Data Center Deep Dive Pt 2
Friends and Constituents,
Are you tired of hearing about data centers? Me, too - and yet that’s what we have to talk about all the same.
Today, I have ONE BIG ASK. Then there’s a video, background information, and a follow-up question towards the end.
Contact the Department of Metropolitan Development and ask them to do what the Hoosier Environmental Council asks for:
Demand they join the City Council and call for a moratorium on new data centers.
Insist that they host a public forum on data centers in each township in Marion County
Extend the public comment period about data center regulation to 90 days.
I was proud that earlier this month, the moratorium bill I authored and Councilor Wells co-sponsored passed unanimously thanks to the pressure that all of you put on the Council.
But in Indianapolis, the Council cannot change zoning by banning data centers unless an appointed board of planners, the Metropolitan Development Commission (MDC), signs off on this policy.
As an appointed board, the MDC does not take feedback directly from constituents outside of public hearings. But they work closely with City leaders in the Department of Metropolitan Development, and they will hear about it if the City receives massive numbers of calls and emails on the issue. So let them hear from you!
Now that you’ve made that call or email, let’s continue with our Data Center Deep Dive. Watch the video overview, then keep reading.
Earlier this month, we focused on tax abatements and zoning. But this time we are tackling the flow of information. Welcome to Data Center Deep Dive, Part Two: Lies, Secrets, and Speculation.
Developers and politicians alike are hiding the truth, speculating, and straight-up lying about data centers in order to get them approved.
These deals are done in the dark.
What do corrupt politicians and big developers have in common? They really don't like taxpayers and constituents sticking our noses in their business. Whenever large development deals like data centers are being worked out, developers and politicians do their very best to keep the deals secret.
Data centers in particular absolutely thrive off of secrecy from the beginning of their projects.
They typically try to buy parcels of land that are not in high demand on the open market quickly and quietly through shell corporations, to make sure that nobody knows that massively wealthy tech firms are the ones interested in buying the property. This secrecy keeps their real estate prices - and the taxpayers’ property tax revenue - low. Good for them, bad for us.
They continue the skullduggery by using non-disclosure agreements: legal documents that prevent the public from knowing certain details.
Last year, when Google sought to build a hyperscaler AI data center in Franklin Township, they were able to convince Councilor Michael-Paul Hart to sign an agreement stating that he would not so much as reveal the name of the company interested in this massive project.
This secrecy makes it incredibly difficult for regular people to determine whether a company can be trusted as a new neighbor! And the government’s secrecy in proposing tax breaks and other incentives makes it difficult to determine if government agencies are selling us out.
Commitments and promises aren’t worth the paper they’re written on.
After all, it seems that very few government agencies can be trusted to hold companies to their promises or regulate them appropriately.
Big Tech usually promises that their new data centers will pay their own way. But can they prove it? Utility companies and the captured regulatory agencies that theoretically govern them have overseen massive increases in regular people’s electricity bills, and have not provided much data explaining this.
The permitting and enforcement for these massive generators is overseen in Indiana by the Department of Environmental Management. Governor Braun has “modernized” this agency and struck as many protections as he could under federal law. The federal agencies that provide a backstop to Indiana’s regulation are similarly being destroyed.
The rules are weak, the enforcement is lacking. But even in that context, Big Tech gets away with simply shocking amounts of bad behavior, often without punishment. In Fayette County, Georgia, a data center company drew almost 30 million gallons of water that they hadn’t paid for while building their campus - causing low water pressure for residents nearby and causing the local government to tell regular people to stop watering their lawns. The local regulators declined to even issue a fine for this $147,000 worth of stolen water, since the company was too big to risk angering.
Here in Indianapolis, data center developers have repeatedly gone back on their commitments. Metrobloks promised Martindale-Brightwood residents that if residents were unconvinced with their sales pitch, they would withdraw their proposals and not seek to build their data center. They lied!
DC Blox, the company seeking to build a new data center campus near the Pennsy Trail and Kitley, told me directly on April 10th that they would only need three generators for the first building they were bringing online, and a total of 20-26 generators if demand required further expansion years down the line. Six weeks later, they’re saying they will need about twice as many generators as they previously estimated.
Don’t trust politicians.
Not to rehash my drinking game from a few weeks ago, but it’s worth commenting on all the weak, misleading, or downright dishonest statements that political leaders in Indianapolis have made about data centers.
Ron Gibson claimed on the radio that the Metrobloks project wouldn’t use diesel generators.
Joe Hogsett claimed that he doesn’t get involved in data center development.
Vop Osili claimed in January that he was going to be releasing a data center guardrails proposal within 30-60 days.
Mike Braun has promised that small modular nuclear reactors would help pay for the cost of data center energy, despite this technology being years away from its first rollout on the continent and almost certainly prohibitively expensive.
AI is a bubble.
Finally, it’s important to discuss the economics underpinning the massive expansion of data centers.
Last year, 75% of all venture capital investment in the United States went to AI.
But there’s a problem: this unprecedented level of investment simply isn’t enough to actually make AI profitable! In order for Amazon, Meta, Microsoft, and the other massive firms to create as much compute power as their models require, these firms would need to spend $500 billion a year on new data centers. This much capital expenditure would require $2 trillion in new revenue per year for these companies.
Big Tech company leaders are quite clear in their explanations of how they could ever possibly make these mind-bending investments ever pay off for shareholders: by reaching “Artificial General Intelligence”, or AGI.
Our next Data Center Deep Dive newsletter will talk about what happens if the tech titans do create this fantastical sci-fi level artificial intelligence. But for now, let’s just look at what actual AI scientists think is the most likely:
AGI will not be possible even in lab settings before these companies will run out of money to invest.
Regular people will get stuck holding the bag.
When the dot-com bubble burst in the year 2000, the stock market crashed and took 15 years to return to its previous level. Massive numbers of people lost their life savings. Tens of thousands of people lost their jobs. But new companies like Netflix took advantage of the massive overbuilding of the fiber optic network to make themselves rich in the next wave of investment.
When the housing market bubble burst in 2007-2008, five percent of the United States lost their jobs. Millions of people lost their life savings and millions more lost their homes. The banks that had a huge role in the crisis were rescued, and Amazon and Netflix made record profits by buying up assets at cheaper values.
When the AI bubble bursts, we know what to expect without a massive political response that holds the powerful accountable: the United States will have massive numbers of newly-built, last-generation, fossil-fuel-fired power plants that no longer have the demand to justify their existence, which would cause utility bills to skyrocket for us regular people. Massive numbers of current data centers would quickly turn into empty boxes that once held computer equipment. Regular people’s retirement accounts will take a massive hit. Huge job losses and a severe recession are almost inevitable in such a scenario.
Don’t despair! A better world is still possible. But the stakes are dire, so we need to get organized and get ready for a fight. For now, keep working with me to fight the data centers in Indiana. Stay tuned for the next data center deep dive in this newsletter.
PS - this newsletter and video represents a good five hours of effort. If they are meaningful to you, throw a few bucks my way so I can keep making them!
In love and solidarity,
Jesse