Complex Systems with Patrick McKenzie (patio11)

AI, data centers, and power economics, with Azeem Azhar

Feb 27, 2025

Azeem Azhar, writer of the Exponential View newsletter, dives into the transformational impact of AI on our energy infrastructure. He discusses the massive data center buildout and the historical parallels with past infrastructure investments. Topics include the evolution of computing, the complexities of data center cooling, and the future of energy with innovations in solar and nuclear power. Azeem emphasizes the urgent need to rethink our understanding of computing and energy systems to adapt to these rapid changes.

01:13:53

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Azeem Azhar

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Episode notes

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Quick takeaways

The evolution of data centers reflects a significant increase in energy consumption, necessitating robust cooling systems that consume 40% of total energy used.

Investment in AI and its infrastructure is surging, outpacing the telecom boom, which signals a transformative shift in the competitive market landscape.

The energy infrastructure is under strain due to AI's growing demands, requiring innovative sources like small modular nuclear reactors and enhanced solar energy solutions.

Deep dives

The Evolution of Data Centers

Data centers have undergone significant changes over the decades, transitioning from basic infrastructure to modern facilities capable of handling vast data processing needs. Contemporary data centers are densely packed with high-performance components that require substantial electrical power, with each rack demanding around 130 kilowatts, a steep increase from past decades. This densification not only escalates energy consumption but also necessitates robust cooling systems to manage the heat produced by these operations, with approximately 40% of energy used for cooling alone. The evolution highlights a shift in operational dynamics, where infrastructural investments mirror historical trends of intense capital deployment seen in past eras, like railroad expansion.

Intro

2min

Infrastructure and AI: Lessons from History

17min

Evolution of Computing and Data Center Infrastructure

5min

Cooling Complexities in Data Centers

12min

Evolving Energy Landscapes

23min

Innovations in Carbon Capture and Energy Management

2min

The Future of AI and Energy Systems

12min

Patrick McKenzie (patio11) is joined by Azeem Azhar, writer of the Exponential View newsletter, to discuss the massive data center buildout powering AI and its implications for our energy infrastructure. The conversation covers the physical limitations of modern datacenters, the challenges of electricity generation, the societal ripples from historical largescale infrastructure investments like railways and telecommunications, and the future of energy including solar, nuclear and geothermal power. Through their discussion, Patrick and Azeem explain why our mental models for both computing and energy systems need to be updated.
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Full transcript available here: www.complexsystemspodcast.com/ai-llm-data-center-power-economics/

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Recommended in this episode:

Azeem’s newsletter: https://www.exponentialview.co/
Azeem Azhar’s guest essay: The 19th-Century Technology That Threatens A.I. https://www.nytimes.com/2024/12/28/opinion/ai-electricity-power-plants.html
Electric Twin: https://www.electrictwin.com/
Video of Elon Musk’s Colossus https://www.youtube.com/watch?v=Tw696JVSxJQ
Complex Systems with Travis Dauwalter on the electrical grid: https://open.spotify.com/episode/5JY8e84sEXmHFlc8IR2kRb?si=35ymIC0UQ5SKdV8rrBcgIw
Complex Systems with Austin Vernon on fracking: https://open.spotify.com/episode/0YDV1XyjUCM2RtuTcBGYH9?si=YshjUXPEQBiScNxrNaI-Gw
Complex Systems with Casey Handmer on direct capture of CO2 to turn into hydrocarbon: https://open.spotify.com/episode/0GHegWgLSubYxvATmbWhQu?si=xNYBjn0ZTX2IT_pAZ5Ozsg

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Twitter:

@azeem

@patio11

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Timestamps:

(00:00) Intro

(00:27) The power economics of data centers

(01:12) Historical infrastructure rollouts

(04:58) The telecoms bubble

(06:22) Unprecedented enterprise spend on AI capabilities

(11:12) Let's have your LLM talk to my LLM

(16:44) Is there a saturation point?

(19:25) Sponsors: Safebase | Check

(21:55) What’s in a data center?

(24:52) The challenges of data centers

(29:40) Geographical considerations for data centers

(36:53) Energy consumption and future needs

(40:48) Challenges in building transmission lines

(41:35) The solar power learning curve

(43:51) Small modular nuclear reactors

(51:26) Geothermal energy and fracking

(01:01:34) The future of AI and energy systems

(01:12:57) Wrap

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