Growing digital capacity and new challenges
Modern data centers are crucial in supporting artificial intelligence and digital services. They provide storage, processing, and analysis for huge volumes of information, including text data, images, and software code. Each year, demand for computing power increases, resulting in greater consumption of electricity, water, and rare metals. These resources are becoming critical for the industry’s continued development.
In recent years, the generative AI market has shown impressive growth rates—nearly 40% annually. Forecasts indicate that by 2032, the market could approach a trillion dollars. This leap requires a massive expansion of infrastructure, presenting the industry with new challenges: from seeking energy sources to optimizing construction and operating costs.
Types of data centers and their features
There are different types of data centers, each serving its own purpose. The largest of these are hyperscale centers, hosting tens of thousands of servers for numerous companies and government agencies. AI tasks are handled in specialized complexes based on graphics processors, capable of processing massive volumes of data. In addition, there are corporate, colocation, highly secure military and intelligence centers, as well as so-called edge centers located closer to end users to minimize latency.
These facilities require significant resources. In 2023, data centers in the US consumed about 4.4% of the country’s total electricity, and this share continues to grow. Hundreds of thousands of liters of water are used daily to cool the equipment. New cooling technologies and diversified energy sources, including nuclear power, are being developed to ease the strain on infrastructure.
Geography and uneven development
Estimates suggest there are around 11,800 data centers worldwide, with the US, Germany, the UK, China, and France leading the way. However, their distribution is highly uneven: in Africa, Latin America, India, and other Global South countries, they are almost absent. In the US, most facilities are concentrated in Virginia, Texas, and California.
This situation exacerbates the digital divide between regions. In Europe, progress is hampered by high costs and complex approval procedures. Meanwhile, in developing countries, a lack of investment and infrastructure prevents the creation of new data centers, which could lead to lagging behind in digital transformation.
Economic and Staffing Barriers
The construction and operation of data centers require significant investment. The average cost per megawatt of capacity reaches $9.5 million, while major projects can exceed a billion. The main expenses are associated with the purchase of copper, steel, aluminum, and other materials, the prices of which are rising due to tariffs and supply restrictions. A particular challenge is the reliance on rare earth metals, most of which are controlled by China.
A severe shortage of qualified specialists in technical and construction fields is also holding back industry growth. Immigration restrictions worsen the situation, making it difficult to attract the necessary workforce. To speed up construction, authorities in some countries are introducing simplified permitting procedures and exemptions from environmental inspections, but this is still not enough to meet soaring demand.
Impact on Energy and the Environment
Data centers have a significant impact on the power grid. To ensure uninterrupted operation, modernization of electrical networks and construction of new transmission lines are required. The issue of funding remains unresolved: there is ongoing debate about whether technology companies should bear most of the costs, or if these expenses will be passed on to consumers, which is already leading to higher rates.
Environmental risks are also becoming increasingly important. Site selection takes into account the threat of natural disasters, and backup systems are implemented to enhance resilience. National security concerns play a crucial role, influencing the placement of centers and technology exports. Furthermore, there is ongoing discussion about the need to ensure data compatibility and portability between platforms to avoid dependence on a single provider.
Outlook and Key Challenges
Despite high costs and complex challenges, data centers open up new opportunities for the development of industry, transport, healthcare, and education. However, job creation is mostly limited to the construction phase, with a small number of permanent staff required for operations. To unlock the full potential of digital infrastructure, it is essential to address issues of raw material supply, specialist training, permitting process reforms, and investment in the energy sector.
In the coming years, the success of countries and companies on the global market will depend on their ability to adapt to these changes. Only a comprehensive approach will ensure sustainable growth and maintain competitiveness amid the rapid development of artificial intelligence.
In case you didn’t know, the world’s leading tech giants such as Google, Amazon, Microsoft, and Meta are investing billions of dollars in building and upgrading data centers across the globe. These companies are not only developing their own cloud platforms but are also actively introducing innovative solutions in cooling, energy efficiency, and data security. For example, Google has been using artificial intelligence for several years to optimize energy consumption in its data centers, significantly reducing costs and carbon emissions. Amazon Web Services (AWS) remains the leader in both the number of cloud services offered and the volume of processed data, while Microsoft Azure is rapidly expanding its network of data centers in Europe and Asia. Meta (formerly Facebook) is betting on green technologies, building facilities with minimal carbon footprints. These companies are setting industry standards and shaping the future of digital infrastructure, impacting the development of the economy, technology, and society as a whole.
