Electricity and Data Centers

I’ve discussed this topic extensively over the last few years. Feel free to check out my previous posts about AI’s demand for electricity here:

https://shorturl.at/GHJwc

https://shorturl.at/5DuMD

The US Department of Energy (DOE) released a report last year projecting that data centers could consume as much as 12% of all US electricity by 2028, up from around 4.4% in 2024. The International Energy Agency estimates that global electricity demand from data centers will more than quadruple by 2030, consuming more electricity than entire countries such as Japan.

Despite significant investments by big tech in new energy generation—primarily through building renewables and re-commissioning old nuclear power plants—this effort is not enough. Supply is not keeping pace with the growing demand, leading to higher bills in many regions of the world where data centers are prevalent.

A Bloomberg analysis of wholesale electricity prices across thousands of locations in the US revealed that prices had increased by as much as 267% over the past five years in areas located near data centers. This infographic from Bloomberg adds a lot of color to the situation.

Residents living close to data centers are not only impacted by higher energy bills. Water is also required in high quantities for data centers, and noise pollution has become a major complaint for surrounding communities. This has turned AI data centers into an important local political issue in many regions.

The Environmental Impact of Data Centers

The environmental impact of data centers extends beyond electricity consumption. The water usage required for cooling systems is substantial. As data centers expand, they can strain local water supplies, particularly in drought-prone areas. This situation raises concerns about sustainability and the long-term viability of such facilities.

Moreover, the noise generated by cooling systems and other machinery can disrupt the quality of life for nearby residents. Increased traffic from delivery trucks and maintenance crews further contributes to local disturbances. As communities grapple with these challenges, the conversation around the placement and operation of data centers is likely to intensify.

Hardware

Hardware prices have skyrocketed in the past year, and the impact of these higher costs has not yet reached mainstream consumers. PC gamers were among the first to feel the pain. High-performance memory, especially graphics chips, is very similar to what is used in data centers. As demand has surged, gamers are increasingly bidding against tech giants with deeper pockets for their hardware, driving prices higher.

Memory producer Micron Technology ($MU) recently announced their exit from the consumer RAM market. They halted sales to third-party brands and discontinued their own 30-year-old Crucial Memory brand. They specifically cited AI demand as the reason for this decision.

Samsung’s internal mobile and tablet division was reportedly denied RAM allocations for future devices by their own memory division, which prioritized AI clients instead. This has led industry insiders to suggest that new smartphones, tablets, laptops, and other devices could have worse hardware specifications than their predecessors, including flagship phones.

Recent industry reports indicate that both Nvidia ($NVDA) and AMD ($AMD) will hike prices for their GPUs in early 2026, with some cases seeing increases of more than double. The Nvidia 5090, their flagship graphics card, is expected to rise from $1,999 to $5,000—making already expensive top-end gaming PCs completely unobtainable for most consumers.

The end result is that consumers and businesses are left with more expensive, less powerful devices. This trend could significantly impact productivity.

The Future of Gaming Hardware

As hardware prices continue to rise, the gaming community may face a significant shift. Gamers who once enjoyed the latest technology may find themselves unable to keep up with the escalating costs. This could lead to a divide between those who can afford high-end gaming systems and those who cannot.

Moreover, the quality of gaming experiences may suffer as manufacturers prioritize AI clients over consumer needs. This shift could result in less innovation in gaming hardware, as companies focus on meeting the demands of the AI sector rather than the gaming community.

AI Slop & Disinformation

I’ve written about this topic extensively as well. For a deeper dive, check out my eToro post here:

https://shorturl.at/m1LwA

AI slop is arguably adding to the frustrations of those facing higher electricity bills and more expensive electronics. A significant amount of resources consumed by AI is ultimately wasted on generating useless AI slop that does not bring any tangible value or productivity benefits to the world.

More concerning is the use of AI to produce and spread misinformation and disinformation across social media platforms. The EU is now taking major enforcement action against X under the Digital Services Act due to their failure to tackle disinformation and their role in enabling misleading information to spread.

I see this as the first in what could be a wave of actions taken against AI by the EU. Tighter regulations and restrictions appear inevitable in the coming years.

The Role of Social Media in Disinformation

Social media platforms play a crucial role in the spread of disinformation. The algorithms that govern these platforms often prioritize engagement over accuracy, allowing misleading content to thrive. This creates an environment where false information can spread rapidly, leading to real-world consequences.

As governments and organizations work to combat this issue, the responsibility also falls on individuals to critically evaluate the information they encounter online. Media literacy will become increasingly important as we navigate a landscape filled with AI-generated content.

Content Without Consent

This issue is closely related to the AI Slop & Disinformation category mentioned above. I touched on it in the same eToro post linked earlier.

A large number of AI models were, and continue to be, trained on data without explicit permission for such use. This problem significantly impacts creative industries—photographers, writers, graphic designers, artists, songwriters, and more.

Interestingly, the US Copyright Office released a report last year stating that some uses of copyrighted material for AI training are not defensible under 'Fair Use.' In the EU, there are calls from politicians to improve opt-out mechanisms and transparency regarding AI training practices.

Disney has raised concerns that Midjourney may have trained on their films, and there is a growing number of lawsuits against AI companies suspected of training on data without consent.

The Impact on Creative Professionals

The implications for creative professionals are profound. As AI continues to evolve, the potential for unauthorized use of their work increases. This could lead to a devaluation of creative content, as AI-generated works flood the market.

Artists and creators may find it increasingly difficult to protect their intellectual property. As the legal landscape surrounding AI and copyright continues to develop, it will be essential for creators to stay informed and advocate for their rights.

Scams

A former colleague recently reached out to me about his investment in copying my crypto trading on another platform. He mentioned that he had messaged me about it a few weeks earlier, but he had actually messaged an AI bot set up to impersonate me. This became clear when he expressed concern to the bot about its behavior. The AI bot responded: "When you say 'this doesn’t sound like you,' what specifically feels off to you? Tone, wording, pace? I genuinely want to align with how you prefer me to communicate."

The bot likely trained on my eToro and social media posts, marking the first time I’ve seen AI used as part of scammers' attempts to impersonate me. Please note: I ONLY use eToro for any kind of copy trading! Always exercise caution and conduct due diligence when investing online.

There is also an increasing number of scams that involve spoofing your phone number and using an AI-generated voice to impersonate you to your friends and family members, with the goal of extracting money from you. There is now a tangible risk associated with having a broad online presence, as scammers can use that data to train AI to impersonate you.

Protecting Yourself from AI Scams

As AI technology advances, so do the tactics used by scammers. It’s crucial to remain vigilant and informed about these risks. Implementing two-factor authentication and being cautious about sharing personal information online can help protect against these threats.

Additionally, educating friends and family about the potential for AI impersonation scams can create a more informed community. By working together, we can reduce the effectiveness of these scams and protect ourselves from financial harm.

Final Thoughts

Despite the undeniable advantages of AI, real tangible downsides are emerging that cause harm to people. If individuals do not see direct benefits from AI, they may begin to dislike and distrust it. This could lead to support for politicians and policies aimed at further restricting or regulating AI.

Personally, I believe that some additional restrictions and regulations could be beneficial. However, AI enthusiasts and tech leaders argue that this will slow innovation.

If a tangible movement against AI develops, we could see valuations for AI companies and adjacent businesses correct sharply downward.

As an ethical investor, AI is now a meaningful component in my ethical vetting process. Like most new technologies, it can be used for both good and bad. Different people, governments, and companies all see the balancing point in different places.

I’d love to see lively debate and discussion about the pros and cons of AI in the comments. Please share your thoughts and experiences.

December’s Monthly Portfolio update, my Quarterly Performance Report, and a 2025 Year in Review post are all in the works, so stay tuned. As always, thanks for copying and following. I hope you had a great Christmas and New Year!