The news is full of stories about new data centers being built, and local residents complaining.
And I have some simple questions:
Who is building all these centers? And why?
How does each new proposed one differ from others? How many are currently proposed, both in the US and the rest of the world?
I understand that different AI’s will be trained on different data sets.
But what is the end game for each one?
What Is the specific need for it, which makes investors willing to risk the money? Is each one aiming for a specific niche, to be the leader in a specific industry? Or Is everybody just jumping in blindly, hoping to become the Google or Windows of AI, take over the world, and kill off the competitors?
Are all the data centers roughly the same size (measured by the amount of data they can process)?
How do they define their data sets, and what are the sources? I assume it mostly comes from the “regular” internet,(i.e. info freely available), so how does one center limit itself to relevant data, and know what to ignore from the wider internet.?
And ( IMHO territory ahead): do you think all these data centers are going to be necessary, or are a whole lot of people going to lose a whole lot of money?
Here in Oz, one of the mooted AI data centres is being promoted from IREN, which already has 5 in the US. They may be involved in other proposals in Australian. They are promoting themselves as providing AI compute for companies that want to do AI. They don’t do the AI themselves.
So whether this is a rain follows the plough business model or they already have major customers already waiting with money in hand is an open question.
They say Train powerful AI models and run inference at scale, fast.
So we are seeing a repetition of the business model that made Amazon’s AWS make more money than selling stuff. Provide services to companies with scalability. Companies can buy in small, and if things go well, it all seamlessly scales up and down as needed. A startup is insulated from capital expenditure and everything is lovely. So long as they come
Whether there is going to be the demand is really unknown. IMHO it is unlikely. The lead time for actually getting a centre built is such that if things don’t pan out, in many places all that will happen is the plans will fail though and nothing gets built.
Everything is currently paced by manufacturing. And that doesn’t scale easily. AMSL is making stepper machines as fast as they can, and the lead time to scale up is measured in years. Worse, history is replete with boom and bust cycles in the industry. There is very little incentive to be dropping billions on what is probably another mirage that could bankrupt them if they got greedy. The various tech bros moan about this.
The problem with the model IREN has is that it assumes that there are yet unknown killer applications that smart young startups will discover and make zillions on. The sheer scale of the build out is essentially saying that these yet unknown killer AI apps will be making hundreds of billions in only a few years. No doubt there are going to be some interesting and important breakthroughs powered by machine learning systems. But something that is of the same scale as the mobile phone? Difficult to believe.
One thing that does fuel data centre build outs in countries outside the US is the increasing perception that sovereign capability and control is becoming ever more important. Governments in a few countries have already been dismayed to discover their data is held and managed in other countries with unclear guarantees about privacy and access by foreign governments.
It’s difficult to say who’s building them, since a lot of data centers are shrouded in NDAs and multiple layers of shell companies. They’re deliberately making it hard to tell who’s building what. My guess is that that means that they’re mostly built by a small number of big players, who are trying to hide their monopoly or near-monopoly status.
A real estate company called Thor Equities purchased some land not far from us to build a data center. The city gave them the green light to build it last year, but now the city says they can’t build it. Thor has now filed a lawsuit agains the city.