The AI industry just learned that computers get hot when you run them. Apparently this becomes a problem when the weather also gets hot. Groundbreaking stuff.
Data centers are now facing higher insurance costs and repair bills because heatwaves strain power grids. The same grids that were already struggling before we decided to build warehouse-sized calculator farms in every state that offered a tax break. Turns out plugging in a million GPUs to generate pictures of cats with six fingers requires electricity. Who could have predicted this.
The risk analysis goes like this: extreme weather knocks out power, servers overheat, billions of dollars in hardware designed to tell you whether a hot dog is a sandwich stops working. Insurance companies are raising premiums because they actually read weather reports, unlike the venture capitalists who funded these places. The actuaries did the math. The AI companies did not.
Severe weather events are increasing. Data center construction is increasing faster. These two trend lines are heading toward each other like drunk drivers on a back road, except one driver is hauling a server rack worth more than your house and the other is a Category 4 hurricane that doesn't give a f*ck about your quarterly earnings call.
The solution being floated is better cooling systems and backup generators. Revolutionary thinking. Spend more money to protect the money you already spent so you can keep spending money on electricity to run machines that sometimes write coherent sentences and sometimes tell you to put glue on pizza. The business model gets stronger every day.
Every retail trader who bought Nvidia at the top is now sweating harder than a data center in Phoenix during July.
Photo by Justin Wolff on Unsplash
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