Unlike banks, grids have an obvious solution to this problem: stop supplying these players with energy when the grid is at significant risk of a black out.
In my thought process, an analogous statement might be, “if you ask for 10 kilowatts from the power company, that’s the power company’s problem. If you ask for 10 megawatts, that’s your problem. If you (an AI company) ask for a historic amount of power and your business fails if you don’t get it, then it’s your responsibility to ensure the grid can supply that much power.
The analogy with the bank just doesn't hold up.
the analogy sort of works if you flip a few things around, but it obscures more than it elucidate at this point.
Data centers/supercomputers/similar facilities have agreements to ensure uninterrupted power.
The grid would sooner cut off residential power than risk running foul of SLAs.
Most developing countries are very familiar with this, the technical term ‘load shedding’ having entered common parlance because of the frequency of power cuts faced by consumers.
> Every problem has an ‘obvious’ solution on the surface after thinking for ten seconds.
Is kind of a silly statement.
What’s the obvious way to automatically detect pictures of birds? Because diffusion and transformers are not it.
My cousin just (last year…) tried to do this as some extra credit high school thing.
The ‘obvious’ solution was detecting edges with a python library and manually writing up 4-5 functions to identify features.
It’s surprising that this even comes close to working.
Even then, grabbing an existing package is just offloading the solution discovery to someone else.
And offloading tricky logic to libraries is kind of how we build all software.
I’ve been programming since I was 9 and I don’t think that would’ve occurred to me when I was 17 lol
And yeah that is how we build all software, but just because someone else made a solution to something doesn’t mean that solution is obvious.
Others who are regular readers of IPCC publications might value the survival of big parts of earths habitable zones and the most densly populated costal areas higher. But priorities differ.
I happen to agree that Bitcoin has very dubious utility, but I suppose it has nailed the "store of value" use case, whereby you can send it anywhere without any friction, and also if you need to, say, escape the country during war or a natural disaster, it's much easier to remember 12 words than try to sneak gold through customs, while the cash you store in your house might be underwater. Bitcoin for many institutions is a digital commodity to diversify for tail risk etc.
Why would you do that when there is a strong likelihood that most of these LLM startups will be out of business within the next year or two.
I'm only half joking as from what I've seen of those involved, I would not put this type of consideration past them.
there is a lot of money behind AI, but i have yet to see any of them actually get us a use case which work reliably.
Not to mention, AI is fun and all, but that energy could be far better spend making the economy less reliant on fossil fuel.
Classic HN. You personally can't see the value of X therefore the entire market for X is wrong.
And, if you want to pay, you can pay a premium to have more 'secure' power. This is an option today, already. No need for any discussion about markets and 'government is holding back the free market'. There is already a market to pay for premium power. And the utilities can charge AI customers more if they want.
a part of the energy grid cannot handle the load being generated by all the solar being deployed, and upgrading the grid takes years. In the meantime, bussinesses and even households simply are not getting a new power connection unless they are deemed of enough importance.
There have been many years of build up to solar power. If the people running the grid haven't done their job then replace them with people who can.
It's shared infrastructure, mainly paid for by public funds. If a government decides the priority should be the millions over the few, that's what happens in a functioning government.
Or they can pay for their own power stations and infrastructure to be built.
If the power grid regularly can't handle the customers it has them it isn't a functioning power grid.
there is not and should not be an "open market" for power. the sale of electricity from the power grid is highly regulated, and for good reason. delivery to residential customers and essential services should always be prioritized over industrial bulk purchasers.
bulk purchasers already have the opportunity to use power sources that are not connected to the grid, if they want to use grid power they should be prioritized according to their benefit to society, not their cash on hand.
And sure, tell them they get disconnected first when there's a shortage. But a hard block is worse than taking their money and using it for improvements.
Usually you do the opposite: In exchange for a lower rate you will be the first disconnected in an emergency.
The fact that they have the capability to pay for and consume this power is the strongest signal that they are indeed providing value to society. The money comes from somewhere. If that turns out not to be the case, they have the strongest incentive to stop.
But this sort of rationing at the hands of some regulatory body has historically proven to be a far more deadly cure than whatever the presumptive disease was.
money is not a good indicator of value provided to society. there is a ton of ways where it falls apart, and there are a lot of people devoted to finding the ways they can collect the most money while providing the least benefit to society.
Ok, it's the least worst system we have...unless you have an alternative. I'm all ears.
we don't need to invent a whole new economic system. we can just say "this is bad, and we should do less of it". and making sure that power goes to people's homes before it goes to datacentres is one of those things. and the best part is that's the way the world already works, so nothing even needs to change.
Public vs private isn't black and white, it's a spectrum. Energy providers sit on this spectrum. In some way, they're public infrastructure. In others, they're private companies. Slightly pushing them more towards "public" via regulation is what we HAVE been doing for a long time. This shouldn't be setting off your communism senses. If it is, you have a fundamental misunderstanding of how the economy works in regard to these kind-of-public-infrastructure goods and services.
Capping prices and participants is pure stupidity. Price controls and rations never work
In a Western society, everyone's needs are supposed to be equally important. We often don't even make majority decisions, because we assume that the constitutional rights of a minority are more important than what the majority finds reasonable.
What do you think prices do? What do you think income is reflective of?
Companies that make lots of money provide things that lots of people are willing to pay for. This is the reflection of what people need. Exxon makes money because people want to stay warm. Cargill makes money because people want to eat. Apple makes money because people want to be entertained. Eli Lilly makes money because people don't want to die.
What do you know that millions of people all acting in their own self interest don't know?
It isn't meant to be fair. Fairness blunts the signal.
In our current society, children can benefit from the wealth and social connections of their parents. That gives the needs of some people additional weight in the market without any actual merit. To get rid of that market distortion, children would have to be raised collectively without any contact to their parents.
There is a lot of wealth that has been created with business practices that later became illegal. Because we prefer not to punish people for actions that were legal at the time, we let people keep that wealth. But if we want the market to prioritize the needs of the current society, such wealth would have to be confiscated.
A society where the market actually reflects the needs of the society would be incredibly dystopian.
That education of the poor is important, perhaps?
In reality, I'm pretty sure they do know that. Which is why they vote for politicians ensure the poor are educated, regardless of the fact that that can't necessarily pay for it at the time. They don't rely purely on laissez-faire capitalism to determine all our social policies.
The Environmental Protection Agency (EPA) has many accomplishments, including: Reducing air pollution The EPA has reduced air pollution by regulating auto emissions, banning pesticides, and cracking down on factory and power plant emissions. New cars are now 99% cleaner than 1970 models, and the EPA's efforts have led to a decrease in smog and asthma cases.
Cleaning up toxic waste The EPA has cleaned up toxic waste through the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund), which provides funding for cleaning up abandoned waste dumps. Protecting the ozone layer The EPA has protected the ozone layer by reauthorizing the Clean Air Act in 1990 to phase out chemicals that deplete it.
Increasing recycling The EPA has increased recycling. Revitalizing brownfields The EPA has revitalized brownfields, which has led to increased property values, reduced impervious surface expansion, and reduced residential VMT.
Reducing water use The EPA's WaterSense program has helped Americans save water, with a cumulative savings of 8.7 trillion gallons as of the end of 2023. Banning cancer-causing pesticides The EPA has banned or restricted many cancer-causing pesticides, including heptachlor, chlordane, EDB, daminozide, and chlorpyrifos.
Testing schools for asbestos The EPA required all primary and secondary schools to be tested for asbestos starting in 1982.
Rating energy efficiency of appliances The EPA introduced the Energy Star program in 1992 to rate the energy efficiency of household appliances. EPA History: Documents about Agency Accomplishments | US EPA Nov 17, 2023
Generative AI is experimental.
Gullible investors for now.
This is not how the grid works in the US. Industrial is very frequently critical and gets higher priority over residential. Outages at major industrial operations can cost millions in lost revenue and can cause direct damage to hardware.
The grid absolutely is a market and should be. Reliable power at fixed prices is a thing you can try to buy from it, but that’s by no means guaranteed.
...but generally not a free market in most jurisdictions. The Texas grid is an ongoing experiment, and yet even the Texas legislature had to step in to bail out[1] providers' massive losses from with very high energy spot prices - it turns out the demand for energy is pretty inelastic at below-freezing temperatures.
1. Via a surcharge on all future customers. That's not very free market of them.
In Texas it’s just a different pricing structure with instantaneous pricing. That’s not more or less free market.
The state government stepped in to socialize the losses incurred by private companies during the last snowstorm. Perhaps we can call it "Free markets with Texan characteristics"?
* Except big players will never go under, and substantial losses are socialized
In exchange they get a much better price on energy with the respective risks attached.
Part of the problem is the AI companies are unwilling to sign long-term power purchase agreements. That means the utility is on the hook for both the capital cost of the development and the risk of unloading a bunch of excess power if the tech company decides to relocate.
That may also be circumstantial evidence that they don't quite believe all their own hype.
No company, particularly one with negative cash flows, wants to saddle itself with long-term liabilities.
There might an opportunity for useful financial engineering: instead of a fixed power purchase agreement, one which floats and is married to a no-shop commitment.
For example: start-up agrees to purchase 10 units of power at a fixed price for 10 years. It has the option of only purchasing 9 units, but must pay a 20¢ fee on the unpurchased power. In this way, if the start-up hits a rough patch, the burden is shared in a way that is meaningful to the start-up's surival probability. In exchange, the start-up commits to not reducing its power purchase while ramping up usage with someone else, presumably at a lower rate, and, once lowered, commits to ramping up its usage with this provider before ramping it up with anyone else.
Now here is the critical part: the utilty doesn't hold that risk. Instead, it pays a fee to a hedge fund or endowment or whatever by which that party agrees to make up the 80¢ (or some fraction of it) on unpurchased power.
In summary, the utility winds up with a reliable cash stream in all worlds except the start-up failing. (One could mitigate that risk by requiring some pre-funding.) The start-up gets a long-term, guaranteed-price source of power. The hedge fund gets a weird financial thing to play with. (A natural provider of that guarantee would be one of the tech giants. I like the idea of it going into the market because one can see those contracts being aggregated and thus diversified.)
Google could entice someone to invest in generation capacity for a new AI datacenter by agreeing to buy their output for a few years, or building their own generation. Then if the AI thing doesn't work out, use that power for their existing data center uses, i.e. move the existing servers into the AI data center. That would be essentially shifting the risk to the power company in the location where the existing data center is, even if that's not the same one they have the power purchase agreement with.
We should work out a mutually beneficial agreement - I think it makes no sense to nationalize energy providers off the bat. But, part of that agreement should be ensuring energy for residential areas. And if that requires cutting off energy pigs in the meantime, so be it.
And that single customer is paying more than likely millions of other customers.
Notably, if the grid has a good PR/marketing department, those customers are a lot more likely (individually) to take a black out ‘for the greater good’ than the data center.
See California’s rolling blackouts, etc. in the past.
While your suggestion is the morally correct thing to do, you’re forgetting the other option makes more money and will always be taken.