Why Texas Is Making Data Centers Wait
a16z.com
a16z.com
And they want to mostly power it with on site GAS?!
What is even happening.
Think about it this way: when OpenAI was founded, it was a public benefit corporation. It had to take into account the "public good" - which is nebulous, but whatever - and capped returns for shareholders at 100x initial investment. It has since been converted into a for-profit corporation and I recall reading that the earnings cap has been done away with, but that should give you at least some idea of the stakes.
According to these guys [0], there has been a total of $180 billion invested in OpenAI since its founding. Assuming there's not been a change in what the shares were sold for to each round - which is a fairly large assumption, I know - for them to reach the 100x threshold that was apparently too low to be followed, the company would have to reach a valuation of $18 trillion dollars.
For what it's worth, the year-on-year GDP of the world's largest economy, the United States, was $32.56 trillion in Q2 2026. [1]
You don't reach a little over half of the economic output of the US in valuation by cutting costs.
[0] https://tracxn.com/d/companies/openai/__kElhSG7uVGeFk1i71Co9...
I don't think it's that big of a trend. There are a lot of people around forums like this who use it (I am one) and a lot of business leaders who want it so they can tell people like me that they need to find somewhere else to work. For the average person, it feels like living in Uncanny Valley and puts their livelihood at risk. They don't like it.
The resistance to AI is real. You don't see moratoriums and protests like this come out of nothing. People don't want to subsidize the infrastructure construction costs for an industry known for its insanely wealthy individuals, especially not if doing so could realistically put them out of a job within the next decade.
They're mostly not opting into some change from no appliances to a houseful of hardcore gaming, they're being led from a houseful of servicable traditional appliances to a houseful of elaborate whizzbang futurist appliances that don't actuallg change much about what they get done in a day.
And all the absurdly more costly resource demands of these received whizzbang doohickies are off-site, so yes, people get pretty shocked and confused when confronted with those extreme hidden costs.
> many of the people using it are using it becuase somebody else (a product vendor or employer) decided to put it in front of them
This doesn’t change the usage without a pendulum changing direction, and it doesn’t currently seem to be.
In 2025, Texas vented or flared enough natural gas to generate roughly 2 gigawatts of useful electrical power continuously for the same period.
https://www.eia.gov/dnav/ng/NG_PROD_SUM_DC_STX_MMCF_A.htm
A lot of gas is burned off simply because it cannot be delivered. Pipelines have a maximum capacity and short term storage is limited.
Most of the state's electricity comes from NG, so clearly there is a market for it. Not to mention heating, cooking, exports, ...
If those incentives come from that taxpayer then this is a roundabout transfer of tax money to gas companies.
This is a bubble. AI just got hot a few years ago and it takes years for the semiconductor industry to design and produce new kinds of chips at scale. I expect tons of new chips to hit the market in 27 and 28. These will run models much faster with less power because they are designed for this specific use case.
Meanwhile there’s constant ongoing research on more efficient models and ways of quantizing them without performance loss.
I get why the people in power want it, you can concentrate dependence on your asset, do surveillance and industrial espionage. But it's so obviously better to have the power distributed out among the people that it's a no brainer for the average joe/jane.
No doubt, there is still a need for large datacenters to generate models, but we should be looking to a more sustainable/distributed approach when it comes to inference, or running the models. That way people can keep their data, not have their ideas ripped off, not be subject to the whims of whatever policy some technocrat dreams up and not be shit out of luck if someone strikes us-east1 or some such place.
Oh, and the energy market that underpins the Texas grid was designed by Enron, literally.
https://www.npr.org/podcasts/1004840920/the-disconnect-power...
With zero threats from government?
The wind turbines were plentiful but lacked de-icing capabilities (another cost cutting measure).
Batteries are good, but my power was off for 72 hours. Some lost it for double that.
To your point "great since the freeze" why would a corporation take on significant costs for a thing that happens only once every decade or so. Much cheaper to let people freeze to death in their own homes.
Regulations don't take away the cost. But they level the playing field. Without them, the market will punish "excess" aka "redundancy". An operator who does the right thing will find themselves unable to compete. Not just decreased margins but possibly put out of business.
Which is why the real failure is the design of the market. And that fundamentally hasn't changed.
> "Great since the freeze"
I take it you know nothing about the back story and didn't listen to the podcast. Prior to this "great freeze" there was another "great freeze" and thing went well for a long time between them until they didn't. Virtually nothing structural that caused the conditions of the failure have changed.
I'm saying it was a problem, it's been addressed. We had one of our hottest Augusts on record this year without a single issue.
If you think it's structurally broken there are energies futures markets you could use to make a lot of money on.
> Austin Energy: ERCOT expects tight grid conditions, requests conservation Tue., Jan. 16, 6-9 am. Similar conditions expected Wed. morning. More info: ercot.com/txans . Conservation tips: austinenergy.com/alerts . > > ERCOT espera condiciones de red ajustadas, solicita conservación Martes, 16 de enero, 6-9 am. Se esperan condiciones similares el miércoles mañana. Más información: ercot.com/txans . Consejos de conservación: austinenergy.com/alerts . Responde STOP para cancelar. Reply STOP to cancel.
> it's been addressed. We had one of our hottest Augusts on record this year without a single issue.
No significant changes to weathercation regulation. No significant changes to the energy market. What exactly, from a systemic perspective, do you feel "has been addressed"? What little I see is too little.
> If you think it's structurally broken there are energies futures markets you could use to make a lot of money on.
What on earth? My problem is that the market is built to incentivize profit over preventing human pain and suffering. That's not a "make money here" opportunity.
1) That's assuming that they actually did fix the problems
2) The idea is to plan and regulate so you don't have market forces fixing problems when the problems are dozens of people freezing to death, massive structural damage to buildings, fires, and business stoppages.
I also would not be so confident about it never happening again, handling the summer well does not indicate necessarily that the winter will go smoothly, they’re different loads.
> AI is needed to reindustrialize America.
It seems like they have no idea or are willfully deceiving why Americans want to reindustrialize USA. It’s not because they feel bad that things aren’t made in USA anymore, it’s because they want those manufacturing jobs back. If you replace humans with robots, it’s almost like a monkey paw’s fulfillment of a wish. They want to build 2 Trillion of data centers to get rid of your white collar jobs and your blue collar job, and you’ll be happy for it cause GDP go up. SMH
The entire effort is dehumanizing. Because the goal is slavery.
Sure, some new fields will open up. But there's a good chance that the majority of us will be competing for physical jobs that robots aren't yet able to do. What other choice will we have, especially if prices keep rising and inference hardware becomes too expensive for normal people?
Now consider the effect on a market if the supply suddenly grows a lot, while demand stays largely consistent.
If the new capacity uses gas to deliver the power it will consume more gas than the USA exported last year.
So basically it will drive up costs _globally_ to a comic scale, for limited return (its already expensive to train new models, this will make it ruinously expensive to both train _and_ run)
the thing that people _will_ notice is that they will not be able to afford LNG (ie heating), but that will also drive up peak energy price, so summer nights will be very hot because peak generation can't kick in because all the gas is contracted out.
Then if AI actually works, more than it does now, it'll put loads of people out of work. This means that money supply dries up. This pushes up the cost of debt. Meaning that infrastructure gets _more expensive_
that and mass unemployment.
It just seems that all these clever people live in thier own little worlds, without bothering to look at how people around them will be affected.
I'd like to add the possibility that all these clever people did look at how people around them will be affected, and they either consider the personal gain to be worth the pain, or they think "if I don't do it, the other guy will!"
Economically speaking, each of them is behaving rationally. And since economics also tells us that locations refusing them will be left behind, we can't say no, right? And let's not even think about how much money these people are pumping into politics... IMO the obvious conclusion is that our economic system is fundamentally broken, because it affords far too much power to individuals.
As a thought experiment, consider that comparable mountains of money would have been available to massively increase the housing supply while making positive RoI, but it didn't happen because these people wouldn't have made enough money.
Lots of oil sites, oil refinery plants, (heck, even landfills) just 'flare' excess Natural gas today.
Biggest reason for that, is, they don't have the infrastructure to store that excess safely (at least around here, a lot of the landfill trucks are NG powered as a way to lower their fuel costs and lower flaring, but storing too much NG in one place makes for a fun terrorism target.) Natural gas is actually -way- worse for global warming than CO2, thus the flaring process.
Not saying that's a good thing. It would be better if companies saw the growing energy demand and figured out how to economically put power generation in place, back when such projects would have been cheaper to build. Alas the cost/benefit for that has usually been on the wrong side, to the detriment of us all.
Inference is 2/3rds of the power used in AI, and I expect the majority of inference to go local in the next 2-3 years, about the time these data centers will come online.
The other 3rd is training, and the major labs are training 6-7 times a year right now. But I suspect we will see a few things. 1) training iterations will slow as the improvements between training runs gets lower and lower. Is it worth spending an extra $500M(ish) for the small improvement in quality? Who is paying for that?
2) Training improvements and improvements in GPUs will require less power. Along with fewer training runs, as we add more and more tokens, the amount of power needed for a training run will likely asymptote at some point.
> This entire essay is so obviously Claude
Well we will know for sure on Nov 4 :) But I expect 99.999% of the reason is Midterms, that way politicians can say "We are stopping Data Centers". I expect that will change once they have to account for their bribes, known as political contributions in the US.
Normally that would earn you a 2AM all caps tweet labeling you a RINO or worse, and getting primaried. Instead, not a peep.
Which tells you its a ruse and he's in on it.
Texas rolled out the red carpet to corporate interests --- and then discovered that their electrical grid operation is totally inadequate to deal with the impact.
This is just one isolated example of a much larger issue related to the "AI race".
AI is power intensive and the "winner" of the "AI race" is likely be whoever can produce lower cost power and lots of it.
Flagging as misinformation
This is not just a wild-eyed thing invented by HN's favorite bad guy.
https://research.google/blog/exploring-a-space-based-scalabl...
Is it a good idea? Most likely not, the amount of issues they are going to have is going to be amazing.
oh and then solve data affinity whilst training.
oh and connectivity.
Oh and lossless RDMA over free space lasers.
Much as I hate musk, I do love the engineers that managed to make practical high bandwidth inter satellite communications possible. the optics and sensing needed to do that is wonderful.
but data centres in space is just such a stupid fucking idea. Sure you need to solve those problems, but like add some fucking solar panels to datacentres on earth and solve the same problem locally. Its literally the same problem. but you have connection, cooling and less cosmic rays
The ISS dissipates roughly 70kw of heat through 5000 square feet of radiator.
70kw is about 1-3 racks of ai compute.
https://www.nss.org/settlement/nasa/spaceresvol2/thermalmana...