There is a lot of paranoia about AI. And we should be worried about it taking jobs too quickly, worsening inequality and mental health effects.
But you also need some perspective. Not everything AI-related is a cause for concern.
Water is one. In my view, data centres using water are a local issue; their overall use is trivial. What I mean is that relative to a household, data centres use a lot of water.
But so do farms, golf courses, many industrial processes, electricity generation, and a whole host of other human activities. If you are worried about local water usage and you have a choice between an almond farm and a data centre, take the data centre.
Some perspective comes from Semi Analysis, looking at the total (blue) water usage of Collosus 2 (Elon’s new 400MW data centre) vs the water usage of an average In-N-Out burger restaurant.
For those so inclined, you can read about wet vs dry cooling systems, adiabatic assists, and their relationship to the climate in Memphis. And then compare that to the blue water intensity of beef farming in south western USA. For the rest of you:
Colossus 2’s blue water footprint is around 346 million gallons per year, while an average In-N-Out store (yes, burgers only) comes in at around 147 million gallons. That’s roughly a ~2.5 : 1 ratio. We’ll let the reader decide what to make of the important information that one the largest datacenters in the world only consumes as much water as 2.5 In-N-Out’s.
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A single burger’s water footprint equals using Grok for 668 years, 30 times a day, every single day
…Oh, one last thing – Elon’s ace up his sleeve – the water treatment plant. xAI is already building a water recycling plant… …expected to more than exceed the cooling water needs, so Colossus 2 could even be considered a net zero water datacenter.
Net effect—data centres don’t use that much water.
I’d extend a similar argument to electricity. Usage is higher, but relative to everything else we use electricity for, it ain’t that much. There is a timing issue in energy: they want the capacity NOW. That is different from the volume issue: can the electricity network grow by 0.5-1%p.a. for the next decade. But more on that later.
Damien Klassen is Chief Investment Officer at the Macrobusiness Fund, which is powered by Nucleus Wealth.
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The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Damien Klassen is an Authorised Representative of Nucleus Advice Pty Limited, Australian Financial Services Licensee 515796. And Nucleus Wealth is a Corporate Authorised Representative of Nucleus Advice Pty Ltd.