabbling in Buddhism and Wicca, recently joined the Romanian Orthodox Church.  As an activist, he saw problems with the way the world was going, as he puts it in the June/July issue of First Things:  "We would remake Earth, down to the last nanoparticle, to suit our desires, which we now called 'needs.'"  Needs for semiconductors, for instance.

 

But after his conversion, he views Christianity as the history of man's rebellion against God.  The global issues he was so focused on formerly—climate change, economic inequality, and so on—he no longer views as problems to be solved, but as spiritual issues, consequences of sin.  Toward the end of his article, he writes "In the Kingdom of Man, the seas are ribboned with plastic, the forests are burning, the cities bulge with billionaires and tented camps, and still we kneel before the idol of the great god Economy as it grows and grows like a cancer cell.  And what if this ancient faith is not an obstacle after all, but a way through?"

 

The chip shortage looks like at most an annoying interruption of what we have come to regard as business as usual.  But what if COVID-19 and its consequences form an opportunity for us, individually and corporately, to ask some questions about the whole set of assumptions that underlie that business?  Maybe business as usual isn't where we should be trying to go.  But that is a discussion for another day.

 

Sources:  Eric Ravenscraft's article "Here's Why Gadgets Are So Hard to Get Right Now" was published on the Wired website on June 12, 2021 at https://www.wired.com/story/heres-why-gadgets-are-so-hard-to-get-right-now/.  I also quoted from Paul Kingsnorth's article "The Cross and the Machine" on pp. 35-41 of the June/July 2021 issue of First Things.