AI and Virtual Currency Spotlight Drive Data Center Surge
Power Demand Unmanageable with Nuclear and Thermal Power Generation
Analysts suggest that Donald Trump, the President-elect of the United States, whose investment enthusiasm lies in artificial intelligence (AI) and the cryptocurrency industry, could paradoxically boost the clean energy industry's boom, which he has criticized.
The Wall Street Journal (WSJ) reported on the 25th (local time) that "Trump's passion for AI and cryptocurrency could have unintended consequences," adding that "the clean energy industry, which he has criticized for years, could be revitalized."
The reason the clean energy industry is expected to benefit indirectly is that AI and cryptocurrency businesses are "electricity guzzlers." The power consumption of data centers required to train large language models (LLMs) or mine cryptocurrencies cannot be met by fossil fuels alone. As a result, big tech companies are rushing to promote nuclear power projects, but completion is expected to take at least 10 years.
Kevin Cramer, a U.S. Senator who served as an energy policy advisor to Trump during the 2016 U.S. presidential election, pointed out, "We already do not have enough electricity to meet the demand of data center farms, whether for AI or cryptocurrency," emphasizing that the U.S. needs as much energy as possible, including renewable energy and fossil fuels.
Accordingly, the market is preemptively reflecting the U.S. energy shortage situation caused by the expansion of data centers. The stock price of Vistra, a power company recently expanding its business portfolio into clean energy, has risen more than 270% this year, and the price of the exchange-traded fund (ETF) 'XLU,' which invests in U.S. utilities such as electricity, gas, and water, has also increased by 20%.
Sheldon Kimber, CEO of Intersect Power, evaluated, "Renewable energy is ready to supply what no one else can immediately," adding, "Its growth will be explosive." Intersect recently partnered with Google on a renewable energy generation and battery storage project for data centers, investing $20 billion over 10 years.
The most closely watched variable in the market is President-elect Trump. During the election campaign, he repeatedly pledged to repeal the Inflation Reduction Act (IRA), which includes clean energy transition and greenhouse gas reduction plans, after taking office. As a climate crisis skeptic, Trump has also signaled his intention to withdraw from the Paris Climate Agreement again after inauguration, as he did during his first term.
However, WSJ pointed out that "Biden's climate law has bipartisan support, and although Trump criticized wind power and electric vehicles, he softened his stance on electric vehicles after Tesla CEO Elon Musk endorsed him," indicating that Trump’s critical position on the clean energy industry could change at any time.
Earlier this month, Trump nominated David Sacks, former COO of PayPal, as the White House AI and cryptocurrency czar, emphasizing that increasing energy production is crucial to winning the AI arms race against countries like China. He also declared that all permitting processes, including environmental approvals, would be expedited for individuals or companies investing more than $1 billion in the U.S. Since clean energy requires massive costs to build transmission infrastructure, this administrative reform is expected to be the biggest beneficiary industry.
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