Sun, May 10, 2026 page7

• Data centers are not the enemy — they are the future

  • Bloomberg Opinion
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  For a bunch of unremarkable warehouses, they are generating a lot of controversy. Data centers — low-slung facilities that house the server racks and energy systems that underpin the digital economy — have become a heated issue on the campaign trail. Politicians from both parties are pushing bills to restrict them. Some want a nationwide “moratorium.” That would be a historic mistake.

  About 4,000 data centers now dot the US, according to one estimate, with 3,000 more on the way. Global capital expenditure exceeded US$450 billion in 2024. Such facilities sustain much of modern life: cloud computing for communications, finance and health care; consumer services such as YouTube, TikTok and Zoom; and, increasingly, the training, fine-tuning and inference processes used by artificial intelligence models.

  For the areas hosting them, these centers can be a boon. For one thing, they lure tax dollars without consuming much in services; in Virginia’s Loudoun County, they generate nearly half of total revenue, funding schools, tax cuts and more. To support them, utilities often expand substations, add transmission capacity and build out new fiber, all of which benefits locals. Construction could be a pain, but it typically leads to better roads, waterworks, renewable capacity and much else.

  More crucially, data centers increase growth and productivity economywide. One study found that they contributed US$727 billion to US gross domestic product in 2023, with each industry job supporting another 6.5 elsewhere. They would only get more important with the advance of AI — which is highly dependent on centralized computing clusters and which could itself boost GDP by 1.5 percent by 2035.

  That said, data centers have drawbacks. They can be large, loud and ugly. They can consume a lot of water and electricity. They have also become something of a stand-in for broader anxieties about AI. As a result, many are facing protests or lawsuits, while about a dozen states are considering bills to restrict them. By one estimate, such opposition has impeded at least US$156 billion in potential investment.

  So what should be done? First, do no harm. A national moratorium — as several lawmakers have proposed — would only slow growth, hinder innovation and erode America’s lead in the AI race. Better to reap the benefits of data centers while mitigating the downsides.

  Consider water use. Many data centers use liquid-based cooling to alleviate the intense heat produced by high-energy chips. In some areas, this could stress already-constrained water supplies. Yet this challenge should not be exaggerated: One analysis found that the water footprint of xAI Corp’s Colossus 2 facility in Memphis — one of the largest data centers in the world — is equivalent to about 2.5 fast-food restaurants.

  The objective, then, should not be obstructionism. Policymakers should instead require transparency about water use while encouraging data centers to use recycled wastewater, build on-site storage, experiment with “closed loop” designs and take other remedial steps. They should also prioritize infrastructure investments and replenishment schemes to offset consumption.

  Another reasonable worry is energy. Global electricity demand from data centers rose 17 percent in 2025, with AI-focused ones increasing fastest. Consumption could double by 2030. Meanwhile, supply is so constrained in some areas that big new facilities might need to wait seven years for a power hookup. Again, though, fearmongering is not necessary. Meeting the US’ power needs would be a long-term project — and AI companies are well-positioned to help.

  For policymakers, a few goals should be clear. They should require that companies building data centers pay for related infrastructure upgrades. They should ease the process of connecting to the grid, thereby allowing companies to generate more of their own power, and ensure that pricing reflects fluctuating demand. Not least: They should accelerate permitting reform, invest in transmission capacity and streamline regulation, to the benefit of the broader economy.

  Easier said than done, of course. However, in time, as tech companies’ goals align with those of the broader public, more people should see the obvious: Data centers are not the enemy. They are the future.

  The Editorial Board publishes the views of the editors across a range of national and global affairs.
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