Artificial intelligence has been all the rage the last couple of years and it has integrated our lives whether we like it or not. And of them are brought to “life” thanks to data centers. 

Data centers that consume vast amounts of energy and water. An average 100-megawatt data center uses more power than 75,000 homes combined and drinks about 2 million liters of water per day. The largest facilities can consume up to 5 million gallons of water daily, as much as a town of 50,000 people. Yet these facilities keep multiplying, with new projects announced almost monthly. More than 160 new AI data centers have appeared across the US in just three years, a 70% increase, many in areas already facing water stress.

But here's a crazy question: do we actually need this many? In April 2025, McKinsey projected that all this computing power will cost $6.7 trillion globally over the next five years. However, demand isn't matching the hype. According to a July 2025 MIT study, 95% of AI pilot projects are failing.

Will Demand Justify the Investment?

The demand for AI applications may determine if this infrastructure boom ends in collapse. 

New AI data centers are popping up in the middle of nowhere. OpenAI and its partners, Oracle and SoftBank, kicked off their $500 billion Stargate project on January 2025, choosing Abilene, Texas. An area with abundant wind and solar power and plenty of empty space. 

Most existing tech hubs don't have enough power to train the latest AI models. But isolation carries risks. Data centers are typically financed for decades, but those at the cutting edge of AI could become obsolete much faster. Nvidia constantly improves its chips, requiring regular upgrades to cooling systems and other infrastructure. And with land so readily available, a competing builder with better and newer design can easily set up shop nearby, leaving older facilities stranded.

Communities Are Fighting Back

Between May 2024 and March 2025, $64 billion in data center projects were blocked or delayed due to community resistance. In the second quarter of 2025 alone, opposition surged 125%, with 20 projects worth $98 billion stopped or delayed.

The reason? Utility bills are climbing. In states with heavy data center concentration, residential electricity costs jumped 13% in Virginia, 16% in Illinois, and 12% in Ohio, double the national average of 6%. Add noise pollution and how much of an eyesore these data centers are, and communities see little upside.

In Arizona's West Valley, developer Tract withdrew a $14 billion project after residents pressured local authorities. In Louisa County, Virginia, Amazon Web Services pulled its 7.2-million-square-foot proposal in July 2025 after extensive community meetings. 

The Economy Depends on This Bet

To deal with these challenges, companies are designing insurance contracts and securitizations to spread risk. NVIDIA is offering vendor financing and cross-investments to reassure partners. But if things go wrong, this could make things worse.

The scale of dependence is striking. According to Harvard economist Jason Furman, US GDP growth in the first half of 2025 was almost entirely driven by investment in data centers and computing technology. Excluding these, GDP growth would have been just 0.1%.

Andrew Odlyzko of the University of Minnesota, who studies infrastructure manias from 19th-century railroads onward, used to downplay the risk of an AI collapse. He believed tech giants could write off failed data center investments without much damage. Now he's much more worried because of how many companies are making massive capital commitments.

Who Pays When It All Falls Apart?

When these bubbles burst, ordinary people pay the price while executives potentially walk away unscathed, or even richer.

In The Global Financial Crisis of 2007-2010 the American government pumped $700 billion in taxpayer money into failing banks through the Troubled Asset Relief Program. What did those banks do? Citigroup paid $5.33 billion in bonuses for 2008, giving 738 employees bonuses of at least $1 million, even after losing $18.7 billion that year. Bank of America handed out $3.3 billion in bonuses after receiving $45 billion in bailout funds. 

And prison time? Over 1,000 executives went to jail for the savings and loan crisis in the 1980s and 1990s. For the 2008 financial crisis, which destroyed the global economy, just one person was prosecuted. Those who suffered were the millions of families who lost their homes, businesses, or savings. The millions of workers who lost their jobs and faced long-term unemployment. The millions who fell into poverty. Meanwhile, executives who resigned often did so with lavish “golden parachutes”.

When the AI data center bubble bursts, with 95% of AI projects already failing, trillions in questionable loans, and the banking system deeply exposed, who do you think will be asked to foot the bill?

Not the executives who approved $100 billion vendor financing deals. Not the billionaires who made fortunes building data centers in remote deserts. Not the private equity firms or sovereign wealth funds.

It will be us, the ordinary people watching our utility bills climb, our water supplies drain, and our tax dollars disappear into another “too big to fail” rescue. We'll be told it's necessary to save the economy, just like in 2008. And once again, the people who created the mess will walk away wealthy while working families struggle to survive.

So, will the data center bubble bust? Probably yes. Maybe it won't. But we should start asking whether those responsible will be held accountable when/if it does. 

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