Beijing has been encouraging its tech giants to build data centers across the country as the central government believes that computing power, especially in the age of AI, correlates to national power. Because of this, many Chinese companies like Huawei and Tencent have been actively building AI infrastructure in rural provinces, like Guizhou province, which is located more than 500 miles to the northwest of Shenzhen. According to Tech Xplore, dozens of these facilities have been constructed in the area in recent years, with more on the way.

Unlike the U.S., where data centers face increasingly tough opposition, these build-outs are seemingly approved with relative ease, and the people living around them apparently appreciate the changes that the data centers and related infrastructure brought to the area. “It used to be a barren mountain, but since the area has developed, transportation has become more convenient, trade has picked up, business opportunities have emerged,” one shopkeeper told the publication. Another local, Li Xixiu, praised the development of the main road as tech companies entered the area, saying that it “boosted the economy of the area,” and that there have been more local opportunities since then. “All the villagers in our neighborhood now find jobs nearby, unlike before, when they had to go to other places,” said Li. Still, it must be noted that Beijing places tight control on objections and protests, and that ordinary people cannot just object to policies set by the central government.

One of the reasons behind American opposition to data centers is the egregious electricity price increases they’ve brought on the average user. The PJM Interconnection region, the biggest power region in the United States, has seen a massive 76% increase in electrical costs because of the burden that data centers have put on the grid. Aside from that, it’s estimated that 20% of power generated in the U.S., amounting to 194GW, will be allocated to data centers by 2035. By comparison, analysts say China has a massive advantage in power generation, with several western Chinese provinces offering steep discounts on their electricity bills for AI companies that use Chinese chips. Furthermore, because the state subsidizes the power costs of residential and agricultural users, the average citizen does not worry that a nearby data center would cause their utility costs to increase.

These rural provinces also have large swaths of land allocated for renewable energy production, with energy overproduction becoming a problem for some operators. So, the construction of these power-hungry buildings actually helps solve the problem by using up surplus power instead of letting it go to waste. The availability of land and power in these western provinces makes it more attractive and affordable to put up data centers, compared to areas east of the country which are largely built up and have higher population concentrations.

Still, this development is not without issue. The Research Institute for Democracy, Society, and Emerging Technology (DSET) in Taiwan said in an email to AFP that while Guizhou has seen an average GDP growth of 7.4% over the past 10 years, wages didn’t increase as much and lagged behind much of the rest of the nation. “This contrast suggests that while data centers drive heavy investment in land and equipment, their impact on boosting local per capita income remains limited,” DSET researchers Cartus Bo-Xiang You and Angela Glowacki wrote.

Data centers have become a hot topic uniting Americans recently, with over 70% opposing the building of this infrastructure near their homes. So, Liquid Death and Garage Beer have banded together to create a viral ad asking viewers to drink their products, create pee, and then send it to the AI data center of their choice. According to Marketing Dive, the concept started with Liquid Death’s creative team, with comedian Sabrina Jalees coming up with the data center idea. It was repurposed into this ad, featuring NFL star Jason Kelce, who co-owns Garage Beer, showing the two brands teaming up together to promote their products and asking people to pee on computers "to save humanity."

“We have a lot of affinity for what those guys are doing: they’re doing comedy, and they’re also an indie trying to break into the mainstream. We’re positioning our energy drink as a light beer of energy — it’s fewer calories, it’s lighter, it’s more drinkable — so that was the strategy,” Liquid Death vice president of creative Andy Pearson told the publication. As for the peeing on data center concept, Pearson added that it’s the one issue that's common across America. “When you look at the data, it is literally the one thing that unites all Americans right now, across the spectrum.” In the video below, Kelce opens by stating "AI data centers waste millions of gallons of water."

Aside from electricity use and consumption pushing prices for all consumers, the next big issue that many data centers face is the amount of water that they consume in their operations. There have been several instances of data centers affecting the water supply of the neighborhood that they’re in. One example of this is this 615-acre campus in Fayetteville, which has been causing low water pressure for over 15 months as it secretly sucked 29 million gallons of water, while another report showed a Meta data center allegedly muddying the water supply in a Georgia town.

These concerns had tech giants like Microsoft and Amazon release claims that their data centers only consume a small amount of water, while Nvidia has also been developing technologies that will cut data center water use by up to 100%. Still, many feel that these efforts aren’t enough to address the issues being felt right now, leading to passionate and widespread resistance against these projects across the nation.

The two indie brands are trying to get on board the issue in a more lighthearted, less preachy way, making use of humor and a bit of crudeness to touch on sensitive issues like data centers. While the video has a disclaimer saying, “to please don’t actually send your pee,” some developments plan to use treated wastewater instead of fresh water for their water demands, so some data centers already use “pee” to cool their GPUs. We just wish that more of these facilities did this from the beginning, instead of making thousands of people suffer from water problems.

There’s light at the end of the tunnel for Nine PBS. We reported last week that the station lost access to 50TB of data representing 70 years of TV history. The issue was that its cloud storage provider went out of business and access to this important set of backups was abruptly cut off. In the meantime, a judge has cleared the way for Nine PBS to retrieve its archival data and programming from Iron Mountain Data Centers.

Let us refresh your memories of this case by sketching out a timeline of how we got here, before discussing the latest ruling.

• 2019: Nine PBS began using Open Source Storage (OSS) as its cloud storage provider.
• 2019-2025: Annual cloud storage contract renewals occur without incident.
• February 2026: Nine PBS wanted to meet with OSS about contract renewal but couldn’t get in touch.
• March 6, 2026: Without any new agreement inked, the existing contract expired on March 6, with the terms allowing 30 days for the customer to retrieve their data. However, OSS seemed to cut off access to Nine PBS cloud data without any warning or any grace period.
• March 13, 2026: Nine PBS learned that OSS saved its cloud data at physical servers housed in Iron Mountain, Colorado. So it wrote to request that Iron Mountain preserve and return the data. However, Iron Mountain doesn’t confirm or deny that it holds this data.
• April 16, 2026: Nine PBS filed suit against OSS, and new OSS owner James Tramel confirms the data is secured at Iron Mountain.
• May 2026: Tramel stops responding, later claiming he was defrauded into buying OSS.
• June 2026: Nine PBS obtains a default judgment stating it owns the data in question and has the right to possess it. Later the same month, Iron Mountain admits it possesses the data. However, Iron Mountain decides to block any access as it says OSS owns the physical servers.
• July 28, 2026: Nine PBS files a lawsuit against Iron Mountain, the data center provider for OSS, seeking protection against data deletion or modification.

Nine PBS - "70 years of our organization’s history" in danger

The latest development in this twisting and turning case of Nine PBS’s lost data seems like good news for the station. On August 12, 2026, a Denver judge established a process that would allow Nine PBS to retrieve its 50TB of archival data from Iron Mountain’s Denver data center.

The outlined framework includes appointing a third-party vendor, such as a former OSS employee, to assist in the retrieval of the data from the hardware in Iron Mountain. This must be done within 30 days. Moreover, Nine PBS must pay the current and overdue storage fees that OSS missed, and any physical devices the third party takes off the premises must be returned to Iron Mountain after data retrieval. Lastly, Nine PBS must verify no other ex-OSS client data is accessed, and indemnify Iron Mountain against any corruption of data owned by others.

Both Nine PBS and Iron Mountain are requested to provide progress updates on the data retrieval process by September 14. Hopefully this will be a lesson learned by Nine PBS, and it will swiftly implement a proper 3-2-1 backup of its irreplaceable data, so any cloud provider error doesn’t cause such a calamity in the future.

PJM Interconnection, the grid operator serving 67 million people across 13 states and Washington, D.C., asked federal regulators on Thursday to approve rules that would cut power to new data centers ahead of households during supply shortages, Reuters reports. The filing with the Federal Energy Regulatory Commission follows two consecutive capacity auctions that failed to secure enough generation, and PJM's board projects roughly 70 GW of new large load by 2038 against roughly 15 GW of generation retired since 2022.

Existing facilities aren't affected, with the proposed Interim Resource Adequacy Service applying only to new loads of 50 MW or more at a single site that connect without bringing their own generation, or otherwise securing supply, by June 1, 2027. Those facilities would be curtailed before PJM deploys Pre-Emergency Load Management, which are the demand-response programs that pay other customers to cut consumption during grid stress.

Attached to the scheme is a new Large Load Registry, which tracks the location and megawatt draw of every 50 MW-plus site in PJM's territory and whether it brings its own supply. Affected customers would be compensated at a FERC-approved hourly rate set at 50% of the penalty rate PJM pays existing demand-response resources during full grid emergencies. It’s understood that operators can waive that payment in line with the White House's Ratepayer Protection Pledge.

PJM can't actually flip the switch itself, however. The operator told Reuters that it lacks the authority to curtail individual sites and would need to rely on utilities and state governments to carry out the reductions, which is why the registry data will be shared with states to set load-shedding priorities. Virginia, home to the world's largest data center cluster, has already ordered operators to pay for their own dedicated grid infrastructure.

Data centers in PJM’s territory have been curtailed before under a Department of Energy emergency order issued in May, which enabled the operator to call on large loads with backup generation as a last resort ahead of rolling blackouts. PJM expected less than 5,800 MW of reserves during that heat event, with Maryland and Virginia under the most strain. Thursday's filing would turn that one-off emergency authority into an established mechanism.

In July, PJM’s capacity auction for the 2028/29 delivery year hit its $325 per megawatt-day price cap and still came up some 6,800 MW short of the operator’s reliability requirement. Its independent market monitor has attributed a 75.5% jump in regional power costs directly to data center demand.

A separate one-time backstop procurement, running September 30 through October 21 with offers capped at $555 per megawatt-day, aims to backfill the shortfall, and from the 2029/2030 auction onward PJM plans to exclude new large loads that don't bring their own supply from the demand it procures for at all.

Cherokee Nation, the largest tribe in the U.S. with more than 475,000 citizens, has banned hyperscale data center development on its tribally owned and trust lands, after a task force convened by Principal Chief Chuck Hoskin Jr. found that 64% of 1,593 surveyed citizens opposed construction of the facilities inside the tribe's 14-county reservation in northeastern Oklahoma. The 37-page report cited energy and water consumption, air quality, noise, and cultural resource protection among citizens' concerns, and the tribe said it won't support projects on non-tribal land within the reservation without early consultation.

"Our primary responsibility is to protect our citizens and tribal communities from these threats, so we will not support any hyperscale data centers on our reservation without proper consultation," Hoskin said in the tribe's statement.

The task force couldn't establish how many data centers Oklahoma actually has, however. For the same June 2026 date, the report cites Cleanview counting 12 operating and 17 planned projects statewide, DataCenterMap listing 46 operational facilities, and ConstructConnect showing 33 in the pre-construction pipeline. No state or federal rule requires data centers to register anywhere, so the task force's most reliable method for detecting sites was monitoring the Oklahoma Department of Environmental Quality for backup-generator air permits, which themselves don't cover every project.

Every active hyperscale project inside the reservation is sited on non-tribal land and is unaffected by the ban. Google's Pryor campus, for example, has operated since 2011 through at least five expansion phases and forms part of the company's $9 billion Oklahoma commitment, while Project Clydesdale near Owasso and Project Mustang in Claremore, which received a 25-year property tax abatement per phase, both proceed under municipal and county approvals. The report concedes the tribe has no direct regulatory control over such land, only leverage via consultations.

Most projects purposely avoid federal permits that would trigger such tribal consultations under NEPA, and Cherokee Nation joins the Seminole Nation and Kickapoo Tribe, which passed their own moratoriums in March and July according to Tribal Business News. Tulsa itself paused new approvals for nine months in March, part of a wave that has seen at least 69 US jurisdictions block new builds and 19 Michigan municipalities freeze approvals after the Saline Township Stargate fight.

The same survey that recorded 64% opposition found 73% of respondents use generative AI tools, with 34% using them daily and 19% weekly. The report calls this "a clear disconnect" between citizens' perceptions and their actions, and recommends fact sheets and explainers on how everyday AI use feeds hyperscale demand. It also recommends a permanent advisory committee to evaluate future proposals and advise the principal chief as new projects emerge.

The global data center optical interconnect market is expected to reach $144.4 billion by 2030, up from $13.7 billion in 2024 — a 48.1% compound annual growth rate (CAGR) — according to a China Insights Consultancy (CIC) report commissioned by a Chinese laser-chip maker, Yuanjie Semiconductors, as part of its Hong Kong IPO filing. The report draws on data from LightCounting and interviews with industry experts. Of that future market, silicon photonics, the practice of manufacturing photonic chips from the same silicon material and mature CMOS foundry processes used for conventional semiconductors, is projected to account for 63.7% of revenue, its share climbing from 16.6% in 2020 as the industry shifts toward denser, more power-efficient designs like co-packaged optics.

The moves that would turn those projections into reality are already well underway. Over the past year, the AI industry has invested more than $15 billion in co-packaged optics, photonic chips, higher-speed transceiver modules, and fiber, developing new integration techniques, acquiring photonics startups, and forming alliances among the biggest players. More recently, OpenLight and Tower Semiconductor placed OpenLight's photonic design kit inside Cadence's mainstream chip-design software. This step makes the laser-integrated 400G and 1.6T chips at the heart of co-packaged optics easier to design and bring to market.

The tech behind the numbers

For decades, data centers have relied largely on copper traces and cables to move data across circuit boards, within racks, and across clusters. Copper is cheap, reliable, and easy to integrate. However, its power consumption and signal losses increase sharply with bandwidth and distance. As AI data centers are packed with ever more powerful GPUs, shuttling enormous volumes of data and pushing networks toward higher speeds, copper hit a wall. Past a few hundred gigabits per lane, its usable reach collapses to a meter, or two, before signal loss and power draw become unmanageable.

The solution has been a transition to photonics, moving data as light instead of electrical signals. An optical transceiver converts electrical signals from switches and processors into laser light, sends it down a fiber, and converts it back at the far end, carrying far more bandwidth over greater distances at much higher speeds. Today, pluggable transceivers pack a laser chip, digital signal processor (DSP) chips, and several optical components into one compact module. As GPUs grow more capable and AI workloads swell, both the volume of data and the speed it must travel keep climbing, pushing the industry from 400G links to 800G to 1.6T and beyond

At the same time, the industry is trying to move the optics closer to the compute. In conventional systems, GPU signals travel inches along copper traces across the board to reach the transceiver on the faceplate. At extreme data rates, even that relatively short electrical journey consumes considerable power. Co-packaged optics (CPO) fixes this by pulling the optical engine out of the pluggable module and placing it as a chip — the photonic integrated circuit (PIC) — directly on the switch or accelerator package, shrinking the electrical path to millimeters. The push for faster optical chips, aiming for terabits-per-second speeds, serves both CPO and the pluggable modules that remain the industry mainstay.

The PIC does everything but generate light. Because laser chips are highly sensitive to heat, they can't be folded into the PIC, which, in co-packaged optics, becomes part of the switch or accelerator package that runs extremely hot. Therefore, the laser stays a separate chip. Whether feeding a co-packaged PIC or a pluggable module, those laser chips are always needed, which is exactly what Yuanjie, the company that commissioned the CIC forecast, makes.

The PIC itself is where silicon photonics comes in. Photonic chips were once built entirely from costly III-V materials in specialized fabs; Silicon Photonics (SiPh) instead patterns the optical circuitry onto silicon using the same mature, high-volume CMOS processes as ordinary chips — saving money and time and making PICs mass-producible. On the other hand, silicon cannot lase. As a result, laser chips still rely on the more expensive III-V method, using materials such as indium phosphide. Circumventing exactly that is the aim of the recent OpenLight–Tower platform. Their approach integrates III-V laser material directly with silicon photonics at the wafer level, aiming to bring the laser into the same scalable manufacturing flow as the rest of the PIC.

The numbers behind the growth

Together, the different photonics technologies solving the AI data transfer bottleneck are driving a huge market in the industry. CIC projects the data center optical interconnect market growing from $13.7 billion in 2024 to $144.4 billion in 2030, a compound annual growth rate of 48.1%, more than a tenfold increase in six years. Growth accelerates over this period, with the steepest gains occurring after 2027. The report breaks down the three main ways: technology, use case, and data rates, each showing where the spending and resulting revenue are concentrated.

By technology, it splits the market between silicon photonics and everything else. SiPho's share climbs from 16.6% in 2020 to 63.7% of total revenue ($91.9 billion) by 2030, with its revenue compounding at 68.5% annually, compared with 32.6% for the rest, and the crossover past half the market landing around 2027. According to CIC, silicon-based optics— primarily PICs — will grow to become the default.

The use-case breakdown shows which parts of data center networking are driving optical demand: scale-up inside the rack, scale-out across a data center, and scale-across between data centers. Scale-up — the short-reach links from servers and chips to the top-of-rack switch — takes the lead with a 561.5% CAGR in revenue. Note that this figure compounds off a near-zero 2024 base, where a tiny absolute gain reads as an absurd percentage. Scale-across follows at 108.5% and scale-out at 42.7%, while the entire non-AI segment, traditional workloads from telecom to enterprise servers, trails at 37.5%. However, in actual revenue and not growth, scale-out is the largest tier at $64.5 billion in 2030, followed by non-AI at $40.2 billion and scale-up, for all its headline growth — at just $32.1 billion, with scale-across last at $7.6 billion.

The data-rate breakdown captures a generational migration of speed. In 2024, the market still ran on the previous two generations, 400G at $5.9 billion and 800G at $4.5 billion, with legacy 200G-and-below links adding another $3.3 billion and the faster tiers barely registering. By 2030, that order is inverted. 1.6T, only entering commercial deployment in 2026, becomes the single biggest segment at $65.6 billion, expanding at an 867.3% CAGR from a 2024 base of essentially zero; 3.2T, a category that didn't exist in 2024 at all, appears only from 2027 and still vaults to $44.5 billion. Together, those two next-generation speeds make up roughly $110 billion of the $144.4 billion total. The rest slides down the ladder: 800G stays healthy at a 34.8% CAGR to $26.7 billion, but 400G flatlines — 1.0% annual growth to $6.3 billion, after leading the prior cycle at 75.3% — and 200 G and below actively contracts, shrinking 15.4% a year.

The moves behind the numbers

While the CIC figures are just projections, the actual moves happening in the industry point in the same direction. Over roughly the past year, more than $15 billion has moved through silicon photonics. Nvidia invested $2 billion each into Coherent and Lumentum — makers of the lasers and optical components that go inside transceivers — in March, followed by $2 billion into Marvell and a $500 million warrant deal with fiber maker Corning, each bundled with multi-year purchase commitments. Meanwhile, Microsoft, Meta, and OpenAI have teamed up with hardware giants Broadcom, AMD, and Nvidia to establish an Optical Compute Interconnect (OCI) Multi-Source Agreement (MSA) group to develop protocol-agnostic scale-up interconnection technology for AI clusters.

On the mergers-and-acquisitions side, Marvell, before the Nvidia investment, closed its $3.25 billion cash-and-stock acquisition of Celestial AI, a photonic interconnect startup, to gain its Photonic Fabric platform for linking chips optically inside the rack. Meanwhile, Ayar Labs, which builds optical I/O chiplets that move data directly off the compute package, raised a $500 million round at a valuation of roughly $3.75 billion. Elon Musk also received regulatory approval to acquire Mesh, an optical transceiver manufacturer.

Those bets converge on co-packaged optics as the architectural prize. Nvidia's Spectrum-X and Quantum-X photonics switches, built on TSMC's COUPE process, are the flagship deployments. Broadcom is pushing its own CPO Tomahawk line and has foundries TSMC and GlobalFoundries, with Tower supplying the silicon underneath. The one constraint the money cannot instantly buy away is the laser: high-speed III-V sources remain the scarce link, with Lumentum currently the only vendor shipping the 200G-per-lane EMLs that 1.6T modules require at volume. That scarcity — and the whole industry's dependence on laser chips regardless of which design wins — is exactly why a supplier like Yuanjie sits aligned with wherever the market goes.

The race to solve AI's copper bottleneck for scale-up and scale-out intensified last week, as the Federal Communications Commission (FCC) is drafting a measure that would block imports of new Chinese transceiver models, with officials hoping to publish the rule before the end of 2026. Yesterday, we covered exactly how much of the Secure Networks Act might rely on Chinese-made optical module manufacturers.

The technology is currently driving billions in acquisitions among companies like Marvell and Nvidia, and sending stock prices for dedicated Western Photonics companies like Coherent and Lumentum skyrocketing, amid calls that key materials like indium phosphide are in short supply.

Following the FCC's Secure Networks Act proposal, the market reacted immediately, with shares of China’s Zhongji Innolight, Eoptolink, and TFC Optical tumbling in early Shenzhen trading. Meanwhile, U.S. rivals Coherent and Lumentum closed 12.4% and 8.9% higher. Before Wednesday ended, however, the Chinese companies had clawed back much of the ground, even as analysts downplayed the impact of such a ban. Innolight still finished 7.3% lower in Shenzhen, while TFC actually closed 2.3% higher.

The whipsawing market movement was an apt representation of the potential implications of such a ban. Photonics, the industry's answer to its latest bottleneck of moving data between chips, is arguably the hottest technology in AI infrastructure right now. It is also a market defined by deep mutual entanglement. However, the FCC's proposal conveniently overlooks the fact that the biggest customer of China's photonics hardware is the United States.

With a crucial U.S.-China summit looming in September, the AI supply chain is being weaponized, once again, for global trade and supply negotiations, turning Silicon Photonics into a bargaining chip.

AI's latest bottleneck is now a US-China tech wars battleground

As AI clusters scale into the hundreds of thousands of processors, the biggest problem is moving data between them. Computing tasks on frontier AI models are distributed across thousands of GPUs using parallel computing techniques. This setup requires the processors to exchange huge volumes of data multiple times a second. Copper interconnects still dominate, but as per-lane signaling climbs toward 200 Gbps, attenuation and crosstalk make passive copper impractical beyond a meter or two. Optical transceivers solve that problem by converting a chip's electrical signals into photons for transmission over fiber and back again, carrying far more data over longer distances at lower power.

As we examined in our recent detailed AI photonics roadmap, Vendors are racing from 800G modules to 1.6T parts while shortening electrical paths with co-packaged optics, which moves optical engines even closer to switch ASICs and, eventually, accelerators. The race to solve AI's photonics bottleneck is therefore becoming as strategically important as securing GPUs and HBM.

The money is already moving accordingly. Nvidia has reportedly committed $4 billion across Coherent and Lumentum to lock up supply. Elsewhere, Marvell agreed to pay $3.25 billion upfront for silicon photonics startup Celestial AI, with earnouts potentially taking the deal to $5.5 billion. At the same time, Elon Musk has received FTC clearance to acquire Mesh Optical. Meanwhile, Microsoft, Meta, and OpenAI have teamed with Broadcom, AMD, and Nvidia in an optical interconnect alliance to develop an open optical scale-up interconnect.

China has been building its own stack. Wuxi's CHIPX pilot line — the country's first dedicated photonic chip fab — began mass-producing six-inch photonic wafers in 2025. Shanghai opened a state photonic computing laboratory in June alongside newly listed startup Lightelligence. Crucially, Chinese officials note photonic chips don't require the EUV lithography tools Washington has cut off.

Commercially, China appears to be currently leading the market. Chinese vendors account for nearly two-thirds of global transceiver unit shipments and roughly 60% of datacom transceiver revenue, according to Counterpoint Research. Innolight — fresh off a $6.8 billion Hong Kong IPO, the city's biggest this year — leads with a 27% revenue share, ahead of Coherent's 17%, with Eoptolink third and Lumentum at roughly 6%.

However, those figures do not reveal the deep-seated supply-chain entanglements that severely complicate any ban. Innolight and Eoptolink reportedly supply the majority of 800G modules in Nvidia's AI clusters, while pairing DSP chips from Broadcom and Marvell with laser components from Lumentum, Coherent, and Mitsubishi Electric. Western rivals, in turn, need Chinese indium phosphide — export-controlled by Beijing since 2025 — for their lasers.

The U.S. ban

It is amid the intense photonic race, marked by co-dependency between the two countries, that the FCC is seeking to ban related Chinese hardware. Reuters says the agency is drafting a rule that would deny new models of Chinese optical transceivers the equipment authorization they need to be imported, marketed, or sold in the US.

Washington fears the transceivers could become vectors for data theft, malware, or service disruption, with officials reportedly seeking to avoid another Huawei situation, in which Chinese telecom hardware became so embedded in U.S. infrastructure that removing it proved slow and expensive.

If enacted, the rule would be the latest round in a years-long technology conflict spanning security fears and market dominance, one that has extended squarely into AI. On the inbound side, the FCC has banned Huawei gear since 2019. It added foreign-made drones to its Covered List in December 2025, new consumer routers in March, and power inverters and advanced robots in July — each time citing national security. On the outbound side, Washington restricts AI GPUs, ASML's EUV machines, chipmaking tools, and manufacturing tech from reaching China, aiming to slow its AI ascent.

The Trump administration has argued that these bans have barely had any impact on the U.S. economy while enhancing national security. A photonics ban may be more consequential. The U.S. is effectively contemplating short-term disruption to prevent a scenario where the next generation of a critical AI technology, the optical layer of every future data center, would be Chinese hardware. On the other hand, the FCC appears to accept the current supply chain reliance, as the millions of Chinese modules already installed would stay put.

China’s response

For every ban the US issues, Beijing insists it emerges stronger. Officials credit the chip restrictions with forcing focus. Chinese firms delivered 1.65 million AI GPUs in 2025, with homegrown suppliers like Huawei and Cambricon ramping up production as Nvidia's local market share fell below 60%. Domestic firms are also developing alternative manufacturing approaches. Prinano recently claimed wafer-scale photonic-chip production using nanoimprint lithography instead of DUV, although important yield and volume data remain undisclosed. China now says it doesn't even want American chips, blocking Nvidia H200 imports while certifying domestic accelerators for state procurement.

The photonics response has been similar, this time with open displeasure. China's Foreign Ministry said it "firmly opposes" the potential restriction and accused Washington of overstretching national-security concerns. Chinese legal and market analysts told SCMP that existing approved modules should remain unaffected. They argued that Western suppliers lack the packaging capacity, cleanrooms, and manufacturing scale to replace Chinese production within the next few years.

Dai Menghao of law firm King & Wood, quoted in the SCMP report, called the measure "relatively mild," expecting a framework like the FCC's router and inverter rules, where approved hardware keeps selling, and only new models face denial. That comparison doesn't exactly match. Routers, unlike photonics, are a mature category. In a market right in the middle of a transition, almost everything shipping into next-generation builds would fall under the "new model" category.

Still, Chinese experts insist Washington is underestimating its own exposure. "The market and policymakers tend to underestimate how dependent the AI infrastructure ecosystem remains on Chinese optical-module vendors," said Neil Shah, vice-president of research at Counterpoint. "Replacing that capacity within the next couple of years would be very difficult."

For now, the rule that would affect a ban remains a draft, subject to comment periods, carve-outs, and court challenges. With a potential US-China summit looming in September, the world's most important AI component has now potentially turned into a geopolitical flashpoint.

The number of local bans on new data center developments jumped to over 500 in July, according to recent data. Local politicians in the United States are refusing to approve new data center construction in greater numbers, posing a threat to the expansion required by AI firms to provide the capacity needed to power the new technology. The analysis, conducted by The Information from legal documents and local news reports, shows that this isn’t a partisan issue.

Republican- and Democrat-run states, towns and counties have all begun to block new data center projects, with Texas and New York both prominent entries from both sides of the political divide, and with the majority of the bans appearing in the Midwest and South, according to the report.

Politicians aren’t doing this out of spite, but in response to the growing concern from residents over the impact on communities. Among them are the impact of noise on local residents, as well as the disproportionate impact on public services, including on water and electricity supplies. It follows Texas Governor Greg Abbott’s moratorium on data center approvals in recent weeks until an extensive audit has been conducted of companies looking to hook their new centers up to the Texan power grid.

The Information’s analysis shows that the bans are growing fast, jumping from 300 in late June to over 500 in July. The ban in Texas is particularly noteworthy due to the state becoming a prominent home for AI data centers. Despite Governor Abbott’s pause, Amazon is still hoping to build a new gas power plant in Pecos County, Texas, to power a data center at the same location. That location is already believed to likely become the single biggest source of environmental pollution in the U.S. once it’s operational.

The rapid growth of new data centers in Texas and nearby states has likely fueled those concerns from residents. The Information reports that most of the bans are in the Midwest and South, with more than 400 restrictions now in place, with nearly three-quarters of the moratoriums approved in July occurring in southern states like Georgia and Florida. Florida, in particular, is quickly stopping new developments, with 14 out of 23 current active restrictions in that state being approved in July, and 15 more under consideration.

Small and big, rural and urban states alike are all seeing political capital used on preventing AI data center expansion. Kathy Hochul, Democrat Governor of New York, recently signed an executive order that paused approval for all data centers consuming 50 megawatts of energy or more. Massachusetts and Nebraska halted tax breaks for developers, while in Colorado, 19 bans are now in place around Denver, and more elsewhere in the state, due to concerns specifically around the impact on the environment and on water usage. In Nashville, Tennessee, a 23-acre data center development next to a zoo, expected to cost up to $700 million, is also facing local and political resistance.

It’s no surprise to see politicians begin to wake up to the public malaise against AI development. Over 70% of Americans are reportedly against more AI data centers, and direct resistance against them is growing, with at least 37 people arrested so far this year for protesting against new developments.

The public pushback against data center construction projects is only growing stronger, even as some protesting local residents have been arrested in the process. That hasn't perturbed those still standing against the AI infrastructure projects, though, and they continue showing up at town meetings, holding protest rallies, and making themselves heard — even with the 24/7 drone of a data center hum in the background.

The latest effort saw Nashville residents and local politicians move to block the construction of a $700 million data center set to be built right next to the Nashville Zoo at Grassmere. The city council approved a blocking measure last week, and now Mayor Freddie O'Connell will wield it to make sure the project doesn't go ahead.

This follows on from another recent story where a Kentucky farming family was offered 10 times their land value to sell up to data center developers, and they refused. Virginia's State Corporation Commission, which regulates public utilities, just ruled that data centers must pay for all the required transmission infrastructure that they have exclusive use of, in an effort to reduce energy bills for residents.

Nobody wants to live near a data center

Data center projects have been firmly disliked by large bodies of Americans since the beginning of this major AI buildout. Early in 2025, it became clear that even as the major AI companies were promising hundreds of billions for "AI factories," governments around the world rushed to build capacity. There was only one problem: residents near the proposed build sites would not be taking it lying down.

In April 2025, Elon Musk's Colossus data center was an early target for protest after it was found to be using permitless mobile gas turbines for power. It's been hit with enough pushback since then that SpaceX has now agreed to remove the 69 turbines it ultimately installed, although it is going to take over a year to complete the move of these allegedly mobile turbines.

By the Fall of last year, evidence had begun to mount about the negative impact of these installations. Water shortages and potential contamination, electricity price increases for residents, and the constant, unending noise that may be causing health problems with sub-audible frequencies.

There's also the slowly growing number of "against" voices in polling for new data centers. What started as a light advantage to the "supports" respondents in September became a near-majority a few months later. Now more than 70% of Americans don't want data centers near their homes, and there's little chance of that changing as the stories of issues during and after construction of these facilities continue to mount.

How the people are fighting back

Protest has been at the forefront of the anti-data center campaigners' playbook since the start, and that's not stopping any time soon. On one weekend in July, anti-data center protestors organized in 42 states to stage 142 protests across the country, all calling for blocks, halts, and moratoriums on the data center rollout.

This is after months of campaigning, which led to close to 70 jurisdictions around the country blocking new data center builds. Some of them, permanently.

Where politicians are more on the side of the developers, the people are going to meet them in person. They're going to town halls and seeking meetings and making their voices heard.

Sometimes politicians don't like that, and people are removed - even when protesting peacefully - and in several cases they've actually been arrested. Close to 40 people have been arrested in 2026 for pushing back against data center rollouts. In one case, because they went beyond their allotted speaking time, and in another, because they clapped following an impassioned statement by a fellow citizen.

In other cases, though, politicians are listening. In Nashville, the local council and the mayor are all on board to protect the local Zoo and residents' bills and ears. This is particularly important because it shows that local legislators can use their political power to block data centers — potentially preventing the White House from using its own to drive projects through.

The forever war

The data center builders aren't taking all of this helplessly. They have the ears of government and massive platforms to evangelize AI and data centers; They've been doing it everywhere from the White House to social media. They've tried building in more rural areas where there are fewer people to protest, paying for their own behind-the-grid power, and offering to spend millions in local investment to counter negative effects.

But it's not working. People don't like data centers. They don't want to live near them. And on top of that, many don't even like the technology the hyperscalers want to build this all for, anyway.

It's unlikely that those bankrolling (and hoping to make money on) the data center AI build-out will just give up and go home, but the residents fighting back against their gargantuan construction projects aren't going to do so either.

This is a long war, and one that neither side is likely to back down from. But in a rare ray of hope in 2026's landscape of high PC and electronics prices due to AI data centers soaking up computing hardware, it's one that the people seem to be winning, for now.

A new Amazon data center is set to become the single largest source of environmental pollution in the U.S., according to a New York Times report on August 8. The tech giant — which already operates the most data centers worldwide — is reportedly building a natural gas power plant in Pecos County, Texas, to power its new data center at the same site. According to project permits, the plant would generate up to 7.65 gigawatts of power using 35 natural gas turbines. The new plant — which burns natural gas to generate electricity — has been authorized to release 33 million tons of CO₂ annually, more planet-warming gases than any other power plant in the country, says the NY Times report.

Conversely, Amazon had pledged to achieve net-zero carbon emissions across all its global business operations by 2040. The company made the promise in 2019 when it initiated and co-founded The Climate Pledge — a voluntary coalition of over 700 companies and partners — aimed at addressing its own corporate footprint and rallying global supply chains. However, the company has seen its emissions rise each year for the past several years, something analysts attribute to a spike in data centers to support the AI boom. The company is currently building several additional AI data centers globally, including the one that the new gas plant would power in Texas.

Amazon has acknowledged the impact of its intense AI ambitions on its earlier climate pledges but insisted the company remained committed to them, despite obvious struggles. “The world looks different now than when we co-founded the climate pledge,” said Margaret Callahan, an Amazon spokeswoman. Still, “our commitment hasn’t changed,” she said, echoing similar statements by Microsoft, which is struggling to fulfill its 2030 sustainability promise amid carbon-heavy AI expansion, but insists it remains committed to it.

As detailed in our data center power roadmap, an increasing number of hyperscalers and data center operators are switching from grid connections to dedicated on-site power generation. The “behind-the-meter” moves are being triggered mainly by the long timelines required to set up new power infrastructure to connect new power-hungry data centers to the grid, but also by growing anti-data center sentiments over irreversible hikes in the electricity bills of nearby communities.

While many companies are also pursuing nuclear and renewable energy options — examples being Microsoft’s Three Mile Island nuclear deal and Meta’s agreement to secure up to 1GW of orbital solar energy capacity — gas appears to be the leading preference due to its scalability and speed of availability. The Trump administration has thrown its weight behind such projects for data centers, promoting oil, natural gas, and coal over renewable energy sources.

An Intel patent application published on August 6, spotted by Patentlyze, describes an orbital data center architecture that moves some of the computing used to operate massive satellite constellations off the ground and into space. The architecture proposes a two-tier satellite network in which a small number of more powerful satellites in higher orbits manage large constellations of relatively simple satellites in low-Earth orbit, handling much of the computing and constellation coordination normally performed by data centers and network operations centers on the ground.

The application, US 2026/0230175 A1, is a continuation of an earlier Intel filing that was granted as US 12,542,604 B2 in February.

Intel’s proposed architecture is a different proposition from the orbital AI data centers now being pursued by companies such as SpaceX and Google, which aim to move AI compute itself into low-Earth orbit. SpaceX’s planned AI1 satellite and Google’s Project Suncatcher both envision running large-scale computing workloads in space, with the resulting data beamed back to Earth over high-bandwidth optical links. Intel’s orbital data centers, on the other hand, are designed primarily to serve the satellite network itself, acting as higher-orbit compute and control hubs for the much larger constellations operating below them.

In large LEO constellations such as Starlink, Telesat Lightspeed, and Amazon’s Project Kuiper, thousands of satellites are constantly moving relative to one another and the Earth. While the satellites perform their individual tasks, the network itself still has to determine how traffic is routed, which satellites and links should communicate, how spectrum is allocated, and how the constellation responds to failures, interference, weather, and other changing conditions. Much of that network planning and control processing is traditionally handled by computers on the ground, with routing and operational instructions calculated at terrestrial network operations centers and then transmitted back up to the satellites.

Intel says that this constant dependency on terrestrial infrastructure delays time-sensitive decisions, increases reliance on ground stations, and makes management harder as constellations grow into the thousands of satellites. Intel’s solution is to move part of that control and compute layer into orbit. Its architecture places more powerful satellites — which contain much more compute and storage capability than the individual LEO satellites — in Medium Earth Orbit (MEO), Geosynchronous Earth Orbit (GEO), or highly elliptical orbits, where they can maintain a broader and more persistent view of the LEO constellation below and take over tasks such as routing, mission planning, scheduling and network coordination without continually sending those workloads back to Earth.

The proposed setup does not eliminate the need for ground stations. It just keeps satellite network control processing in space. Intel specifically describes moving mission planning and scheduling operations into orbit. The company also argues that offloading heavier network-management tasks to a smaller number of powerful satellites could allow operators to build simpler, cheaper LEO spacecraft. Under current architectures, individual satellites still have to actively participate in network-control functions, requiring additional onboard compute and communications hardware. There’s currently no indication that Intel is actively building the satellites.

The Nashville Metro Council just gave the go-signal to Mayor Freddie O’Connell's plan to use eminent domain to block a planned 23-acre data center campus sitting right beside the Nashville Zoo at Grassmere. According to real estate news platform CoStar, the city council approved the measure by a 27-5 vote last Wednesday, meaning the city government can now take the next steps to proceed with the legal process that will force the purchase of the property.

“I’m glad Metro Council passed our legislation that gives us the option to acquire property next to the zoo for a number of public needs,” Mayor O’Connell said in a statement. “We’re working closely with our Finance and General Services departments to plan for the site.”

The developer of the property, DC Blox, wanted to put up a 69,220-square-foot single-story data center on the site that was expected to cost more than $700 million to build. It would sit right beside the 188-acre Nashville Zoo at Grassmere, which opened in 1990 as the Grassmere Wildlife Park. This zoo is one of the biggest attractions in Tennessee, expecting to receive two million visitors annually by 2027. Aside from that, it also participates in more than 50 conservation programs with institutions across the world.

Zoo officials objected to the development, raising concerns about disruptions like noise and light pollution, among others. They even started an online petition that garnered more than 500,000 signatures by the end of July, even getting support from celebrities like Brad Paisley, Sheryl Crow, and Jack White.

DC Blox argues that 648 Grassmere Park used to provide data center functions, so putting up a newer one on the site would not necessarily disrupt the community, including its neighboring zoo. However, there have already been several widely reported incidents from across the U.S. that highlighted the noise and light pollution that zoo officials have been concerned about.

Residents in a town in Michigan have been complaining for about two years now after their neighboring data centers started emitting noise 24/7, comparing it to the sound that a vacuum makes in your living room. Aside from that, some people complain about infrasound, high- and low-frequency vibrations that do not register on decibel meters but could sometimes be felt coming from data centers and potentially cause adverse health effects. A Microsoft data center in Wisconsin is also facing a lawsuit due to noise and extreme light pollution.

While this does not mean that the proposed Nashville data center will cause a similar issue, it seems that city officials do not want to take this risk. Light and noise pollution could have adverse effects on the animals housed by the zoo, potentially disrupting their habitats and behavior.

The city council vote would allow the local government to negotiate with DC Blox for the acquisition of the property. However, this does not automatically mean that Nashville would automatically have the right to own the property. It will first have to negotiate with the owner to determine that property’s fair market value, and if the two parties cannot agree, then a judge or jury will have to determine the final amount. The company could also challenge the eminent domain claim.

There have been fears that the government will use eminent domain to advance data center projects, which was further spurred by Georgia Power’s use of the power to acquire 30 residential properties to expand the power grid. Although the utility company said that it wasn’t in the data center business, the move was made to connect a substation to a power plant, with 70% to 80% of the electricity traveling through it expected to serve data centers. But, as Nashville showed, this authority can also be used to block data center projects.

Although the majority of Americans oppose data centers going up in their backyards, several local governments still support similar developments as they believe that these will bring investments and opportunities for their constituents. However, the passionate but peaceful resistance of some people has resulted in their arrests, with Futurism reporting that 37 regular people have been arrested so far this year.

What’s more interesting is the wide demographic diversity of those who have been detained and charged. The two arrests Tom’s Hardware previously reported on included a farmer who went a few seconds over the allotted speaking time during a town hall meeting in Oklahoma discussing an AI data center project and a teacher who was dragged out of a community meeting in Kansas for clapping after a speaker finished giving their statement opposing another similar development. The protesters also crossed ideologies and party lines — the only common thing among them was the fact that they were concerned about the impact of a data center in their community.

The publication also noted that there were 12 other instances where the police were called because of a confrontation between politicians and protesting individuals. One example of this is when police intervened after a Utah senator got physical and slapped the phone out of a reporter’s hand, who was only there to cover the harassment by anti-data center protesters against his business.

“In my opinion, I was kicked out to prove a point that the law is on their side and if people continue to try and express themselves and speak, they will also be intimidated or arrested by law enforcement,” Pablo Payan, a maintenance manager who was arrested in Indiana after he refused to identify himself on the record, told Fox32. “So, I think it was a flex of power.”

Data centers have become a hot topic among the American public recently, especially as there have been widespread reports of these developments causing massive increases in electricity costs, negative impacts on the local water quality, 24/7 noise pollution, among other issues. The federal government has taken steps to reduce some of the impact through its “ratepayer protection pledge,” which includes AI hyperscalers, utility companies, data center operators, and even state governors. However, some experts say that this is just a promise that has no legal bearing, meaning companies necessarily don’t need to follow it.

Even though a few jurisdictions are pushing forward with data center projects despite local opposition, there are also some local and state governments that have paused their development. These include multiple Tennessee counties, Seattle, Washington, which is home to the headquarters of Microsoft and Amazon, and the State of New York. Most of them said they will use the one-year delay to study the effects of data center developments and how to best mitigate against them. One Pennsylvania town even took a different approach by listing 43 specific demands for a proposed data center, which its developer allegedly shot down as “too difficult.”

This is likely what made these protesters emboldened in their fight against data centers — the fact that other communities have successfully lobbied against data center developments means that they can push back, too.

23 state governors and 187 utility companies and data center developers have signed President Donald Trump’s “ratepayer protection pledge,” which is Washington’s way of trying to control spiraling electricity costs driven by the massive power demand of AI data centers. According to The Associated Press, some of the signers include utility companies NextEra Energy, Duke Energy, American Electric Power, Southern Co., and Pacific Gas & Electric, and data center developers Equinix, Digital Realty, and Prologis.

Trump first revealed this promise in late February during the State of the Union address and then hosted some of the biggest AI hyperscalers — including Meta, Amazon, and OpenAI — in the White House a week later to force them to spend on their own power requirements. This was supposed to help bring electricity costs down, with Energy Secretary Christ Wright saying back in March that it “will deliver more affordable, reliable, and secure energy for the American people.” The president repeated this promise during the event, saying, “Electricity bills for American families will actually come down. They’re going to have a lot of electricity left over, and they’ll put that into the grid.”

Unfortunately, the March promise had little to no effect on electricity rates across the country at the moment. Despite the White House’s promises that the pledge would lower utility bills, PJM Interconnection, the nation’s largest power grid operator, slapped Maryland with a $2-billion bill for upgrading its grid to accommodate out-of-state AI data centers. Monitoring Analytics, an independent watchdog monitoring PJM Interconnection, also said that the 75.5% increase in power costs in the U.S.’s largest power region has been directly caused by data centers.

It’s unclear if these cost increases are the long-term effects of the AI build out even before the White House pledge, but it seems the administration is doubling down on it by asking states, utility companies, and data center developers to commit to it, too. Trump has been pushing for the acceleration of the adoption of AI tools and the infrastructure needed to support them, believing that it needs to win in the “AI race” to maintain its global supremacy, especially as China is neck-and-neck with the U.S. when it comes to the technology.

However, the American public is pushing back against these developments, especially as issues impacting electricity costs, water quality, noise pollution, and more that were caused by data centers are widely reported. It has gotten to the point that several jurisdictions have applied temporary bans on data center developments, including Seattle (which plays host to Amazon and Microsoft) and the state of New York. These developments threaten to derail the current administration’s AI policy, which has ordered grid operators to expedite AI data center applications.

The ratepayer protection pledge will supposedly allow the U.S. to have its data centers without punishing the common American with excessive electricity cost increases, but its critics say that it’s just a promise and cannot be legally enforced. The Associated Press says that California is trying to pass legislation that will codify these promises into law.

Oregon is the only state at the moment to have passed a law that forces developments that use more than 20 megawatts of power to pay their fair share. The POWER Act, which was passed in April 2025 — almost a full year before Trump announced the ratepayer protection pledge — forces the power bills of large electricity consumers to “reflect the true costs of their electric service.” Because of this, Portland General Electric (PGE), the state’s largest power supplier, has increased the data center power bills by 30% while also cutting residential costs by 1.3%.

It’s unclear if any of the states that have signed the pledge have similar legislation underway, or what steps the data center developers will take to follow through on their promises. Still, the U.S. president is adamant that states should support data center development within their borders. “You have to convince your community. You can’t fight it. You have to go with it,” Trump said. “If you don’t take all that money, somebody else is going to take it. You might as well do it yourselves.”

More than 70% of Americans now oppose data centers, which has resulted in bipartisan moves to block these projects. This pushback isn’t limited to just a few people or towns, either. In fact, a coordinated protest was organized just this weekend, happening in 142 different venues across 42 states, and is the first one to happen simultaneously across the U.S. Forbes reports that this makes community consent scarcer than the chips and other equipment and resources needed to build and run these sites. As Reuters notes, the organisers behind the protests have branded the "unaccountable" data center buildout as an "unacceptable infringement on our liberty."

Data centers have faced shortages of various kinds in the past few years — it began with GPU supply, then evolved into a memory chip bottleneck. Alongside that, there’s also the limited supply of electricity from the grid, as well as the related power infrastructure. But the one thing that many data center developers did not count on was the lack of public support.

This resistance isn’t limited to the streets, as bipartisan political moves have resulted in everything from delays in various projects to statewide bans. More than 69 jurisdictions have already imposed data center bans, with Seattle (home to the headquarters of AI tech giants Microsoft and Amazon) and the state of New York passing one-year moratoriums. Because of this, more than $130 billion worth of data centers have already been delayed in just the first quarter of 2026.

Developers have employed various techniques to get around these bans and opposition. This includes picking sites in rural areas with fewer people (thus less resistance), bringing their own electricity, or claiming that their data centers use less water than lawn care and gardening. But despite all their promises of jobs, investment, and tax revenue, the American public has grown wary of suffering from the consequences of having a data center as a neighbor. This is especially true after reports of increased utility rates, water quality issues, noise pollution problems, and more have widely circulated around the country.

Because of this, any data center project must take the community into account. It can no longer just rely on a friendly town council for approval, especially as the voting public has proven that they are willing to take steps to oust officials that they feel do not represent them. While many know that the U.S. needs data centers to compete in the AI race, they don’t want this to happen at the expense of their quality of life. And while investors can just keep on pouring money into purchasing chips and upgrading infrastructure, they cannot just buy off the community — instead, they need a solid plan that stands up to scrutiny and opposition and accounts for the months or even years it will take for permits to go through and get approved.

U.S. data centers are on track to consume about 20% of the nation's electricity by 2035, up from 5.9% today, according to a new BloombergNEF forecast The research firm raised its 2035 demand projection to 194 GW, an 83% increase on the forecast it issued in December, and calculated that even a record pace of grid connections sustained every year for a decade would leave a 19 GW supply shortfall.

BNEF's December outlook put 2035 demand at 106 GW, and that figure was itself 36% above the projection the firm published in April 2025, which works out to roughly 78 GW. The 2035 number has increased around 2.5 times in 15 months, with the latest jump reflecting the volume of new AI facilities entering the development pipeline rather than capacity actually under construction. Many other forecasters are moving in the same direction, with the electrical industry nonprofit EPRI more than doubling its 2024 estimate and S&P raising its projection by more than a third between October and April.

Nearly half of the projected capacity will serve AI training and inference workloads, and the U.S. is expected to host 64% of the world's AI chips by power demand in 2033. BNEF estimates that data centers will account for around 12% of U.S. electricity consumption in 2030 before reaching 20% five years later, with Virginia and Texas running above the national average. Gartner separately forecast that global data center electricity consumption will grow 26% this year, reaching 565 TWh in 2026.

The most data center capacity ever connected to the U.S. grid in a single year is 7.1 GW, according to the report. Holding that pace through 2035 still produces a 19 GW shortfall under BNEF's base case, even after accounting for on-site gas generation. Lloyd Arnold, a BNEF analyst and one of the report's authors, told Bloomberg that of the output from "every coal plant, every gas plant, every solar farm in the U.S.," one unit of energy in five will go to data centers.

PJM Interconnection, the 13-state grid operator whose territory includes Northern Virginia's data center corridor, will send 34% of its electricity to data centers by 2035, with ERCOT in Texas at 22%, per reporting from TechCrunch. PJM's independent market monitor has already attributed a 75.5% increase in regional power costs directly to data center demand.

Close to half of planned U.S. data center builds this year are projected to be delayed or canceled, with lead times for high-power transformers stretching to as long as five years. BNEF's own December revision was driven primarily by early-stage projects that entered utility queues to secure power before construction began, so a meaningful share of the pipeline behind the 194 GW figure remains speculative.

A report by The Conversation has claimed that the government can seize private land to make way for new transmission lines needed to meet the surging electricity demand of data centers. According to the July 16 report by Aaron Walayat, Assistant Professor of Law at the University of Dayton, power companies can use eminent domain — the legal authority that grants the government the power to take private property and convert it to public use in exchange for compensation — to implement the takeovers.

The AI boom has led to a surge in data centers in the U.S., with thousands already operational and several more planned or under construction. While the massive superclusters are necessary for the technological revolution AI has brought about, there's growing opposition to their construction over several concerns. Among them are land use, noise pollution, water usage, and the impact of immense electricity consumption, issues that have reportedly made 70% of Americans opposed to building data centers nearby.

In many instances, data centers draw the required electricity from the grid. As the industry enters the gigawatt era, utility companies are under pressure to increase supply to meet surging demand. This requires building new power infrastructure, such as transmission lines, which often have to cross private land. When this happens, the power companies try to buy the land. Should the owner refuse, the government can force a sale through the eminent domain law.

The law grants the government the power to take private land, regardless of the owner's consent, provided that the land is for public use and the owner receives just compensation. The government can also delegate the power to “private entities or common carriers,” such as utility companies. It is this legal authority that power companies can enact to implement the takeovers.

According to the report, the law does not automatically grant infallible authority. The company must prove that the infrastructure will be for public use. Several states also reserve the right to interpret eminent domain laws according to their own constitutions.

The report highlights another layer of legalities amid ongoing data center tensions. Opponents have successfully blocked 75 planned data center projects in the first quarter of 2026, including the 2,100-acre Digital Gateway project, eventually canceled over a newspaper-notice technicality. On the other hand, several other projects have gone ahead, often with community support. Meta recently announced plans to expand its Hyperion AI supercluster from 2 GW to 5 GW.

Australian Prime Minister Anthony Albanese said that the government is working to establish the “Australian Standards for A.I.,” which would stand as a national framework that AI companies must follow if they want to operate in the country. As backlash against the negative effects of data centers is making it harder for AI hyperscalers to build and expand infrastructure in the U.S. and Europe, the New York Times reports that many of these firms are now eyeing the Land Down Under for its vast lands and abundant renewable energy sources. But even before they start setting up shop in the country, Canberra wants to get ahead and ensure that these developments do not cause any problems for the general public.

“Every country on earth is grappling with these challenges right now. Australia will be the first country in the world to bring these issues into a single, national framework,” the prime minister said in his speech. One part of this policy will enforce a “legal obligation” for data centers to produce the same amount of power that they consume, ensuring that their presence does not put an unnecessary burden on the power grid that would result in increased utility prices for the average citizen. It also wants to ensure that these projects be as water efficient as possible, especially given that Australia is the driest populated continent on Earth, according to the International Groundwater Resources Assessment Center (IGRAC).

Aside from concern for data centers’ use of natural resources, the Australian government also wants to ensure that the intellectual property rights of its people are protected. Albanese said that Australian creators, including writers, musicians, artists, and news reporters, should “retain control of the price and value of their work” when used for AI training. “Anything less is theft. No country has got this right yet,” says the prime minister.

While some business industry groups expressed their support for the government’s goal, they were also a bit cautious, saying that overregulation could mean that Australia will miss out on the opportunities the AI data centers will bring for the company. University of New South Wales in Sydney professor Toby Walsh, who specializes in Artificial Intelligence, also told The Times that the PM is on the right track, as it addresses the concerns that most Australians have regarding AI and the infrastructure behind it. However, these are just planned policies, and the regulation behind them must still be worked out. “The devil will be in the details exactly what they do,” says Prof. Walsh.

New York Governor Kathy Hochul signed into law Senate Bill S10642 today, also called the Responsible Data Center Development Act, which would put a one-year moratorium on all data center developments in the state. According to Reuters, this is the first temporary ban to be enforced statewide in the U.S. Maine’s legislature was actually the first one to pass a statewide moratorium, but Maine Governor Janet Mills vetoed the measure after it failed to exempt a data center project “that enjoys strong local support from its host community and region.”

"As data center development threatens ⁠to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it's my responsibility to take ​action and lead," Hochul said in a statement. She also said that she’s pursuing legislation to repeal tax exemptions for large data centers. The moratorium will apply to data center projects with a capacity of 50 megawatts or more, with the New York Department of Environmental Conservation not issuing any more permits to projects that haven’t been completed yet.

Hochul said that the state will build a Generic Environmental Impact Statement (GEIS) so that future data center developments are held to “consistent standards,” while also looking at how the construction and operation of these projects will impact the environment. Although the data center moratorium is set for one year, the governor’s office said that it will be lifted once the state has finalized the GEIS.

President Donald Trump has been pushing for the development of AI technologies, with the White House releasing the ‘AI Action Plan’ to accelerate infrastructure build-out. While this policy encouraged the development of AI data centers, the numerous large projects also resulted in memory and storage chip shortages, as well as negative impacts in the communities and regions where they’re located. For example, Monitoring Analytics, which oversees the largest power grid operator in the U.S., attributes an “irreversible” 76% price hike to increased data center demand, while a Virginia county has asked government offices to conserve power because of AI-driven price hikes. There have also been multiple issues with various data center projects relating to water consumption and air and noise pollution, which is why 70% of Americans now oppose having a data center built near their home.

All this pushback has resulted in many jurisdictions passing data center moratoriums. More than 75 projects have already been delayed in the first half of this year, amounting to $130 billion, with New York state being the first one to pass a state-wide temporary ban. Before this, Seattle, which plays host to the headquarters of Amazon and Microsoft, passed a similar one-year moratorium last month.

While delays like this will likely negatively impact the future availability of compute within the U.S., it’s also forcing tech giants to speed up innovations and governments to pass laws that protect their constituents. Multiple startups have started unveiling or even turning on their small modular reactor (SMR) prototypes, which could deliver the power needed by data centers without increasing air pollution or straining the local power grid. AI tech companies like Microsoft and Nvidia are also working on solutions that will cut data center energy use and water consumption, while Oregon’s POWER Act increased data center bills by 30% while cutting residential costs by 1.3%.

Meta has said it will expand its Hyperion data center in Richland Parish, Louisiana, to 5 GW (gigawatts) of compute capacity from an initial 2 GW, pushing the company’s planned investment in the region beyond $50 billion. The announcement — made in an official blog post on Monday, July 13 — confirms the long-signaled scale-up of what is already Meta's largest data center.

The expansion will be a major increase over the $10 billion, 4-million-square-foot project Meta unveiled in December 2024, when it said the campus would deliver more than 2 GW of capacity. However, the 5GW target itself is not entirely new. CEO Mark Zuckerberg said in July 2025 that Hyperion would eventually reach that scale. Monday’s announcement formally ties the expanded capacity to an investment exceeding $50 billion and provides updated figures for jobs, contracts, and public infrastructure spending.

Much of the announcement is built around local economic impact. Meta said local Louisiana businesses have received more than $1.6 billion in contracts since construction began, while also highlighting teacher bonuses in Richland Parish that rose from $10,000 last year to more than $50,000 this year, funded by increased tax revenue tied to the data center.

In what appears to be a bid to pacify anti-data-center sentiment further, Meta said it plans to invest over $1 billion in local infrastructure improvements, including roads, water, and wastewater systems, as part of the expansion. The company’s recent agreement with utility Entergy Louisiana includes natural-gas plants providing more than 5.2 GW of capacity and support for up to 2.5 GW of new solar generation. Entergy claims Meta’s payments could save other customers around $2 billion over 20 years — a significant reprieve amid concerns over the impact of data centers on nearby residents’ electricity bills — although those savings remain projections.

On the other hand, the project is also receiving substantial state and local support. In late 2024, Louisiana Governor Jeff Landry signed into law a 20-year sales tax exemption for data centers built before 2029, part of an explicit effort to court Meta. The law allows qualifying data centers to claim sales-and-use-tax exemptions on eligible equipment. At the same time, Meta is expected to benefit from the state’s Quality Jobs program and a payment-in-lieu-of-taxes agreement that could reduce its property-tax burden if investment and employment targets are met.

First announced as a $10 billion project in December 2024, Hyperion is Meta’s AI supercluster campus in Richland Parish, Louisiana. The data center will house the infrastructure needed to train and run Meta’s future AI models, with CEO Mark Zuckerberg linking it directly to Meta Superintelligence Labs, the company’s AI division. In October 2025, Meta and Blue Owl Capital announced a joint venture valuing the project’s buildings and infrastructure at roughly $27 billion. Blue Owl holds about 80% of the venture, with Meta retaining 20% and leasing the completed facilities. The July 13 announcement raises Meta’s total planned investment in the region to more than $50 billion, but provides no further details on how the expansion affects the joint venture.

Hyperion is one node in a much larger spend. Meta is forecast to spend up to $145 billion in capital expenditures in 2026, mostly on AI infrastructure, as demand for AI compute continues to outstrip supply. The company has said it will cut 8,000 jobs to raise funds. Meanwhile, Monday's announcement follows what Meta says is its strongest week on the market since early 2024, driven by new AI model releases.

Data centers accounted for 23% of Ireland's total electricity consumption in 2025, according to data released by the country's Central Statistics Office last week. The report revealed that data center consumption rose to 7,663 GWh in 2025 from 6,973 GWh in 2024, a 10% rise in a single year. Meanwhile, consumption by the rest of the country increased by just 2% within the same period.

Viewed over a ten-year period, the 2025 figure represents a steep 360% increase from 2015, when data centers' total consumption was just 5%. The rise in consumption is even steeper when measured on a quarterly basis. Q4 2026’s consumption was 1,991 GWh, a 584% rise from Q1 2015’s 291 GWh.

“Newly compiled quarterly figures spanning 2015 to 2025 highlight a substantial increase in metered electricity consumption by data centers. Over this period, data center consumption saw a significant increase, from 291 GWh in the first quarter of 2015 to 1,991 GWh in Q4 2025, growing by 584%,” noted Dr. Grzegorz Głaczyński, an in-house statistician in the CSO’s Climate and Energy Division.

At 23%, data centers' consumption was almost as much as residential, including both urban and rural dwellings, which stood at 28%. The roll oout of these server farms — which have rapidly increased in number around the world due to the AI boom — have sparked a global debate. While they are critical to the AI technological revolution, there has been growing concern about their impact on the local communities where they are situated. Critics cite the impact of the immense electricity consumption on residents’ bills as one of many concerns.

The Republic of Ireland, with a relatively small population of around five million, is home to around 89 data centers, primarily clustered around the Greater Dublin Area. The majority and the largest belong to hyperscalers, including Microsoft, AWS, Google, and Meta, that build and operate facilities exclusively for their own cloud infrastructure, consumer apps, and AI frameworks. The rest are owned by colocation providers that lease out capacity.

While Ireland's initial data center boom was driven by traditional cloud storage and social media applications, the explosion of generative AI has led to a sharp increase. Due to fears that soaring electricity demand from server farms would cause widespread blackouts, the country's Commission for Regulation of Utilities (CRU) issued an emergency regulatory direction in November 2021 that imposed a de facto moratorium on new data center grid connections. The policy mandated that the national grid operator, EirGrid, immediately halt the processing of standard power applications for new data facilities, requiring developers to either supply their own on-site electricity generation or relocate to unconstrained regions outside the Greater Dublin Area.

Despite the moratorium, data center consumption continued to rise steadily, to the point that the International Energy Agency predicted in 2024 that data centers would account for a third of the country's electricity consumption by 2026. The data show that the prediction remains a possibility, as the 23% figure was for 2025 and consumption has risen steadily every year.

Ireland has replaced the moratorium with a new Large Energy Users (LEU) Connection Policy, enacted by the CRU in late 2025 to manage data center growth. Under this policy, developers of new data centers (over 10 MVA) must provide 100% on-site, flexible power generation to meet demand, while sourcing at least 80% of annual electricity from new, unsubsidized renewable projects within six years of operation.

The immense electricity consumption is not unique to Ireland; surveys indicate that global data center electricity consumption will grow by 26% this year. These concerns, as well as issues over water usage and noise pollution, have led to growing anti-data sentiment in the US, with 70% of Americans reportedly opposed to siting data centers nearby. Protests have led to the cancellation of over 75 data center projects in the U.S. in Q1 2026.

Microsoft’s emissions for fiscal 2025 (FY25) rose by 25% from the previous year, even as the company’s 2030 deadline to become carbon-negative draws closer. According to the company’s 2026 Environmental Sustainability Report, released on Thursday, July 9, the backward step was driven primarily by the rapid expansion of its data center infrastructure and its decision to stop using short-term renewable energy certificates, which reduced its reported footprint without necessarily adding new clean electricity to power grids.

Microsoft reported approximately 20.3 million metric tons of carbon dioxide-equivalent emissions across its operations and supply chain, up from 16.2 million tons in fiscal 2024 and nearly 58% above its 2020 baseline. Electricity consumption increased by 24% during the year as the company built the computing capacity required for its cloud and AI businesses. Regardless, Microsoft says it remains committed to becoming carbon-negative, water-positive, and zero-waste by 2030. It also reported meeting its 2025 renewable-electricity target, replenishing more water than it withdrew globally, and exceeding several waste-recovery targets

The report’s foreword, written by Microsoft Vice Chair and President Brad Smith and Chief Sustainability Officer Melanie Nakagawa, focused heavily on the collision between the company’s headline sustainability goals and the realities of AI. Microsoft established the goals in 2020, a few years before the current scale of AI’s capabilities and the corresponding high environmental demands began to manifest.

While AI is inarguably a world-changing technological revolution, it is raising serious environmental concerns that begin right at the raw material sourcing and the complex semiconductor fabrication stages. The impact continues even after the processors have been compiled into supercomputers in massive data centers, with issues related to land use, energy consumption, noise pollution, and water consumption. Residents are increasingly opposing the building of these data centers in their communities due to these issues.

Microsoft is exposed at nearly every point of the AI chain. It procures servers and custom AI chips; owns and operates a massive, global network of over 300 data centers across 34 countries that powers the Azure cloud platform; and supplies the computing infrastructure behind products such as Copilot and its partnership with OpenAI. Scope 3 emissions from construction, purchased hardware, suppliers, and other value-chain activities remain the largest part of its footprint. Meanwhile, electricity-related Scope 2 emissions grew from nearly 2% of the total in 2024 to 13% in 2025.

Microsoft acknowledges that environmental solutions are not expanding as quickly as AI infrastructure. “This tension is real,” the foreword states. “It is forcing sharper questions: Where do we need to move faster, invest differently, or rethink our approach?” The company argues that the answer is not to retreat from AI, but to combine carbon-free electricity, carbon removal, sustainable fuels, lower-carbon construction materials, hardware reuse, and efficiency improvements into a single portfolio rather than treating each environmental target separately.

Its decision to stop buying non-additional, unbundled renewable energy certificates forms part of that change. These certificates can allow a company to claim renewable electricity already being generated elsewhere. Microsoft says it will instead prioritize longer-term agreements that help add additional carbon-free generating capacity to the grid, even though doing so will increase its reported emissions in the near term. Its renewable-energy agreements now cover up to 40 GW across 26 countries, with approximately 19 GW operational.

The company is also modifying the data centers themselves. It introduced a closed-loop liquid-cooling design that CEO Satya Nadella says enables AI data centers to use about as much water annually as a restaurant. Microsoft is experimenting with microfluidic channels etched into silicon, zonal cooling that reserves colder liquid for the hottest equipment, and lower-carbon concrete, steel, and mass timber for its construction. These efforts have not exactly quelled anti-data-center sentiment around its data centers. The company faced protests over a planned facility near Granger, Indiana, while residents living near its $7.3 billion Fairwater AI complex in Wisconsin have filed a lawsuit alleging persistent noise, dust, traffic, and light pollution.

Away from carbon, the report records clearer progress. Microsoft replenished 14.2 million cubic meters of water, exceeding its global withdrawals for the first time, and reduced average data center water-use effectiveness by 25% from its 2022 baseline. It achieved a 92% reuse and recycling rate for retired cloud hardware, diverted 90.5% of construction and demolition waste from disposal, and reduced single-use plastics in primary product packaging to 0.07%. It also legally protected 16,266 acres of land, approximately 36% more than the land estimated to be occupied by its operations.

The report is equally candid about where Microsoft is falling behind. The company's most important commitment—becoming carbon-negative by 2030 — is moving further away rather than closer. Total greenhouse-gas emissions climbed 25% year over year and now sit roughly 58% above the company's 2020 baseline, largely because AI infrastructure is expanding faster than its decarbonization efforts can offset. Scope 2 emissions also jumped sharply, rising from nearly 2% of Microsoft's footprint in FY24 to 13% in FY25 as electricity demand from new data centers surged. While Scope 3 emissions remain the company's largest source of carbon pollution, the report says the growing contribution from purchased electricity underscores how increasingly difficult it is to power AI infrastructure with clean energy alone.

Elon Musk has received the go-ahead from the Federal Trade Commission (FTC) to acquire Mesh Optical Technologies, an AI infrastructure startup that develops light-based networking hardware for data centers. Records published by the FTC on June 25 show that the regulatory body granted early termination of its antitrust review of the transaction, permitting Musk to procure Mesh. While the deal is yet to be finalized, with no official statement from either party, the government's green light indicates it’s all but done, as this was the last hurdle.

Interestingly, Mesh was founded by three former SpaceX employees who helped develop the Starlink optical communication links that keep thousands of satellites interconnected. So, why is Musk — who is simultaneously building the world's largest multibillion-dollar semiconductor manufacturing facility and an 11-million-square-foot orbital data center factory — seeking to own a company founded by his former employees? The answer appears to be optical interconnects, a critical technology that connects all three.

The connection problem: AI's latest bottleneck

As AI continues to grow in capability and user base, so do the enabling AI clusters, many of which now comprise tens to hundreds of thousands of processors. The hardest problem in scaling an AI cluster has evolved beyond making the chips faster to moving data between them. Training and inference tasks on frontier AI models are split across thousands of GPUs using parallel-computing techniques, requiring the processors to exchange enormous volumes of data every fraction of a second.

While per-chip compute capacity has raced ahead, the bandwidth linking those chips has not kept pace, a mismatch the industry refers to as the "I/O wall." The processors mostly communicate via copper interconnects, which currently dominate AI clusters. However, copper presents inherent limitations. As per-lane signaling climbs toward 200 gigabits per second (Gbps), attenuation, crosstalk, and the skin effect all worsen at higher frequencies, driving up power and corrupting the signal until passive copper becomes impractical beyond a meter or two.

To overcome these constraints, the industry is increasingly turning to optical networking, bringing the technology closer to the processor. Optical links use transceivers to convert a chip's electrical signals into light for transmission over fiber, then convert them back into electrical signals at the receiving end. They can carry far more data over much longer distances while consuming less power than equivalent high-speed copper connections, making them increasingly essential as AI clusters grow larger. Chipmakers and networking vendors are racing to deliver faster 800G and 1.6T optical transceivers while shortening electrical paths with co-packaged optics, which place the optical engine alongside the switch ASIC (application-specific integrated circuit).

This shift has transformed optical interconnects from a supporting technology into one of the industry's most strategically important AI infrastructure markets, attracting billions of dollars in investments and resulting in major partnerships for new and existing industry players. One such player is Mesh, the optical hardware startup that has drawn the interest of the world’s richest man.

A mesh solution to Musk’s ambition?

Elon Musk has been one of the most aggressive players in the AI industry. After co-founding OpenAI, he went on to launch a proprietary company, xAI, before turning his focus to building data centers. In less than two years, xAI deployed the Colossus supercomputer with over 200,000 Nvidia Hopper- and Blackwell-generation accelerators. Colossus 2, with a long-term target of 1 million GPUs, is already operational. For Musk, however, buying the chips was not enough. Why not build them, too?

Characteristic of the world's richest man’s preference for complete vertical integration, SpaceX — in collaboration with Tesla and xAI — is now building Terafab, a vertically integrated, multi-billion-dollar semiconductor manufacturing facility aimed at producing chips capable of delivering an unprecedented over 1 terawatt of AI compute capacity annually. Located in Austin, Texas, the colossal facility aims to consolidate every stage of chip production under one roof, handling everything from logic and memory fabrication to advanced packaging and testing. An ambitious project that we've also analyzed for its feasibility.

The facility's output will serve to meet the chip needs of the broader AI industry, as well as those of Musk’s xAI, self-driving vehicles, Optimus humanoid robots, and SpaceX's orbital AI data center plans. Musk says 80% of Terafab's total compute output is ultimately destined for Earth orbit to support SpaceX's orbital data centers.

“But there aren't any data centers floating around in space,” observers may point out. Introducing Gigasat, Musk's 11-million-square-foot fix for that reality. Gigasat is yet another massive facility under construction, this time for manufacturing everything needed for SpaceX’s AI1 satellite, the company's most likely world-first orbital data center with 150 kW of compute.

At first glance, everything seems in place for the next generation of Ultra-capable AI infrastructure. However, there is one critical missing piece in this stack, one that we've established earlier. Hundreds of gigawatts of extremely powerful silicon are not particularly useful if the data can't move between the dies fast enough in AI clusters, whether on the ground or in space. The industry-prevalent copper hits a wall long before you reach the scale Musk is chasing. Hence, the need for the missing piece: optical interconnects.

This brings us to Mesh, a manufacturer of precisely that missing piece. Mesh Optical Technologies is a US optical communications startup that develops high-speed optical interconnect hardware — optical transceivers that convert a chip's electrical signals into light for high-speed transmission over fiber — for AI data centers and space communications.

Its flagship product, the Alpha C1, supports 800G and 1.6T data rates and reportedly draws about a third of the power of competing modules, using a flip-chip die-bonding process the company says makes the optical engine repeatable at the volume — potentially millions of links — that AI clusters demand.

These are the characteristics needed to seamlessly interconnect the next-generation terrestrial AI supercomputers and, potentially, future space-based computing platforms, which Terafab aims to deliver. An added benefit is the space-related experience of the three Mesh founders, who happen to be ex-SpaceX employees who helped build the laser-based inter-satellite links that connect Starlink's constellation.

Again, in typical Musk fashion, rather than simply buying the hardware, he is moving to acquire the entire company, gaining full control of its R&D and supply chain. Should the deal — which is all but done — go through, Musk will own the full stack of critical infrastructure needed to power the future of the AI industry.

Smart money is flowing to optical interconnects

The SpaceX ecosystem is just one of many entities that recognize the immense technical and economic importance of optical networking in AI. AI chipmakers are actively investing in the optical supply chain to secure manufacturing capacity and prevent hardware bottlenecks.

Nvidia alone has committed a reported $4 billion across component makers Coherent and Lumentum to lock up supply. Elsewhere, several hyperscalers, including Microsoft, Meta, and OpenAI, have teamed up with hardware giants Broadcom, AMD, and Nvidia to establish an Optical Compute Interconnect (OCI) Multi-Source Agreement (MSA) group, with the goal of developing protocol-agnostic scale-up interconnection technology for AI clusters.

To counter chipmakers' dominance, entities such as Japan's NTT established the $500 million IOWN (Innovative Optical and Wireless Network) Fund. This fund explicitly targets the creation of an open photonic ecosystem to accelerate the global transition from copper to light-based AI clusters.

Then there are the smart-money moves by investors, as well as the rising balance sheets of companies. Lumentum stock reportedly soared 339% in 2025 and delivered an additional 135.4% return in the first five months of 2026 alone, while Fabrinet, Cisco, and Coherent all recorded significant revenue surges attributable to optical hardware sales, meaning that Musk's move to acquire Mesh is extremely prescient, given Terafab's ambition.

Global data center electricity consumption will grow 26% in 2026 to reach 565 terawatt-hours (TWh), up from 447 TWh in 2025, according to a recent Gartner forecast that names power availability as a binding constraint on AI expansion. Worldwide power demand is set to rise 27% to 132 GW over the same period, up from 104 GW in 2025, with consumption projected to exceed 1,200 TWh by 2030. The gigawatt figure measures peak capacity that has yet to be built, permitted, and connected, while the terawatt-hour figure measures the electricity actually drawn over the year. Both, however, are climbing faster than utilities can add supply.

"Surging demand for compute-intensive AI workloads is driving unprecedented data center power growth, while AI capacity is now constrained by power availability, making data center power security the new battle ground for scaling and protecting margins in the global AI race," said Gartner's Direct Analyst Linglan Wang.

AI-optimized servers consumed about 95 TWh worldwide in 2025 and will draw 175 TWh in 2026, an increase of roughly 84%. Gartner expects that figure to reach 258 TWh in 2027, the point at which AI-optimized hardware will consume more electricity than conventional servers for the first time. By 2030, AI-optimized servers are forecast to account for close to half of all data center power consumption.

Conventional servers are effectively flat by comparison. They grew less than 1% in 2025 and are projected to rise 1.2% in 2026 to around 195 TWh, reaching 200 TWh in 2027. Gartner estimates AI-optimized servers will make up 31% of total data center power consumption in 2026, up from roughly 20% a year earlier. Cooling, of course, represents a growing share of the total, with electricity used by cooling systems forecast to climb 22.6% in 2026 to 195 TWh, reflecting the thermal load of denser AI racks and continued capacity expansion.

The U.S. accounts for about 204 TWh of the 565 TWh total in 2026, or 36% of worldwide consumption. Of that U.S. figure, dedicated AI data centers consume roughly 68 TWh, or one-third of the national total, while non-AI data center demand in the country has grown only marginally over the same period.

Regional grids are already feeling the strain, and more than 75 data center projects worth $130 billion were blocked in the first months of 2026 amid opposition over power and water costs, while some operators have turned to on-site gas generators to bring capacity online without waiting for grid connections. In Virginia, one county asked employees to conserve power as data center demand pushed utility rates higher.

In its report, Garner warns that grid supply will be insufficient to meet demand once consumption passes 1,200 TWh by 2030, a shortfall that will affect all data center users, not just AI operators. The forecast accounts for parts and supply shortages, delayed or cancelled projects, and geopolitical disruption, including conflict involving Iran. Wang said infrastructure and operations leaders should prioritize efficiency upgrades, secure grid access, and invest in high-efficiency cooling and edge computing to manage the constraint.

Hyperscalers have moved in the same direction, with Meta having signed deals for more than 6GW of nuclear power to supply its upcoming data centers, and one firm repurposing retired U.S. Navy reactors for an AI site in Tennessee. Those projects will take years to deliver, with recommissioned nuclear plants and the earliest small modular reactors not expected online until 2028 or later, leaving power availability as a near-term limitation on the seemingly unstoppable AI build-out.

Controversy due to AI data center buildouts generally centers around their massive power usage and draining of local water reserves, but noise is a third torment to nearby residents, and one that is arguably much harder to correct. Residents of Sturtevant, slightly south of Milwaukee, Wisconsin, filed a class-action lawsuit against Microsoft due to the excessive noise produced by the company's Fairwater facility. CEO Satya Nadella described the project as "the world's most powerful AI data center," projected to generate 865,000 tokens per second and have a final bill of $7.3 billion.

The Sturtevant residents live just 1.5 miles (2.4 km) from the facility. The lawsuit was filed by three citizens and represents the households within this distance, reportedly amounting to over 1,000 homes, including areas in Mount Pleasant. The filing describes the noise situation as "not only excessive, but consistent and pervasive," and claims Microsoft did not "implement adequate acoustic barriers, shields, or walls that absorb, mitigate, and/or prevent the escape of noise, thereby resulting in the offsite emission of excessive noise beyond its property." One resident claims he had to change his shift at work to be able to sleep at all.

Nearby residents also complain about excessive dust and traffic stemming from the construction work, as well as light pollution. One resident says he often can't see his house coming into town, while another claims that before the data center arrived, the sky was dark and full of stars, now mostly gone due to the bright lights.

To some credit, Microsoft appears to have been trying to improve the situation, judging by a fairly detailed blog post on its community website. On June 18, the company said its engineers applied several measures that "fully resolved the issue," and that it would apply additional mitigations over the following months, including "additional sound reduction components."

The backstory in the post says the firm was aware of the issue back in April, and "[it] did not expect the tonal quality of the sound to travel as far as it has," attributing the decibels to cooling fans operating at too-high speeds, now purportedly corrected. In an earlier project update about the data center, Microsoft says it would have street sweepers working 10 hours a day and limit construction to hours between 6am and 10pm.

The lawsuit was filed on July 1, indicating that either the issue isn't resolved, or that the particularly short distance between Fairwater 1 and Sturtevant might make for a conundrum that's exceedingly tricky to solve. Some Mount Pleasant residents even live across the street from the campus, too. Before the Fairwater data center arrived, the land was already zoned for heavy industrial use back in 2017 to Foxconn, a status that carried over to Microsoft upon purchase. Notably, Wisconsin's "direct legislation" apparently does not allow amending or repealing existing ordinances, and is only available to cities, not towns.

The Cheyenne Board of Public Utilities has stopped accepting industrial wastewater from data center fill-and-flush and closed-loop cooling operations after tracing a rare bacterium in the city's reclaimed water to Goat Systems LLC, the entity Meta uses to build its Cheyenne campus. In a notice reported by Cowboy State Daily, the Board said Goat Systems was in significant noncompliance for discharging water carrying Cupriavidus gilardii, a metal-resistant bacterium that interfered with two water reclamation plants and pushed the reuse system offline for months of cleanup. The Board revoked the contractor's fill-and-flush discharge privileges on March 24, and a wider suspension now covers every data center connected to city services.

Fill-and-flush is a commissioning step in which crews fill a cooling loop's piping with water, flush it to clear debris before the system is run, and then send the used water to drain. Goat Systems routed that flush water, which contained Cupriavidus gilardii, into Cheyenne's sanitary sewer, Frank Strong, the Board's engineering and water resource division manager, told the Wyoming Tribune Eagle. Strong said the fill water had been purchased from the Board itself and that the origin of the bacterium remains unknown, but said that lab staff caught it in February during routine fecal-bacteria sampling. "This isn't something we normally test for," Strong told the paper.

Microsoft and Nvidia market sealed liquid loops as a near-zero-water alternative to evaporative cooling, an approach that is spreading quickly as AI data centers expand into more communities. Microsoft describes cooling systems that are filled once during construction and then recirculate the same water, while Nvidia's Rubin platform runs a coolant that is 75% water and 25% propylene glycol. That one-time fill, however, is the step that produces a discharge, and the flush water leaves the site before the loop is sealed.

Strong went on to add that the Board's concern extends past the finding of the bacterium, because closed-loop systems can carry glycol and other chemicals that municipal treatment plants aren't built to process. Cheyenne sprays its reclaimed water on parks, golf courses, and other green spaces, and the Board worried the bacterium could become an aerosol hazard during irrigation. Cupriavidus gilardii isn't a regulated contaminant, yet the discharge disrupted treatment sufficiently to trigger pass-through and interference findings under the Cheyenne City Code and federal pretreatment rules.

Meta said that it's supporting its general contractor, Fortis, which stopped discharging and began hauling wastewater offsite, and that independent testing found no trace of the substance. Testing at the Dry Creek and Crow Creek facilities cleared in late June, and the reuse system is back online. Cheyenne City Councilman Pete Laybourn called the disclosure "a very, very unpleasant surprise." The Board hasn't said how the suspension affects other Cheyenne data centers still under construction.

Ampera, a nuclear tech startup, just revealed its first full-scale, 3D-printed nuclear reactor module that it says could be used to power AI data centers. According to the company’s press release, this module is the “world’s first subcritical, solid-state, factory-built thorium nuclear reactor.” It’s also the nuclear part of the company’s Integrated Energy Architecture, which comes with a Waste Heat Recovery module that could also be paired with either this 3D-printed nuclear reactor module or a Conventional-Fueled Power Generation module.

"This next-generation nuclear core and pressure vessel sets the foundation for factory-built, mass-produced nuclear energy," said Ampera CEO and founder Brian Matthews. "The advanced technology and additive manufacturing used demonstrate a clear commercial path for new nuclear technology coming to market in an accelerated manner."

The company’s description for its groundbreaking product is quite a mouthful, but it shows how advanced this nuclear reactor is. Subcritical means that its fuel does not reach criticality on its own, requiring an external source to jump-start the fission process. This is inherently safer because it reduces the chance of a runaway reaction that could lead to a meltdown. It also features a “solid-state” core, meaning it does not have any moving parts, making maintenance and operation simpler.

Factory-built suggests that the nuclear module could be manufactured relatively quickly in a production line. This would make it easier to scale for mass production and transport via shipping containers, thus cutting production costs to make it more affordable. Lastly, it uses thorium as its primary fuel source. Thorium is more abundant than uranium, so it’s easier and cheaper to acquire. It’s also not inherently fissile, requiring an external neutron source to produce protactinium-233, which then decays into U-233. While it could still be used for nuclear weapons, it’s relatively harder to do so, which is why the World Nuclear Association says that it “is sometimes promoted as having excellent non-proliferation credentials.”

While the startup unveiled the finished nuclear module, it didn’t mention turning it on and producing electricity with the system yet. This is in contrast to Valar Atomics, which turned on its Ward 250 nuclear microreactor recently and produced electricity to power an Nvidia RTX Spark desktop. Its CEO, Isiah Taylor, also announced that it’s partnering with Nvidia to power a 30MW data center using its technology.

Ampera is also targeting a 30MWe output with its complete system using a proprietary closed-loop, supercritical CO2 Brayton-cycle turbine to produce energy. One advantage of its modular approach to developing its power solution is that customers can purchase them as necessary. It can match the turbine module with its Waste Heat Recovery module to supplement power production in data centers, or it could attach a Conventional-Fueled Power Generation unit to the entire unit as a site’s primary power source. Once the nuclear module becomes available, operators could then easily swap that out to reduce their carbon footprint.

The company did not give a timeline for when it expects to start producing power with their solution, but it seems that they’re confident that they could deploy it soon in various applications. "Our reactors are built for the markets that need power the most: AI data centers, defense, industrial and maritime," Matthews said. "We expect to be the first company to industrialize factory-built nuclear power with near-term deployment timelines."

Data center developer QTS has officially terminated plans to build a portion of the planned 2,100-acre “Digital Gateway” data center campus in Virginia, following years of legal battles with local residents and historic preservation groups. According to a Bloomberg report, the Blackstone-owned company formally submitted a written filing to the Virginia Supreme Court on July 2, explicitly stating it was withdrawing its last remaining appeal “after careful consideration”.

QTS’s withdrawal marked the official end of the project, as other stakeholders had earlier pulled out due to prolonged litigation. In a major win for opponents of the data center, the proposed land — situated at the edge of the Manassas National Battlefield Park, a historic Civil War battlefield — will now remain under its original rural zoning restrictions.

Digital Gateway was a planned massive 22-million-square-foot, gigawatt-scale data center complex in Prince William County, Virginia, that would have been the world's largest. QTS was responsible for 800+ of the 2,100 acres, while a second developer, Compass Datacenters, controlled roughly 800-1,000 acres. The rest of the designated 2,100-acre "Digital Gateway" zone consisted of local roadways, environmental buffer zones, and parcels belonging to individual homeowners who had agreed to sell.

Initially approved by the Prince William Board of County Supervisors to capitalize on the soaring demand for AI and cloud computing, the project immediately faced fierce opposition from residents, despite the promise of tens of billions of dollars in capital investment and substantial local tax revenue. Opponents argued that the facility's location adjacent to the Manassas National Battlefield Park posed severe threats to the area's environmental, historical, and residential landscape, a common refrain in growing anti-data-center sentiment.

Several lawsuits followed, with the one that appears to have eventually collapsed the massive project hinging on an ironically small detail. The landmark mega project — roughly double New York’s Central Park’s size with city-sized power needs — collapsed in a domino effect after Virginia courts voided the county’s initial rezoning approval due to improper public notices. The newspaper notices publicizing the hearing at which the project was approved weren’t separated by at least 6 days, as mandated by state and local codes at that time, thereby invalidating the hearing and the resulting approval.

Virginia courts upheld the invalidity of the zoning approvals in March this year. Following the ruling, Prince William County gave up first, refusing to spend additional public funds to defend the project in court. Compass Data Center, a co-developer of the project, withdrew from the project the next month, with the company president stating, “While we still believe this project offered significant benefits for the region and our neighbors, recent legal actions and compounding regulatory hurdles have effectively closed a viable path forward.”

Only QTS remained, filing an appeal with the Virginia Supreme Court. It has now withdrawn that appeal, leaving the entire Digital Gateway project completely dead. The company says it will now “work on a responsible and orderly wind-down of development efforts”.

The “Digital gateway” case is the latest win for anti-data-center proponents and the latest blow for those on the other side of the fence. We recently covered a report that more than 75 data center build-outs worth $130 billion have been successfully blocked in the first Q1 2026, although several others have moved forward. While data centers are needed to power AI’s exponential growth, their development often raises valid concerns about water use, noise pollution, and spikes in electricity bills for nearby residential areas. There has been an uptick in protests against data centers and a corresponding rise in companies pursuing innovative solutions to the problem. SpaceX is currently building an 11-million-square-foot Gigasat factory to manufacture orbital data centers, while several companies are deploying offshore data centers. On the other hand, there are reports that China may be artificially stoking opposition to data centers in the U.S., even as Trump's administration is pushing for AI development.

Meta is building a cloud business to sell excess AI computing capacity, according to a Bloomberg report that cites people familiar with the matter. The company is reportedly weighing two service models: selling developers access to AI models hosted on its own infrastructure, including its closed-weight Muse Spark model, in an arrangement similar to Amazon Web Services' Bedrock, or selling raw computing capacity in the same way neocloud providers such as CoreWeave do.

The initiative is reportedly dubbed Meta Compute and is led by head of infrastructure Santosh Janardhan, Meta Superintelligence Labs leader Daniel Gross, and president Dina Powell McCormick. Either path would put Meta in direct competition with AWS, Google Cloud, and Microsoft Azure. Judging by Wednesday's trading, though, the market thinks the hyperscalers aren’t the ones with the most to lose.

Meta has been one of the neocloud sector's most important customers. The company expanded its cloud computing agreement with CoreWeave to $21 billion in April and has signed contracts worth up to $27 billion with Nebius, roughly $48 billion committed to renting other companies’ GPUs because its own buildout couldn’t keep pace with demand.

Investors repriced that relationship within hours of the Bloomberg report. Meta shares rose more than 10%, the stock’s biggest single-day gain in over five months, after a year in which it had fallen nearly 15% and lagged the S&P 500. CoreWeave fell 10.8%, and Nebius dropped 12.4%.

“The impact of adding Meta's capacity to the market is more likely to be on neoclouds than the big hyperscalers. Those companies like CoreWeave and Nebius rely on Meta for their growth, and Meta may not need them anymore,” Gil Luria, managing director at D.A. Davidson, told Reuters.

The report didn’t come out of nowhere. At Meta's shareholder meeting in May, CEO Mark Zuckerberg said entering cloud computing was “definitely on the table,” adding that companies were approaching Meta “almost every week” to buy access to its AI models or spare computing power.

Meta raised its full-year 2026 capex forecast to between $125 billion and $145 billion in April, citing higher component pricing and competition for land, power, and construction labor. The same week, Zuckerberg told employees that roughly 8,000 planned layoffs were a direct consequence of the company's infrastructure budget.

That budget buys a heterogeneous fleet. Meta signed a 6 GW, $100 billion agreement with AMD in February, holds GPU deals with AMD and Nvidia worth roughly $110 billion combined, has announced four generations of its MTIA inference silicon, and struck a multi-billion-dollar Graviton deal with Amazon to cover general-purpose CPU shortfalls. Its Prometheus and Hyperion campuses are designed to scale to 1GW and up to 5GW, respectively.

Capacity at that scale arrives in large, indivisible increments timed to demand projections, which is how a company that was rationed on Gemini access by Google and paid neoclouds tens of billions for GPU time can simultaneously find itself with surplus compute worth selling.

We’ve seen a similar story with SpaceX. After xAI’s infrastructure, the company leased the entire capacity of the Colossus 1 data center in Memphis, more than 300 MW, to Anthropic for around $1.25 billion per month through May 2029, and subsequently agreed to rent capacity to Google for roughly $920 million per month. Bloomberg Intelligence estimates the arrangements could generate more than $50 billion by 2028.

Residents of Memphis and Southaven, Tennessee, are eligible for a 50% discount on Starlink plans, as well as a waiver on hardware rental, as SpaceX’s way of investing in areas close to its data centers. According to the Starlink website, the discount would apply automatically based solely on the subscriber’s address, cutting the cost of a 100 Mbps plan from $55 (plus the $10 Monthly Kit Fee) to just $27.50. Even the most expensive Max plan, which could hit speeds of more than 400+ Mbps and costs $130 monthly (plus the $10 hardware rental), would drop to just $65.

SpaceX SVP for Starlink Michael Nicolls shared the news on X, saying, “The unique capabilities of the Colossus datacenters could not be accomplished without the partnership and support from the local Memphis community. Happy to bring affordable and great @SpaceX @Starlink connectivity to our neighbors.” Elon Musk also said in a post, “Half price Starlink for people in the Memphis region,” while sharing a post that talks about the discount. This is great news for users in the area who are already using Starlink or are planning to switch to it, but critics say that this is simply a PR stunt to help give the company a positive image as it faces lawsuits for air and noise pollution.

The Southern Environmental Law Center (SELC) has previously sued the company for the alleged “illegal” generators that it used to run the Colossus site, while another class action was filed last month over the “near-constant noise” and vibrations that surrounding areas experience from the data centers, according to PCMag. "Communities in Memphis and North Mississippi aren’t asking for discounted internet service,” SELC Senior Attorney Amanda Garcia told the publication. “They're asking xAI to shut down its illegal, unpermitted power plant that continues to pump out staggering amounts of harmful (sic) pollution, including smog-forming nitrogen oxides, fine particulate matter, and hazardous chemicals like formaldehyde.”

But even though the EPA itself said that xAI isn’t exempt from securing permits for its gas turbine generators, it seems that the community is on the back foot in this legal battle. This became apparent after the U.S. government asked the court to dismiss the lawsuit, saying in a legal memorandum that shutting down xAI’s generators “threatens American national, economic, and energy security by seeking to shut off the power supply for artificial-intelligence innovation that supports the Department of War’s military operations.”

The Starlink discount for the community surrounding SpaceXAI’s data centers would make it more affordable for users who have no access to reliable wired internet. However, Memphis and Southaven are both urban areas with no shortage of faster and cheaper wired fiber alternatives. AT&T and Xfinity offer 300 Mbps plans that only cost between $40 and $45 per month — about $20 more affordable than the discounted Starlink Max plan.

The boom in data center construction meant that millions of dollars’ worth of servers, cabling, and other parts and components are on the road at any given time. Because of this, cargo thieves and hijackers have started targeting these high-value items. Business Insider reports that a trailer containing about $300,000 worth of copper wire spool, which can be used for powering data center servers, was recovered last week by the Cook County Sheriff’s Office in a truck yard near Chicago. The truck yard owner also said that the same driver dropped off another stolen trailer a week earlier, this time containing about a million dollars’ worth of data center equipment.

Both trailers have been reported stolen — the former taken from Pine Hill, Alabama, and the latter from Jacksonville, Florida. The original locations where these trailers were stolen show the nationwide scale of these theft rings, which had previously mostly targeted retail goods. The trailer that contained the copper wire spools also had its tags replaced with one from Indiana, according to Freight Pulse, probably in an attempt to obfuscate its source. It’s unclear how the data center equipment cargo was discovered, but the trailer carrying the copper wire was located through its GPS tracker.

Data center equipment, especially servers, seems like a lucrative target, especially given how expensive these items are. However, they are also specialized machines that are often only bought by institutions and large companies, so thieves would likely have a hard time selling them on the black market. They also likely have serial numbers, which would make it easier for buyers to check the status of the equipment with the manufacturer. Given the cost required to invest in these things, buyers would most probably demand official receipts and warranties — something that thieves and fences won’t be able to provide.

However, consumer electronics are easier targets, and we’ve seen theft rings hit consumer electronics before. For example, about $1.4 million worth of Switch 2 consoles en route to a GameStop branch in Texas were stolen from the back of a semi-truck last year. Gaming GPUs are popular targets for theft rings, too, with a shipment of EVGA 30-series GPUs stolen from the back of the truck in 2021 appearing in Vietnam a few months later, being sold by a major retailer at a discount. Another set of MSI RTX 3090s was also lifted directly from the company’s China factory in 2020, with the 220 GPUs estimated to amount to $336,500.

There are probably more incidents of theft that have been reported to the police but not publicly known. And although the value of the stolen goods could be staggering for the average person, companies and freighters often have insurance coverage, so they don’t have to worry about paying out of pocket for the entire loss.

The Chinese government quietly approved the Space Computing Industry Innovation Center in early June, which aims to bring together rocket and satellite manufacturers, semiconductor fabs, and AI tech companies to build a space computing network. According to the Beijing government, this aims to “connect the entire industrial chain of space computing and boost the development of the satellite Internet of Things (IoT) sector. Research firm SemiAnalysis said on X that China made this move a week before Elon Musk announced his AI1 satellite, which will run AI workloads while orbiting in space.

The center is set to be officially launched later this month, and it will focus on six major research areas: highly reliable, heat-resistant space-native computing chips, high-performance hyper-interconnected space computing payloads, space computing satellite platforms and standard systems, space-based large models under constrained power conditions, integrated space-ground cloud-based measurement and control networking, and space computing power service-oriented and tokenized operations. These are designed to build an orbiting AI data center that will not rely on Earth-bound energy sources and will avoid the bottlenecks that many ground-based data center developments face today.

While Beijing made this quiet announcement earlier than Musk’s AI1 reveal, we should note that Elon already had technical details available during the interview. In fact, the world’s first trillionaire has been talking about compute in space since November last year and filed for a one-million-satellite Orbital Data Center System with the FCC in February 2026. Jeff Bezos is also getting into the game with the 51,600-satellite Project Sunrise set to operate in a sun-synchronous orbit.

What makes China’s announcement different, though, is that it’s making multiple companies work together to build a system. On the other hand, SpaceX and Blue Origin are going at it alone — the two companies are competitors, and it doesn’t look like they’re cooperating with each other to develop the technologies required for space-based AI compute. It even seems that the former is intent on vertical integration, with its new 11-million-square-foot (around 190 to 200 football fields) Gigasat factory and Musk’s TeraFab megaproject.

We’re unsure which technique will be more effective in the long run: having one or two companies pour massive resources into this megaproject (with its success or failure being solely borne by those firms) or making several smaller companies and institutions work together to build a Space Intelligent Computing Research Institute, with the output presumably available for use by Chinese firms. But one thing is certain: Beijing is taking space-based data centers seriously enough to pour resources into them — a significant move for a nation with ample excess electricity and available infrastructure to build power-hungry data centers.

Amazon employees Darius Irani, Patrick Schloesser, and Liesl Wigand, who are members of Amazon Employees for Climate Justice (AECJ), say that they’re currently being investigated by their employer for breaking company policy after they testified in favor of the Seattle data center moratorium. According to Bloomberg, the three were called to separate Zoom meetings with an HR staff member after the city passed its one-year AI data center ban, where they were told that the company was investigating concerns about their public comments. Staff say they were intimidated during calls, are being monitored at work, and may face possible termination.

The company said that even though the three were free to discuss their working environment, they’re not allowed to speak as its representatives. “As we looked more closely at how these employees represented themselves, and how their comments were received by others, it became clear that they may have been speaking in their capacity as Amazonians and not as private citizens,” Amazon spokesperson Margaret Callahan told the publication. “We believe it’s important to apply our policies consistently so, just as we would with anyone else, we’re investigating whether there was a violation of our policies and may or may not take action based on what we find.”

Legal representatives of the three personnel said in a letter to the Seattle Office for Civil Rights (SOCR) that the investigations could lead to discipline, with one of them even saying that they could possibly be terminated. The lawyers argued that they were investigated by the company because of what they said when the Seattle City Council heard public comments on the measure, and said that Irani, Schloesser, and Wigand did not use company time when they made their comments, nor did they make any mention of their employer or shared propriety information.

The SOCR is a local government agency that enforces laws against employment discrimination, among other things, and the three affected employees are asking the agency to look into the situation. They alleged that they were intimidated during the Zoom meetings and complained about being monitored while they were at work. This also isn’t the first time that AECJ-affiliated workers faced an issue with Amazon. The company reportedly fired two people in 2020 who were part of the group’s leadership for putting a spotlight on Amazon warehouse workers’ safety (or lack thereof) during the pandemic.

Amazon says it is just investigating the situation and hasn’t made a decision yet. However, news like this will not do any good for the company and industry in general, especially as they gather bad press because of their AI data center projects. While the company has been trying to put its good side forward, like comparing its water consumption with other hyperscalers to highlight its high water efficiency, it still cannot shake off the perception that it could cause higher electricity costs, reduced water pressure, and noise pollution, among others.

The U.S. Federal Energy Regulatory Commission (FERC) is taking steps to ensure that AI data center operators are connected to the grid as quickly as possible. According to Bloomberg, the energy regulator is about to release an order asking grids to prove that they’re expediting AI data center connections, especially projects that “bring their own power, or curtail demand during times of high stress.”

“We promised some fireworks last month and we’re going to light the fuse today,” FERC Chairperson Laura Swett said in a meeting, Bloomberg reports. Commissioner David Rosner also said that any studies to enact these changes that grids will do must be completed in 90 days. These moves are in line with President Donald Trump’s “AI Action Plan” policy roadmap that he launched last year, which seeks to make it easier to build AI infrastructure.

Data centers need massive amounts of electricity — something that the U.S. grid is poorly-equipped to handle. Because of this, grid operators invested heavily in upgrading their infrastructure and then passed on their costs. PJM Interconnection, which is the largest power grid operator in the U.S., raised its power costs by 75.5%, with this increase largely blamed on AI data centers. The State of Maryland also filed a complaint with the FERC, as PJM Interconnection planned to charge it $2 billion for infrastructure upgrades needed for projects that do not directly benefit the state..

But despite FERC’s condition that data centers should bring their own power or reduce demand as needed for them to qualify for fast-track processing, this will still likely be a cause for concern for many Americans who are increasingly resisting data center developments in their backyards. After all, it’s not just power consumption that many communities are concerned about. Many data center developments are also being built in drought zones, where water shortages are already an ongoing concern. Some people are also concerned about the noise pollution that these facilities bring to otherwise quiet rural areas.

AI hyperscalers are keen to get their data center projects off the ground, especially as the demand for compute is still growing. The White House also wants these developments to go full steam ahead, especially as it deems that this infrastructure is crucial for the U.S. to win the “AI race” against China. But as long as citizens feel that these projects will threaten their quality of life, data center developers will only continue to see increasing opposition.

The city of McMinnville in Warren County, Tennessee has just passed an 18-month data center moratorium, allowing the city to determine the “electrical grid capacity, water and stormwater impacts, environmental and public health concerns, noise, and community fit” of these projects before even giving them the chance to apply for a permit. The Tennessee Lookout also listed several other bans that have recently been enacted or are under deliberation, like the larger Warren County, which is planning to vote on a temporary ban over its entire jurisdiction on the 22nd.

Aside from this area, other rural counties have passed moratoriums or are in the process of debating one. Coffee County, which sits adjacent to Warren, passed a data center ban at the same as McMinnville, while Knox County will vote on the issue on the same day as Warren County makes its decision. Even Nashville, the capital of the State of Tennessee, has passed a moratorium bill on its first reading with only a lone dissenter among the 40-member Metropolitan Council.

Tennessee is currently home to 63 data centers, according to the Data Center Map, with Elon Musk’s massive Colossus and Colossus 2 data centers located in Memphis. However, it seems that Tennesseans are pushing back on these developments, as several counties are considering and passing temporary bans. This is especially true for rural areas, where many data center developers take interest because of cheaper land, less regulatory friction, and weaker resistance.

“I think that they’re aiming these at … these smaller places in Tennessee because our land is so cheap, our laws are so lenient, the income isn’t taxed like it is anywhere else, and generally they’re just not going to get a lot of pushback, because a lot of people don’t know what’s going on, and they don’t know anything about this,” Kai Sage, a resident of McMinnville told the publication. “Luckily, a lot of people around here were informed, so as soon as we alerted people about this, people quickly reacted.”

These bans are not permanent, though. Instead, they’re designed to give local governments time to assess how it would go about these developments, helping prevent potential disasters that data center projects can bring to the local community. “A moratorium is not a permanent ban. It is a responsible time-out,” McMinnville City Administration Nolan Ming posted on social media. “It gives us time to study the issues carefully, update our zoning and land use regulations, and make sure any future decisions are based on solid information, not rushed approvals.”

No U.S. state has enacted a data center ban yet. Maine’s legislature passed a moratorium in April that would have paused all developments until October 2027, but Governor Janet Mills vetoed it at the last minute because it would affect one well-supported project in Franklin County. Still, the number of bans and moratoriums across the country have been steadily increasing, with 69 jurisdictions enacting one as of May 2026. Even Seattle — home to AI tech giants Microsoft and Amazon — has passed a one-year pause as its studies the community impact of data centers.

Most of these are just temporary delays, as governments try to come to terms with the massive amounts of resources that these projects demand. However, this is also throwing a wrench into AI hyperscalers’ plans to build more compute, whose demand is only expected to go up as AI becomes more advanced and gets more widespread adoption.

Data center water use is one of the hot topics right now in the U.S. and is one of the primary reasons why such projects are being blocked across the nation. However, Amazon claimed that it’s improving its water efficiency and that it uses the least amount of water on a per kWh basis among the AI tech giants, including Microsoft, Google, and Meta. Aside from that, it also said that despite using 2.5 billion gallons of water across the world in its data centers, it said that that amount is still a fraction of what other industries in the U.S. are using annually.

Amazon pointed at EPA data from 2017 that said Americans use 9 billion gallons of water daily just for landscape irrigation. This amounts to nearly 3.3 trillion gallons of water every year just for watering plants and gardens and doesn’t even include the irrigation needed for food production. This makes its 2.5-billion-gallon water consumption a literal drop in the bucket, amounting to just 0.075% of water used for keeping gardens green and thriving.

These gardens, however, have a direct benefit in that they could potentially keep ambient temperatures lower (versus an all-cement environment) and add to the aesthetics of the immediate area — the only question is how many people these developments benefit. Moreover, many new data centers in the U.S. are reportedly being built in areas suffering from water issues. While the overall data center water consumption might seem small if you look at the larger picture, we still cannot turn a blind eye to its potential effects on the local community.

For example, a Meta data center has allegedly caused a Georgia town’s deep-well water source to muddy — a sign that the level of the local water table is hitting low levels, allowing mud to be siphoned by the residents’ water pumps. Another site reportedly sucked 29 million gallons of water in 15 months, which caused low water pressures for residents. Reports like these make it harder for other data center projects to secure permits from local governments to start construction, especially as communities fear that these issues could happen in their area, too.

Amazon boasts water efficiency improvements

As the pushback against data centers’ egregious resource consumption has become front-and-center in many permitting fights, Amazon is showing that it’s taking steps to reduce its water consumption and claims that it’s on track to being “water positive” by 2030. It achieved this by implementing innovations in its data centers to reduce water use without reducing performance.

The company says that it mostly uses air cooling for its data centers, which uses up a lot less electricity compared to water cooling. But when ambient temperatures rise, it switches to Direct Evaporative Cooling, with the company spraying water on an absorbent medium, which the company describes as “a sophisticated, giant sponge,” and then runs the hot air through it to reduce temperatures by five to 10 degrees. It says that this is more power efficient than using chillers, reducing power use by about 20% to 25% during the hottest time of the day when power usage by other users is at its highest, too.

It also said that it raised the temperature thresholds in its data centers. While this meant that its servers ran hotter compared to previous years, it didn’t impact on the longevity of their hardware and they were still able to deliver the same amount of computing power as before. Through trial and error, the company discovered that it could keep running its servers using air cooling only, with its water-cooling systems only kicking in once the ambient temperature reaches 85 degrees F (or more than 29 degrees C). This resulted in 50% reduction in water use, says Amazon water specialist Beau Schilz.

Efforts like this are essential for data center operations to become sustainable. After all, despite the pushback against new data center projects, we cannot forever put a moratorium on them as AI’s demand for compute is increasing. But until AI hyperscalers can earn back the trust of the people and prove that they can build infrastructure without increasing costs for everyone else and hoarding the resources that communities need for their survival, then they can only expect opposition to continue.

Data center projects are being delayed nationwide as many opposition groups have successfully blocked their progress. According to Data Center Watch, a boutique research firm tracking data center development, at least 75 data center projects worth around $130 billion have been blocked or delayed across the nation in the first quarter of 2026 alone. By comparison, this is the same amount that was blocked throughout 2025.

This metric reflects the growing opposition to data centers across the United States. In late 2025, an Ipsos survey showed that nearly half of Americans didn’t want a new data center project near their neighborhood. However, this number jumped to 70% a few months later, indicating increasing resistance to data centers. Many of the concerns raised by residents include massive electricity price hikes, egregious water consumption, and potential noise pollution, among others. However, there have also been reports that Chinese users have been amplifying these issues while posing as Americans.

These concerns have resulted in numerous moratoriums passed in different jurisdictions. At least 69 local government units have enacted bans as of May 2026, with more joining the list since then. Seattle, the hometown of AI tech giants Microsoft and Amazon, is the biggest city to have passed a one-year pause on data center projects so far, affecting five proposed projects. It has even gotten to the point where Maine almost passed a statewide ban on large new data center projects until October 2027, with only the governor vetoing the bill because it affected one particular data center project.

Despite President Donald Trump’s push for AI development in the U.S., pushback against data centers has come from both sides of the aisle. While a few politicians have been pushing for data center development despite community opposition, many more have been listening to their constituents and passing regulations to halt or delay projects as they study how these projects could impact the community and mitigate any negative effects.

The number of projects being blocked across the nation is concerning for both the federal government, which is competing against China to gain the edge in AI technology, and AI tech companies like Anthropic, which is struggling to gain access to more compute. But if these developments damage the environment and the lifestyle of the people living around them, then it seems that Americans would rather do without them.

Data centers consume significant resources, often to the detriment of local communities. But while water use has been on the lips of those fighting back against data center deployments, the sheer scale of their impact wasn't entirely clear until recently.

Many new U.S. data centers are being built on drought-prone land, and their cooling systems, which seem to consume gargantuan quantities of water, only represent a small portion of their total water usage by 2050. So, what makes up this overall figure for water usage? Cooling, of course, plays a part, but ongoing energy demands and chip fabrication also make up a larger part of the story.

They're consuming how much?!

A recent Guardian report on water consumption cited figures from Xylem, a water technology company. That does raise some questions about the accuracy of the report, and led us to dig further into the numbers from other sources. Although they're not quite the same as Xylem's original reporting, they do paint a similar picture.

Quantifying the sheer amount of water data centers use isn't easy. Much of it depends on the specific hardware being used within the facilities, how they're cooled, and what the local grid infrastructure is like. In a recent MostPolicyInitiative report, it highlights that U.S. data centers in 2023 alone consumed 17.4 billion gallons of water. And that's before all the recent gigawatt+ scale data center projects kicked off. By 2028, direct consumption could increase by as much as 73 billion gallons as some of these new facilities come online.

But the keyword, there, is direct. The UNU Environmental Cost of AI's Energy Usage report from earlier this year highlighted how global data center electricity consumption required just under a trillion gallons of water in 2025. AI workloads account for around 20% of that, or 200 billion gallons. That equates to around 300,000 Olympic swimming pools. That share is projected to rise to 40%, or by 400 billion gallons, to a total of 600 billion gallons of water by 2030, giving it a global electricity demand in excess of the entire country of Nigeria and using enough water to supply 500 million people in Sub-Saharan Africa.

However, with 200 billion gallons of water (and counting) dedicated to AI workloads, how does that compare to other industries?

That's still a footnote compared to the or 26.4 trillion gallons used by U.S. agriculture in 2024 (as per USDA), but it is closing in on international oil refining numbers. OPEC produced roughly 86 million barrels of oil a day in 2024, and with a rough conversion of 0.4 barrels of water per barrel of crude, that's in the region of 550 billion gallons a year.

There are still industries using much more water than AI, and much more even than all the data centers combined. However, water use is growing dramatically, and it's not really coming from the increased cooling demands. It's coming from power demands and hardware manufacturing.

As Americans' feelings towards data centers sour and, in turn, increase their opposition to their development, addressing the growing water needs of these new deployments may be key for developers who want to see their projects reach completion. For residents facing water shortages, droughts, and water contamination, the danger is more existential.

Cooling innovation

For data center developers, the main way they've looked to address growing water demand from their facilities is to improve cooling. Moving away from evaporative to closed-loop, direct-to-chip cooling can have a huge effect on the water used in the cooling process.

That's a good thing. Indeed, Microsoft's Satya Nadella claimed that the company's newest AI data centers have cooling systems so efficient that they "can operate effectively with zero water consumption." He also compared these mega data centers to single restaurants in terms of annual water consumption.

For home PC enthusiasts, Nadella is talking about using the data center equivalent of an AIO watercooler, rather than just letting the hot water evaporate to cool it down. It's easily more efficient in terms of water usage, which is great from that direct-use perspective.

Closed-loop cooling is absolutely an important innovation in data center development, and combined with more exotic ideas like fanless liquid coolers and immersion cooling (perhaps even undersea and in-orbit deployments) could see data center cooling use very little water in the future.

But it's not the cooling that's the problem: it's the power being generated to run them. And the one downside to closed-loop cooling systems is it uses more power than evaporative cooling systems. As those power demands rise, so does the indirect water usage of these facilities.

Power is the issue

The vast majority of indirect water use by data centers by 2050 will be down to power generation, the Xylem study suggests, and if recent generations of GPU development are anything to go by, those power demands are going to be enormous.

Nvidia's Ampere generation A100 enterprise GPU had a TDP of 300-400W. An H200 of the Hopper generation has a TDP up to 700W. A Blackwell GB200 GPU can pull as much as 1,200W. The next generation Vera Rubin? That's now up to 2,300W per chip.

Once you start scaling these GPUs up to their full racks, the power consumption is extreme. Where traditional data center server racks consumed between 10 and 15 KW, the latest GB300 NVL72 designs could consume upwards of 150KW a piece. Vera Rubin might be more energy efficient, but its racks could consume upwards of 230KW each.

Data centers just weren't traditionally designed with this kind of density of energy demands in mind. Powering them alone will be an enormous challenge and require enormous quantities of water to do it.

However, other industries also consume far more energy than all data centers, and thus, consume more indirect water usage from power generation. For instance, steel and iron manufacturing, chemicals and petrochemicals, cement and glass manufacturing, and many other industries each use multiple times more power than all data centers combined.

Renewables, water recovery, and nuclear

For hyperscalers, the near-term solution to data center power problems has been to use (occasionally law-breaking) mobile methane jet turbines. These aren't too heavy on water consumption, but have their own environmentally damaging effects with heavy carbon emissions.

A longer-term solution to this issue, and hopefully the extreme indirect water demands of these facilities, will be a combination of renewables, nuclear power, and water recovery.

The Switch Tahoe Reno exascale data center shows how it can be done. It's a 650MW facility built in 2017 that uses 100% renewable solar energy. In Portugal, the SINES DC Start Campus is a 1.2 Gigawatt facility that's partially online and uses 100% renewables, as well as using seawater cooling to offset its water usage. Although many of the newer data center projects are far larger, as the price of solar deployment continues to plummet, it's certainly possible that data centers powered by renewables can be effective and profitable, without consuming such vast quantities of water.

Another option is nuclear energy. New, smaller reactor designs are making it possible to get these facilities online faster and with a more modular design. There's even the possibility of repurposing old aircraft carriers and submarines with onboard nuclear reactors to power data center facilities.

Data center developers know this is at least one path for the future. That's why they're rushing to secure access to key materials like Uranium.

The future of data center power, especially AI data centers, and the water that they require, is almost certainly some mix of renewables and near-site nuclear power.

As the mobile methane turbines popping up at data centers have shown, the developers will often just use what they can get their hands on. Perhaps alongside moratoriums and pauses in construction, data center protestors could make sure that if data centers are built in their local area, the developers should also be required to invest in water infrastructure to offset their ever-growing demands, alongside more renewable energy solutions.

An ongoing fight over a proposed data center sited just 50 yards from Nashville Zoo has escalated further, with the zoo’s land use attorney filing a zoning appeal to overturn permits already approved for developer DC BLOX. An opposition petition has already passed 331,000 signatures, with Grammy-winning country star Brad Paisley calling the project "an absolute nightmare scenario" in a video posted to Instagram over the weekend.

The pressure now shifts to the Metro Planning Commission, which is set to hold a public hearing Thursday, June 11th, on legislation that would ban data centers larger than 500,000 square feet across Davidson County and keep smaller ones at least half a mile from homes, schools, and zoos. The 69,220-square-foot facility at 648 Grassmere Park would draw an estimated 50 MW from the local grid, and the zoo argues its noise and light could disturb vulnerable species, including clouded leopards it is working to conserve.

Bill BL2026-1391, filed by District 20 Councilmember Rollin Horton and passed after a first reading earlier this month, will create Nashville's first zoning rules for data centers, according to the local news outlet WKRN. Facilities over 500,000 square feet would be prohibited outright, while those between 100,000 and 500,000 square feet would need Board of Zoning Appeals approval following a public hearing. All data centers would have to run closed-loop cooling systems that don’t return water to the public supply, and smaller facilities would face buffer zones of 100 to 500 feet from homes, daycares, churches, parks, and other data centers.

It's been reported that the bill will also look to restrict the use of backup generators to emergencies and testing, and require developers to prove Nashville Electric Service has capacity before approval. Governor Bill Lee signed a separate state law last week requiring data centers to cover the cost of grid infrastructure upgrades their facilities need.

The DC BLOX project itself falls well under the size that the bill seeks to ban, and the company already claims closed-loop or waterless cooling for the site, but it’s the half-mile zoo buffer that’d be the blocker should it come to pass. The zoo told NBC News that land use attorney Bill Herbert, a former Metro Codes Director, filed the appeal to overturn DC BLOX's approved permits.

"As we move forward, we have taken the next step in our fight against the proposed data center," the zoo said in a statement to NBC News, confirming that land use attorney Bill Herbert, a former Metro Codes Director, filed the zoning appeal to overturn DC BLOX's approved permits. A company spokesperson told the outlet the facility “would not be an AI factory placing a burden on local resources” and sits on land that previously hosted a data center, though he couldn't say what the new facility would be used for or whether AI companies would be customers.

The standoff in Nashville fits a pattern of opposition to new data centers we’re seeing nationwide. A Gallup survey from last month found that 70% of Americans oppose data centers built near their homes, and Seattle is set to pass a one-year moratorium on new AI data center construction. If Horton's bill passes, Nashville would have some of the strictest siting rules of any major U.S. city, written in direct response to a facility too small for most AI workloads.

Samsung Heavy Industries signed a three-way agreement with Greek shipowner Capital Clean Energy Carriers and classification society Lloyd's Register at the Posidonia shipping exhibition in Athens earlier this month to commercialize a 50MW floating data center, according to Chosun Biz. The deal followed the signing of a joint development agreement between the shipbuilder and Supermicro to verify whether AI servers can run reliably on water, with the design pairing seawater cooling with LNG-fueled fuel cells for onboard power. Under the proposed business model, shipowners will buy the platforms and lease capacity to operators on long-term contracts, much like how they charter tankers.

The memorandum of understanding splits the work three ways: Samsung Heavy handles technology and construction, Capital leads project sourcing and investment, and Lloyd's Register covers regulation and certification. Samsung Heavy signed a second memorandum with consulting arm Lloyd's Register Advisory covering feasibility studies and an assessment of the North American market.

Receiving approval in principle from the American Bureau of Shipping and Lloyd's Register in April, the 50 MW project can draw external power through subsea cables when moored in ports or coastal waters, or generate its own using solid oxide fuel cells running on LNG, sidestepping long grid connection queues that have stalled land-based projects in the U.S. and Europe. Jerry Kalogiratos, CEO of Capital Clean Energy Carriers, said in Lloyd's Register's announcement that floating data centers offer "a scalable and flexible solution, with the unique advantage of mobility."

Meanwhile, the agreement with Supermicro is designed to address the question of whether precision AI hardware can tolerate environmental factors like vibration, tilt, salt, and humidity over a multi-year service life. Samsung Heavy will develop offshore positioning control and technologies to seal out salinity and moisture, while Supermicro validates server operating conditions in river and marine environments. The shipbuilder is leaning on its floating LNG production facility experience to integrate power, cooling, networking, and safety systems into a single hull.

Besides Samsung Heavy, Japan’s MOL is also building a 73 MW floating data center with Karpowership for a 2027 deployment, China's 24MW subsea facility off Shanghai entered full operation last month, and Nautilus Data Technologies operates a much smaller 6.5MW barge at the Port of Stockton, California. Samsung Heavy also has a potential anchor tenant, having signed a letter of intent with OpenAI in October alongside Samsung's 900,000-wafer-per-month Stargate memory commitment, covering joint development of floating data centers. To date, however, there’s no signed customer contract for a named deployment.

China is drafting a plan to spend roughly 2 trillion yuan ($295 billion) over five years on a nationwide web of AI data centers. The goal is for at least 80% of the underlying technology, AI chips included, to be sourced from domestic suppliers such as Huawei, according to a Bloomberg report citing people familiar with the discussions.

The National Development and Reform Commission is responsible for the blueprint of this network, while state carriers China Mobile and China Telecom will operate most of the facilities and link them up to a single computing grid by 2028. The build-out of this grid leans heavily on sovereign debt and ultra-long special government bonds. Folding in power grid upgrades could push the total capital requirement beyond 5 trillion yuan, those sources told Bloomberg.

Funding the build-out is easy, though; filling them with domestic accelerators is a different story. The 80% domestic sourcing requirement effectively locks out Nvidia and AMD accelerators, so China will be capped by whatever amount of chips SMIC can physically produce. The foundry’s most advanced stable node remains its N+2 process, which is roughly equivalent to 7nm and is currently running above 93% utilization, leaving little headroom as every government-certified Chinese chipmaker competes for the same wafer slots.

Another major chokepoint is high-bandwidth memory. Highly limited domestic HBM supply constrains how many Ascend-class accelerators Huawei can assemble. Huawei alone shipped around 812,000 chips last year and projects some $12 billion in processor revenue for 2026, a pace that its own supply chain has struggled to sustain. It’s estimated that China’s domestic suppliers will cover only around 76% of all Chinese AI chip demand by 2030, even as that market grows toward $67 billion.

Beijing has massively tightened its restrictions on foreign silicon in a series of new controls. Last August, Beijing introduced a requirement that data centers source at least 50% of chips locally, and by November, state-funded projects were barred from foreign accelerators entirely, with builds less than 30% complete reportedly told to strip out Nvidia, AMD, and Intel parts.

China's own industry has questioned whether domestic hardware can keep pace. SMIC co-CEO Zhao Haijun has cautioned that the rush to add capacity risks leaving data centers idle, comparing it to building highways ahead of the traffic. Chinese chip executives have separately conceded the country trails the leading edge in AI data center silicon by five to 10 years. When DeepSeek was steered toward Huawei hardware for model training, it eventually reverted to Nvidia hardware, lending credence to the idea that domestic parts still struggle with the heaviest training workloads, even where they suffice for inference.

Elon Musk has laid out the first detailed design of SpaceX's AI1 satellite in a 30-minute video posted to the company's X account, the opening generation of an orbital craft SpaceX wants to build by the million to run AI workloads off Earth's power grid. Carrying a 150 kW peak compute payload across a 70-meter deployed wingspan, the spacecraft uses an interchangeable hardware design that lets different chipmakers supply the processors. The timing of this announcement is no accident, coming just three days before SpaceX’s IPO, which is set to price on June 11th and trade on June 12th at a target valuation near $1.75 trillion.

In his announcement, Musk pegged the satellite’s compute payload at roughly the draw of a single Nvidia GB300 rack, which pulls around 140 kW on the ground. One AI1, in those terms, is about one rack in orbit. In terms of its overall specs, SpaceX disclosed an average compute payload of 120 kW, a peak of 150 kW, and a density of 70 kW per ton, with the craft operating at roughly 600 km.

A satellite with these specs comes with some serious space requirements, and its 70-meter deployed wingspan edges past the 68.4-meter span of a Boeing 747-8. As for the interchangeable compute, that leaves the platform open to whichever vendor ships the most competitive AI silicon, rather than locking it to a single supplier.

This interchangeability is no doubt important to Musk, not least because SpaceX can’t yet guarantee its own supply of chips. The company is currently building Terafab, a chip fab that’s running as a joint venture with Tesla, while its S-1 IPO filing warns it can’t currently secure enough chips.

That aside, the elephant in the room is cooling: a rack on Earth sheds heat into moving air and circulating water, neither of which exists in a vacuum, where the only viable route is radiating it away as infrared. AI1 features up to 110 m² of deployable liquid radiators, as well as redundant pumping loops and integrated micrometeroid shielding. By comparison, the International Space Station’s ETACS rejects roughly 70 kW of heat — around half of what’s needed to cool a 140 kW GB300 rack — across 422 m² of radiator at a cost of up to $500 million, according to SemiAnalysis.

Musk has previously waved off potential thermal critiques, telling SpaceNews back in March that it's "safe to say SpaceX knows how to do heat rejection in space" and pointing to the company's fleet of more than 10,000 Starlink satellites.

SpaceX filed with the FCC in January to launch up to a million orbital data center satellites and has already signed compute deals, including a $920 million-per-month agreement with Google. The model has prominent skeptics: OpenAI's Sam Altman called orbital data centers "ridiculous" earlier this year.

SpaceX has announced a new 11-million-square-foot Gigasat factory in Bastrop, Texas, dedicated to building the infrastructure needed to achieve the company's orbital data center goal. In an internally conducted interview posted on X on June 8, SpaceX CEO Elon Musk confirmed that the facility is expected to begin producing complete "AI satellites" by 2027. The company is targeting 1 gigawatt (GW) of orbital AI compute capacity by the end of next year, with plans to scale that figure by an order of magnitude annually thereafter.

During the interview, Musk unveiled the build and specs of the proposed AI1 satellite, the company’s take on orbital data centers. The satellite will span roughly 70 meters (229.66 feet), with a massive solar array — generating power at a density of 250 W/m² — making up the bulk of the structure. AI1 will also feature vertically oriented, double-sided radiators for cooling, with the 150-kilowatt (kW) peak compute payload positioned right in the middle of the structure.

The massive 11-million-square-foot Gigasat facility — more than ten times larger than Starfactory, SpaceX's current largest spacecraft manufacturing complex — will vertically integrate much of the AI1 satellite supply chain on a single campus. The facility will manufacture solar ingots and wafers, solar cells, printed circuit boards (PCBs), silicon-based electronic components, user terminals, gateways, and the AI1 satellites themselves. The 1,000-acre site will also include dedicated satellite development and testing facilities, warehousing and logistics infrastructure, and a large-scale AI satellite production line.

According to Musk, the solar manufacturing facilities are already under construction, while the AI satellite production building is about to break ground. SpaceX expects to be producing a "reasonable volume" of these orbital data centers by the end of 2027. While each satellite will carry 150 kW of compute power, the company aims to achieve 1 GW per year of space AI compute in that same time. That would mean launching on the order of more than 6,000 AI1 satellites in a single year. For context, Starlink has about 10,500 active satellites as of June 2026.

Musk hopes to scale to 100 GW per year by 2030 and even has eyes on Terrawatt-level computing, completely solar-powered in space. "This is what we are going to try to do and think we probably can do, which is to get to roughly an annualized rate of a gigawatt per year by the end of next year at Space AI compute. And then aspirationally, scale that by an order of magnitude per year. So in two and a half years, hitting an annualized rate of 10 gigawatts a year at Space. And three and a half years, maybe 100 gigawatts," he said, while also expressing a desire to one day scale to a terawatt per year, depending on progress in chip making.

The largest AI data center anyone has actually announced is Meta's Hyperion in Louisiana, designed to scale up to 5 GW and house roughly 2 million GPUs at full buildout, at over $100 billion — and even that only reaches its first 2 GW phase by 2030. xAI's own Colossus 2 in Memphis just expanded to nearly 2 GW of capacity, with 555,000 GPUs, for about $18 billion, making it the world's largest single-site AI installation. So 100 GW/year is approximately 20 Hyperions or 50 Colossus-2s per year.

Achieving this will take an unprecedented volume of chips, and Musk's answer is Terafab — a SpaceX/Tesla/xAI venture in Austin aiming to fab 1 terawatt of compute a year, roughly 100 to 200 million advanced chips, in a 100-million-square-foot plant. However, the project itself is being met with widespread skepticism. For starters, none of the three companies has ever made a chip, yet they're starting at the bleeding-edge 2nm node. Our in-depth Terafab industry analysis explores various other reasons why this skepticism is valid.

Multi-Gigawatt ambitions aside, Gigastat is a significant step towards orbital data center goals that are increasingly seen as a potential viable solution to the extreme power consumption of on-ground data centers. Not unexpectedly, SpaceX is leading the race. Manufacturing solar arrays, wiring, and satellite bodies at volume is largely conventional work — much of it built on technology SpaceX already produces for its Starlink V3 satellites, just at far greater scale — which is part of why a 2027 production start is credible.

About two-thirds of the 809 data centers planned across the U.S. are slated for land that has been in drought over the past year, an analysis from The Guardian found this week. The research claims that 517 data centers are set to be built in areas classified as drought-stricken in the last year, according to the National Oceanic and Atmospheric Administration's (NOAA) National Integrated Drought Information System.

According to the report, data center cooling accounts for only about 4% of the additional water AI will demand by 2050, according to a January report from Xylem and Global Water Intelligence, while power generation takes roughly 54% and semiconductor fabrication about 42%. A UN University report published last week reached a similar split, putting 2025 data center electricity use at about 448 TWh.

The chips inside the racks, and the power to run them, account for the rest. A modern logic fab consumes between 2 million and 10 million gallons a day, and chipmaking can’t use ordinary water. Producing 1,000 gallons of the ultrapure water required by fabs takes roughly 1,400 to 1,600 gallons of municipal supply, so the input is lossy before a single wafer is etched.

TSMC's three Phoenix fabs, for example, are projected to draw a combined 16.4 million gallons a day once complete, in the fourth-driest state in the country. The company offsets much of that through on-site reclamation, rated at 85%, climbing toward 90%, but it’s still drawing water from an area where it’s already in short supply.

Data center operators routinely note that the sector uses a fraction of what agriculture does, but that’s only accounting for one of three legs. Only counting cooling excludes the fab and generation demand created by the same infrastructure, which is where most of the growth capacity is concentrated. A data center and the fab supplying its accelerators can sit in the same drought area and pull from the same groundwater, but only one of them will end up showing in the cooling figures.

A potential fix will be sealed, direct-to-chip liquid cooling. Nvidia rates its GB200 NVL72 system at up to 300 times the water efficiency of air cooling, but that figure covers the cooling loop alone. Those racks pull 120 kW to 140 kW each, and the Vera Rubin platform, arriving later this year, pushes a single rack toward 600 kW. More power per rack means more generation, and thermal and gas-fired generation is itself water-intensive, so rack-level water savings reappear at the power plant.

Meta's proposed Hyperion data center in Louisiana is one example. Closed-loop cooling here will be paired with the output of roughly 10 gas-fired plants, which consume water of their own to generate that electricity. So, on-site cooling water usage falls while the combined draw of cooling and generation rises, and as rack power scales toward Rubin's 600 kW, that combined figure will climb faster still.

Several states have started legislating around cooling, including California, Michigan, and Iowa, which are weighing mandatory water-use reporting. South Carolina and Kansas may require closed-loop systems, and New York lawmakers have floated an outright data center moratorium. Each measure targets the visible 4%, and leaves the fabrication and generation demand that drives most of AI's water growth untouched.

Back in 1999, 87 acres of land in Taylor, Texas, was donated (nominal fee $10) to the city by a farmer, with a condition in the deed that it would be used for community parkland. In 2025, the land was sold for $10M to a data center developer, who has won several legal battles against the nearby residents who are trying to stop the massive construction project, reports 404 Media. Now, the disgruntled locals are planning to take their case to an appeals court.

To introduce this case, let’s go back to 1999, when the $10 deed was inked. For some background, 404 Media talked to long-time local Pamela Griffin, who used to play on the farmland, and watched her children grow up and enjoy the same freedom. Griffin recalled that old farmer Mr. Bland used to talk to her father from time to time. According to her, Bland once said to her dad, “I see the kids don’t really have nowhere to play.” He continued, “I’m thinking about giving this land for parkland because these kids need somewhere to play.” The original July 1999 deed has since been unearthed, and the farmer did indeed follow through with his words. Now, let’s make the following chain of events simple using a bullet point timeline:

• Pre 1999 – a farmer’s promise to his neighbors,
• July 7, 1999 – Bland granted the land to the Texas Parks and Recreation Foundation, a public trust, for $10 on the condition it be used as a park,
• 2003 - Texas Parks and Recreation Foundation granted the land to another non-profit called the Williamson County Park Foundation,
• 2003, one month later, Williamson County Park Foundation gave the land to the City of Taylor,
• 2008 - the city of Taylor sold the land to the Taylor Economic Development Corporation (TEDC) for $15,000,
• 2025 – TEDC sold the land to data center developers Blueprint for $10 million.

This is quite a tale, and there appears to be a lot at stake for parties on either side of the dispute. In summary, locals face a multitude of undesirable side effects coming from having a data center in their backyard. There’s also the principle of the original deed being ignored, a big deal in Texas. Meanwhile, the council asserts that stopping this kind of development (in the city zone it is situated) is beyond its scope, and the millions in tax raised will benefit residents.

Griffin only found out about the planned 135,000-square-foot data center on the land when local organizers called around the neighborhood to raise awareness in 2025. She didn’t even know what a data center was at the time. Looking it up with her family, the idea of such a construction on your doorstep didn’t appeal.

Locals like Griffin became concerned about impacts to air, water, electricity, and noise. In correspondence with the City Council, they have been assured that work will be done to minimize health risks to people living nearby. Mitigations like a barrier wall, landscaping, closed-loop water cooling, and the developers building their own power substation were mentioned.

While folks might not want to live near a data center for the aforementioned reasons. It may also negatively impact the resale price of nearby homes. However, the City Council says that the expected extra $30M in tax revenue over the coming decade will be a positive for the area. With $20M earmarked for the school district.

Meanwhile, the council has also painted its situation as one where it is powerless to resist the data center development. This was made clear in a council website FAQ. 404 Media investigations revealed that this lack of power to change the course of the development is likely because of the property’s existing Employment Center zoning. The City can only regulate form, not function, it seems. However, the dev hasn’t yet secured the City’s approval for planning and building permits.

With the lack of satisfactory response from the council, Griffin and her family decided to hire a lawyer. There then followed a series of legal disputes, which, so far, have favored Blueprint. Nevertheless, Griffin and family members are filing an appeal with the Third Court of Appeals in Austin, Texas.

Land deeds are powerful documents in Texas. Activists opposed to the data center unearthed the original July 7, 1999, deed, which is shared on the 404 Media site. Indeed, we can see the legal document does stipulate that the 87.97 acres of land “be held in trust for future use as parkland.”

Central to Griffin’s determination to continue is the notion that “I’m not fighting just because of a data center. I’m fighting because this land was deeded for parkland.” Texas deeds need to be upheld, and the community should have a park, according to the resident.

SpaceX just announced that it closed a multi-year deal to provide compute capacity to Google. The agreement, which is worth $920 million per month, will begin in October 2026 and is expected to continue until June 2029. Reuters said that the transaction includes 110,000 Nvidia GPUs, plus CPUs, memory, and all other components needed for AI processing.

It appears that Elon Musk's company will not deliver the entire 110,000-strong GPU compute capacity in one go — Google will pay a reduced monthly fee as the company brings more server racks online through September 30, 2027. If SpaceX cannot hit the 110,000-GPU target on that date plus a one-month grace period, then Google can cancel the agreement or settle for the lower number of available GPUs “with a corresponding pro-rata reduction in the monthly fees.” It also gave the two parties the option to cancel the deal altogether after December 31, 2027, provided that they give a 90-day notice to the other.

This is the second major deal that SpaceX announced in months, as Anthropic secured the entire computing power of SpaceX’s Colossus 1 data center in early May. This was a surprising move, especially as Colossus 1 is one of the company’s most hyped assets, which Elon Musk launched in just 19 days. It turns out that launching it at such speed meant that it has a mix of H100, H200, and GB200 GPUs, which is resulting in efficiencies for training AI LLMs as the faster GB200 GPUs end up waiting for the older, slower GPUs before it can complete each computational step. Anthropic is instead using it for inferencing, especially as it is struggling to keep up with the demands of its growing user base.

The combined annual value of just these two deals is already worth more than SpaceX’s entire revenue for 2025. Reuters estimated that they would bring in more than $25 billion annually to the company, compared to the less than $20 billion that it made from Starlink, launch services, and AI revenue.

These massive deals, worth more than $70 billion in total, will lift SpaceX as it targets a $1.75 trillion IPO on June 12, 2026. While it started out as a space exploration company and is known for commercially launching satellites at a fraction of the cost compared to NASA and providing relatively affordable and stable satellite internet, it’s actively expanding towards orbital data centers. SpaceX acquired xAI earlier this year to help achieve that dream and has even filed some documents at the FCC detailing its plans. Google is also reportedly in talks with the company for a slice of the orbital data center pie.

Two city council committees just passed a data center moratorium in Seattle, making it the biggest jurisdiction in the U.S. to enforce a ban on these projects. According to The Guardian, the moratorium and an accompanying resolution must still go through a full council vote on Tuesday, June 9, 2026, but this is just a formality given the massive support that the data center ban has from the general public.

Several other towns, cities, counties, and areas in the United States have passed data center bans, especially as projects like these have increasingly become unpopular among Americans. Still, many didn’t expect tech-industry heavy Seattle to follow them in their footsteps.

Seattle mayor Katie Wilson first heard about the plan to build five large data centers near the city in April, after the Seattle Times broke the story. “That was the first that I, as the mayor, had heard about this,” Wilson said. “Both I and many of the councilmembers were happy to move toward a moratorium, especially knowing that there was really strong public support out there for that course of action.”

The city intends to spend the one-year hold on data center development to study its impact on the community surrounding it and what the local government should do to ensure that its constituents benefit from the project. This includes putting up pollution standards, determining energy connection requirements, setting contract terms, setting labor standards, and other regulations that will apply to data centers. Wilson also mentioned that Seattle will ascertain if these projects are a “good use of urban land” during this period.

Seattle’s residents supported the temporary moratorium, with more than 50 residents showing their support for it when the city hall opened public comments on the measure. Aside from increasing electricity bills and impacts on the water supply, some of the concerns that were raised at this time included the climate impact of data centers, especially behind-the-meter projects that are often powered by jet engines running on fossil fuels, noise pollution, and the conversion of arable land into sprawling campuses.

The city council’s decision to pass the one-year ban is in stark contrast to the actions of some politicians in other states that support data center developments despite opposition. For example, one Indiana mayor was caught on camera insulting his constituents who were against a proposed data center project in their area, while a Utah senator slapped the phone out of the hand of a reporter who was covering a story about the cases of harassment against his business because of his support for a 40,000-acre site in Box Elder County.

Meta has moved from building traditional structures for its data centers to putting up tents across the U.S. and sticking AI servers inside them. Michael Thomas, founder of market intelligence and data center tracking firm Cleanview Energy, said on X that the AI tech firm has already built or is in the process of constructing three data centers that use the strategy.

One site, located in New Albany, Ohio, already has five buildings that took approximately two to three years to complete. The company then started putting up five tents, with an area of around 125,000 square feet each, in the area. City permits seen by Cleanview Energy say that the construction started in April 2026, while recent satellite images show that the structures have already been completed.

Meta CEO Mark Zuckerberg first announced the strategy of pitching tents and filling them with AI servers last year. It seems that he wanted the infrastructure to come online quickly while demand for compute is increasing exponentially. It’s said that Meta is inspired by Elon Musk’s feat with xAI, which built a 100,000-strong AI data center in just 19 days in 2024 — something which usually takes four years, according to Nvidia CEO Jensen Huang. The technique is apparently quite effective, and it’s now being applied to two other sites, including one in Tennessee.

Putting AI servers inside tents, officially called “rapid deployment structures,” is one of the more unique approaches to the AI build-out, Thomas said. They’re certainly not as sturdy as physical buildings made from steel and concrete, with one commenter comparing it to the “classic $10k racing bike with a $9 lock” situation. Nevertheless, the company has probably weighed the pros and cons of such a setup and has decided that it was worth taking the risk to gain an advantage in the AI infrastructure race.

Another factor that allowed Meta to bring its data centers online at a much faster pace is its use of “behind-the-meter” power, in which the company installed its own turbines to produce power on-site rather than relying on grid power. This is similar to what Musk did with his Memphis Supercluster, which he initially powered with portable power generators. However, Meta’s turbines would be a permanent feature on the Ohio site, as it’s designed to run independently of the power grid.

Thomas said that there’s about 2GW of capacity available from behind-the-meter data centers, with an extra 1GW expected to go online this year for a total of 3GW. If on-going projects stay on schedule, the Cleanview report says that the total capacity could hit 13GW by the end of 2027 — about the same amount of power generated by 13 nuclear power plants and more than enough to power NYC.

This combination of seemingly temporary structures and jet engines strapped to the ground is certainly an interesting combination. As one reporter said, “It’s like a scene out of the movie Mad Max.”

Scott Ferguson (R), the mayor of Shelbyville, Indiana, was caught on camera insulting community members who were opposed to a proposed data center project near the city. The mayor's office has been forced to issue a statement after he was secretly recorded claiming he had only seen 'No AI data center' signs in "sh***y," unkempt houses.

Shelbyville is a city of 20,000 people located around 30 miles southwest of Indianapolis International Airport and is the county seat of Shelby County. Fox 59 reports that its city council has advanced a billion-dollar data center proposal in the area, amid increasing resistance from the public.

“I’ve seen a lot of these all over town, but I only see ‘em in sh***y houses with sh***y,” Ferguson was recorded commenting on "No AI data center" protest signs. Another person cut him off and corrected him, saying, “You see them in working class houses.” The mayor then continued, saying, “most of them are rentals.” Another off-camera speaker said, “It doesn’t matter whether they’re rentals, they’re still human beings.” To which he answered, “Yeah, I know, but they’re unkempt properties.” It’s not clear if Scott knew he was being recorded.

These comments have understandably caused a lot of controversy, and the video has blown up online. One commenter said, “Tell us you aren’t getting paid under the table without telling us,” while another added, “Wow… So, we know who the expendable people are for him.” Another person said, “Disgusting behavior. Who insults their constituents?”

In response to this, the mayor’s office released a statement saying, “The Mayor regrets that his choice of words may have caused offense. His comments were intended to reference property maintenance and not the character, value, or importance of any resident, homeowner, or renter in our community.”

Ferguson’s offhand remarks are adding a lot of fuel to the fire against data centers. The project that the Shelbyville city council approved is a 429-acre site that will play host to 11 data center structures. Fox59 reports that more than 2,000 people signed a petition against the project, but were ultimately ignored by the council. Despite the city council giving it a go signal, the data center developer must still go through several other hoops before it can begin construction.

The majority of Americans are now against having a data center constructed in their community, especially as several issues of increased utility prices and poor water quality have been linked to recent projects.

It has gotten so bad that many town halls and meetings have become contentious, and a few politicians who supported data centers are becoming quite defensive. For example, one farmer was arrested for going a few seconds over the allotted speaking time and was charged with trespassing in court. A Utah State Senator also slapped the phone out of the hand of a reporter who was covering the public harassment against his employees for his support for another project in the state. Most worryingly, one Indianapolis politician had their home shot at by an unknown assailant who left a “No Data Center” sign after the incident.

With the debates around data centers becoming more passionate than ever, some U.S. authorities are now worried that “anti-tech extremists” will take advantage of the situation and execute acts of violence against AI data centers. On the other hand, critics say that this could lead to mass surveillance and even the criminalization of peaceful opposition to data center projects.

SpaceX has won a 100% property tax abatement from Grimes County, Texas, for its proposed, massive $55 billion Terafab semiconductor chip manufacturing facility. According to a local news outlet, KBTX, Grimes County commissioners voted 4-1 on Wednesday, June 4th, to approve both a reinvestment zone designation and the tax abatement, which will fully exempt SpaceX from property taxes tied to the project in exchange for a regular payment instead.

In exchange for the tax exemption, SpaceX will instead remit a lump sum of $10 million to the county, followed by $20 million annually for 35 years. The vote — centered on a three-part proposal for the SpaceX Terafab facility, consisting of an obligation framework for jobs and infrastructure, a Tax Increment Reinvestment Zone designation, and a 35-year PILOT tax abatement agreement — followed a hearing that drew in more than 100 residents to the Grimes County courthouse.

Proponents of the proposals, including local officials, argued that the project promises massive economic investment, job creation, and national security benefits. Conversely, residents opposed to the project cited a lack of transparency in the approval process, potential strain on water and power infrastructure, and the destruction of rural identity. Commissioner David Tullos, who cast the lone “No” in the vote, questioned SpaceX’s absence in earlier meetings, saying that the hearing was the first time it had sent a representative since the project was announced. Tullos also questioned the company about the size of the proposed reinvestment zone and the company's plans for portions of the land included within it.

Several residents reportedly expressed deep concern about environmental impacts and land loss amid tears. In response, John Federspiel, senior director of Starlink Product Engineering at SpaceX, said: "We recognize that large projects bring legitimate questions about infrastructure and environmental stewardship. Our company is committed to proactively ‌addressing those ⁠concerns and taking care of them responsibly.”

Despite an apparent majority opposition from residents who urged the commissioners to delay the vote on the tax abatement — which public records show SpaceX applied for just last month — all proposals passed. A number of local residents expressed disappointment in the outcome, with many insisting that a 100% tax rebate — for a company about to launch the largest IPO in history with an expected $1.75 Trillion valuation — was too far.

Defending the arrangement in an X post on Wednesday, SpaceX owner and world's richest man, Elon Musk, said that the exemption was necessary to remain competitive with other chip manufacturers. “The reason SpaceX asked for this, which is standard practice for massive capital investments, is because Terafab will have a large number of extremely expensive machines for making chips. Property tax on these crazy money machines would put us at a serious competitive disadvantage relative to other chip fabs in the world,” Musk said.

He also implied that the county stands to significantly benefit from the project. “Something that perhaps isn’t clear is that, if this location works out (other locations are still in the running), SpaceX will still be paying an annual amount that increases tax revenue for Grimes County by ~25% and will be by far the biggest source of revenue for the county,” Musk argued.

SpaceX is advancing the Terafab project as part of its plans to expand beyond aerospace into computing infrastructure and domestic chip production, a strategic pivot investors see as vital for future growth. The company already owns Colossus 1, a massive data center it rented out to Anthropic, and is currently building Colossus 2.