capitalists when they discover how capitalism works.
“overheating can even trigger a recession.”
You don’t say.
And I still wonder if there even is any demand at all. Sure it’s used a lot, but most of that is free or highly subsidized services. And from startups that throw money at the wall and have no chance at all of ever becoming profitable. But there is demand from enterprise tho! Is there? The era of tokenmaxxing is over and enterprise is cutting down on AI costs after seeing spending balloon and no real increase in profits or revenue or even productivity. Some people claim to be more productive, but it’s not by a wide margin and the ROI is hard to see.
All AI is used for is filling the internet with slop. If generating an image of AI lobster Jesus would actually cost what it should cost, I wonder if they would still be generated as much. So these AI companies see high usage, more than they can handle, and claim high demand. They buy all the hardware, hardware producing capacity and force the construction of all these datacenters. Often by bribing officials, speed building, cutting corners and not caring about anything sensible like the environment. Instead of also investing in renewable energy, they just plop down gas turbines, because it’s cheaper and faster. And for what? So we can generate more slop?
But no worries guys, we’ll ask Grok how to solve climate change, not a problem! A little more fucking up the environment now doesn’t matter, we’ll get our magical genie to create a magical solution to all our problems. Which is so fucking dumb, it’s doubtful anyone actually believes that.
We already know how to solve climate change, we just choose not to because it would mean giving up some luxuries.
Another factor is that model capabilities are topping out, but inference costs of cheaper models are absolutely plummeting.
In other words, it’s a race to the bottom. And inference will become a dirt cheap commodity.
…And what do we need all those datacenters for if inference is dirt cheap?
100%. Such an enormous waste of money, resources, and attention, happening in a time when we have so many real problems to solve.
I think that’s exactly right.
Paul Kedrosky was on Zitron’s podcast some time ago and said that he’s not sure that the return on the datacentres will be enough to pay for interest on the debt issued to build them - and it’ll never pay back the original capital. That should scare everyone. He also talks about how the bond markets - including USA bonds - are affected by the sheer size of AI debt. It’s quite worrying.
AI was supposed to make everything cheaper and more productive. Instead we get higher power bills, pricier computers, fewer workers building homes, and inflation. Turns out the productivity miracle is mostly Big Tech finding a remarkably efficient way to make everyone else subsidize its server farms.
This is trickledown economics V2
Why fewer workers building homes?
People who could build homes can get more money to be on datacenter builds instead.
I assume it’s because of all the trades required to build these mega data centres. Usually there are a lot of bonuses associated with mega projects.
its ai guys trust us its the ai its not the war with iran and the oil shortage its ai trust us
It’s both. Prices of electronics have skyrocketed because data centers are reserving years worth of manufacturing time from the chip fabricators, meaning no one else can get any. Datacenters are increasing electricity prices because they’re eating up cities worth of power.
Binary thinking is not helpful
The neat thing is it can be all of the above.
