Are Data Centers Bad for Local Communities? Joe Honan Answers | The Brief

I sort of want to play devil's advocate and tell you why data centers really are the advent of the apocalypse. And then if you could sort of just essentially tell me why I'm wrong, you know, maybe assage my fears here and I'll start with the following. To your point, hyperscale data centers require immense amount of electricity. I mean, they have evolved in the last 30 years, but that amount of electricity can really constrain local power grids. It can drive up monthly utility costs for regular consumers. So first and foremost, how much electricity does one data center actually require to operate? And then number two, how would you respond to the average consumer who is concerned that their utility bills will actually increase if there is a data center in their community? It's a great question. And it is the metric that is driving the entire industry is power consumption, right? So the idea of what a typical data center would be is anywhere from, let's say, 10 megawatts on the small side up to these very, very large, you know, 100, 200, 500 megawatt, you know, installations, right? So the very, very large ones, the hyperscale data centers, those are the ones that we keep hearing about that, you know, in the news that people are protesting around and so on. And there is a need, in my opinion, this isn't a political thing, it's an arithmetic question. Energy is required to power compute all around the world, right? And the idea of how do we get to that place where we have enough renewables, enough abundant energy and so on into the future? How do we get there from here? I think there's two pieces to this that are very important. One, first, as you mentioned, we have to acknowledge that data centers require energy, right? They just do. That's how they run. That's how we get the things that we need out of them. That's how all these big models are being trained and so on. That said, you know, I think that there is a somewhat of a misconception, but it should be an industry problem to solve around power consumption, meaning I as a homeowner in my community should not be paying more to subsidize a large data center project and so on. That's an industry problem. That's an investment by companies like mine or others that are in the industry that is required to be able to offset those costs. Those costs should not be passed on to the consumer, in my opinion. I think it is not nearly as prevalent as we may see in the news, but it is certainly a concern and I would have the same one if I were in a community next to a planned data center. I would want to know what impact it has on my energy bill. Yeah, that actually might be refreshing for some of our audience members to see the CEO of an AI company being so transparent on that. Let me have you debunk, let's say, another claim. To your point, again, you are going to require millions, millions of gallons of water, which are continuously pulled from local supplies to cool all of these massive servers. We're filming this episode here in California, in Los Angeles. That's always an issue. We're just coming out of an historic drought. So how much should residents, especially in those rural farmlands, how much should they worry about data center water consumption? Is this something that is going to require copious amounts of water on an endless loop? Yeah, data centers do require water, but it is not necessarily just hooking it up to the community tap and just forever feeding it, right? There's a lot of technology that goes into recycling of that same water, the cooling of that water and so on to be able to reuse the amount of water that is required per day. The very, very large data centers will require, as you mentioned, 500,000 up to a million gallons of water per day. And with the technology and with proper building and planning of these things, that doesn't mean a million gallons out of the community utility every day. It is a allocation that is reused and hopefully over time and as we get better density and so on for these things, that process of water consumption and utilization will also get much more efficient. And that's one of the reasons why these new data centers are being planned is to be more efficient with the use of water and power and even density of how many servers you can fit in a rack. So if I can be somewhat presumptuous, just because I think it's really important for our audience and those who are skeptical on data centers to understand, just yes or no, the water that these data centers consume, they can in fact be recycled, correct? That's correct. Yes, it can be recycled and reused in the same cooling factory. Okay. Yes. So then let's move on to another issue that opponents will often bring up. So you have these onsite backup diesel generators or gas turbines. They're emitting nitrogen oxide and the cooling systems themselves, they'll create this constant disruptive hum almost. I'm sure you've been following this story out of Nashville where the Nashville Zoo is fighting a proposed 69,000 square foot data center slated to be built just 50 yards from the property line. And the zoo is saying, well, none of our animals can go to sleep anymore because there's 24 7 noise being emitted. These rare animals, again, we have life support systems, you know, we lose power. It's a big deal for us. More than 227,000 people signing the zoo's petition opposing it. DC blocks telling multiple news outlets the facility will not burden local resources and will pay for its own power infrastructure to meet all environmental requirements. So how would you respond to opponents who are saying that these massive data centers forget about the water, forget about the utility, forget about the energy? It's just noise pollution. And there's no actual way to combat that. Some of that is a temporary problem, particularly with these gas turbines, you know, and the decibels that that they require as more of these data centers come online. And as the technology matures on how to power them, I think that overall output of sound will will lessen. I think if you look at most data centers, you can go out and and tour, you know, switch in Las Vegas or other large data centers, you know, around the community, there is much more ambient noise than just that building. Right. And it just kind of blends in. Certainly, sound, power, water, those are all things that the industry needs to be aware of. And, you know, I'm a big animal lover as well. And I would certainly advocate for, you know, any animal at a zoo being able to sleep. But I would be surprised if that were the case where to that extent, you know, of of an issue. I'm not going to wade into the Nashville Zoo politics. I'll leave it at that. But interesting perspective. OK, here at Prager, you are obviously free market conservatives. We believe in, you know, job creation and limited government. And I think one of the strongest arguments that proponents of data centers will say is, look, this is going to create jobs. But if we're being honest, which I think up until this point really have been, there has been an increasing number of surveys and statistics, particularly from the Brookings Institute, but elsewhere as well. And they seem to make the argument that actually, no, data centers are kind of offering these high end yet short term construction numbers, but very few permanent on site operational positions. So to what extent are data centers themselves actually creating these long term permanent jobs? I do think that there is a resurgence in the skilled trades, which I think is great. You know, pipe fitters, plumbers, electricians and so forth, you know, with with the boom of construction, the the the point of these data centers is to is to run without a lot of manpower in them, you know, day by day. Right. So it is I do think that there are permanent jobs being created. I don't know if it's around the operations of of the data centers versus the the management of those clients and the equipment that is that is attached to them, you know, versus just the the shell of the building. Right. So I have looked at some of the numbers. There is a massive shortage of skilled trades that I think is a positive thing to it. The nature of these data centers, though, is to run fairly autonomously or at least be remote hands available. So the long term jobs, like in any technology cycle, there will be an increase in a creation of net jobs versus a reduction of them. I just don't think it's necessarily attached to the physical data center. Thanks for watching this week's episode. Let us know your thoughts in the comments below and also tell us what topics you want to see covered, whether it's immigration tariffs. We have great episodes coming up and we'll see you next week on The Brief.