Alright, let's break down why this whole OpenAI situation is a five-alarm fire of pure, unadulterated bullshit. Sam Altman is running what is essentially the world's most expensive and dangerous confidence game, and everyone in the media and tech world is just nodding along.
First, let's talk about the sheer, mind-boggling scale of the promises. OpenAI, a company that is hemorrhaging cash, has committed to building 250 gigawatts of data center capacity by 2033. To put that in perspective, the entire global data center capacity right now is about 55GW. So Altman is promising to build almost five times the entire world's current infrastructure in just eight years. The cost for this fantasy? Roughly $10 trillion. That is not a typo. That's one-third of the entire US GDP. It's a number so large it becomes meaningless, like a child saying they want a billion ice creams.
Now, let's get into the immediate, short-term insanity. In the next year alone, to even begin fulfilling the deals they've announced with Broadcom, NVIDIA, and AMD, OpenAI needs to secure about $400 billion. Let that number sink in. That's more than the total global venture capital raised in all of 2024. It's more than five times what Amazon spent to build AWS. And they need this cash almost immediately because building a single gigawatt data center takes years and billions of dollars upfront. There's also no evidence these data center projects have even broken ground, making the promised 2026 deployment dates a physical impossibility.
The financials are even more horrifying. OpenAI is burning money at a catastrophic rate of $6.7 billion on R&D in just six months, with a huge chunk of that spent on research for models they never even released. Their revenue is a fraction of their costs, and they're on track to spend $40 billion on compute contracts alone. It's a monstrosity that threatens to suck all the oxygen out of the Western financial system, requiring trillion-dollar annual investments that would eclipse global private equity deals.
The whole house of cards is built on blatant lies and market manipulation. Some verifiable lies include Altman claiming they magically acquired 1.7GW of capacity from nowhere (which is equivalent to all the data centers in the UK) and promising deployments in locations that don't exist.
It's a scam of historic proportions that will inevitably collapse and take the market down with it.
In a way, the AI race is starting to mirror the Cold War arms race. Back then, the US used its economic might to outspend the USSR on military tech, forcing Moscow to divert scarce resources from areas that improved the standard of living, such as light industry, towards the military.
From a strategic perspective, the US has no choice but to do what they’re doing. AI has the potential to provide predictive power to model things like the state of the global economy, to make correlations between events that would otherwise would not be found, to do automation, etc. Even if there's a very small chance of the really outlandish promises of being true, they would be game changing.
In my opinion, the looming energy crisis is the real story here. The US power grid is already running on a razor's edge with reserve margins sitting at a scary low 15%. As more data centres keep getting deployed, the emergency buffer for heat waves, unexpected outages, and so on, is about to get swallowed whole.
The problem is you can't just wish new power plants into existence. Building new generation, whether it's a gas plant, nuclear, or renewables with their storage needs, takes the better part of a decade and has gotten brutally expensive thanks to the trade war. So we're about to see a classic supply and demand shock. A massive, constant, and inflexible new demand from AI data centers is going to slam into a power supply that can't keep up. The inevitable result is that electricity prices are going to go parabolic for everyone, not just the tech companies.
As a result, we'll see a cascading effect on the broader economy. First, grid stability becomes a national issue. Those rolling blackouts that were a regional problem in Texas or California could become a lot more common as the system gets overloaded. Second, and more dangerously, it torpedoes US manufacturing competitiveness. The US spent the last decade leveraging cheap energy to keep domestic manufacturing viable. Now, the US is about to have Europe's problem, where prohibitively high energy costs make it unprofitable to run a factory. Essentially, whatever is left of the physical industrial base will have to be sacrificed to power the AI bubble, and the economic hangover is going to be brutal.
Yes, that's a third contradiction, that could lead to crisis. The demand for natural resources rises exponentially on a finite planet and interacts with all the other simultaneous crisis you mentioned. If the system were to move to mitigate this third crisis tendency, there might still be room to increase energy production, by accelerating the destruction of nature even further. Or, just hypothetically, by increasing pressure on cartels to move monopoly prices (gas, oil) closer towards lower, competitive prices. But this is unlikely, because it would actually destabilize and increase splits in the capitalist class, even short term.
All in all, this decisive move with AI, towards something that destabilizes the system midterm can only happen, because it stabilizes short term. E.g. via destroying value.
There are hard physical limits on what the US can do here. It's not just about lowering prices for gas or oil, it's having the facilities to actually produce energy. This is a problem that has no solution in the short term. I get the impression that people in charge don't understand the problem either, and they're just assuming they'll be able to deal with it when the time comes. Ultimately, I very much expect that the fundamentals of the system will become further eroded.
Yes, exactly, but I don't think "the US" has agency enough to make that decision. Rather, the system is blindly moving towards the abyss because of uncaring forces driven by contradictions and the need to delay the crisis they inevitably cause. Or push them on other people, like Europe.
I'd argue that the agency is expressed in the federal government funnelling untold billions into this tech, and passing regulation friendly to these companies. The material conditions are the underlying driving factor of course, the decline of the US empire, the rise of China as a competitor, and so on, these are all tangible factors that influence the behavior of people within the system.