How Data Centers Actually Work

Lauren Goode: Well, they’re all interested in growing more. Who among us, Mike? But the hyperscalers refers to this class of major tech companies or cloud service providers. So Meta, Amazon, Microsoft, Google, they’re all in that category.

Molly Taft: Yeah, and I think it’s important to remember that these companies have so much money and they have an ability to raise capital like nobody’s business. So they’re able to do some really crazy stuff to build quick and to build-out really, really big. And they’re getting pretty creative, because their goals right now are to build these things quickly and get them up and running so they can basically use this physical infrastructure to compete with each other.

Lauren Goode: I think that’s right, Molly. I think there’s a lot of frenemy building happening right now, and I would just love to be a part of their group chats when all of these announcements are being made.

Michael Calore: Yeah, and speaking of frenemies, the other sphere of influence that these companies are operating in is the political sphere. Obviously, in order to build a giant data center somewhere, you need to have the political will to do it, which means you need buy-in from the local residents, the local government, the state, the country. So what’s happening in the political sphere with folks who want to build more data centers and people who oppose it, regulation? How is that playing out?

Molly Taft: That’s a great question, and I think if you look at the national conversation, it’s quite different than what’s happening on the local level. You have Washington, you obviously have an administration that is very friendly to the idea of an American AI empire. Importantly for the energy conversation, the way that the Trump administration has approached this support has been through support of fossil fuels. They would really like for all data centers to be powered with oil and gas, a little bit of nuclear and coal. And this works out great for those industries as well. If you’re going to have this massive expansion of power demand, it’s really cool to be in the middle of that and be the one that everyone wants to turn to for energy resourcing. And then on the other side, there has been this influx of local opposition to these data centers for a variety of reasons, be it the water use, be it fears about rising electricity rates, be it noise, and some of the really big struggles have catapulted this issue to national conversation. I’m thinking about xAI in Memphis. When Elon Musk wanted to get xAI up and running, he installed a bunch of unpermitted gas turbines in order to get xAI working that he installed in a majority Black community in Memphis that already had severe issues with air pollution and asthma. And those folks made themselves known. Earlier this year, there was an attempt in DC to impose a moratorium on any state regulation around AI at all. It was an incredibly broad inclusion in the Big Beautiful Bill that ultimately didn’t succeed. But one of the people who opposed it publicly was Marjorie Taylor Greene, who actually mentioned data centers in her opposition, and she compared AI to Skynet, the fictional AI from the Terminator movie franchise. So, this is getting some strange bedfellows in league with each other, I think this kind of contrast between what the administration is trying to push forward and some very powerful energy companies that stand to gain from it, versus some truly grassroots local movements and people concerned about the impacts of what these things are going to do in their communities.