The burgeoning artificial intelligence boom, driven by tech titans like Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Meta Platforms Inc. (NASDAQ:META), Microsoft Corp. (NASDAQ:MSFT), and Amazon.com Inc. (NASDAQ:AMZN) relying heavily on Nvidia Corp. (NASDAQ:NVDA) powerful GPUs, could lead to a dramatic doubling of electricity rates within the next five years.
Chamath Warns Of Doubling Electricity Costs Because Of AI
This stark warning comes from venture capitalist Chamath Palihapitiya, as highlighted in a recent X post by Shay Boloor, Chief Market Strategist at Futurum Equities.
Palihapitiya underscored the severe strain AI data centers are placing on existing power grids. “If we don’t find some compelling solves, electricity rates will double in the next five years,” he stated in the video, emphasizing the looming financial burden on consumers and businesses alike.
The sheer demand for gigawatts of power to fuel AI compute capacity is rapidly outpacing the grid’s ability to keep up.
A PR Crisis In Making For Big Tech Firms
The implications extend beyond just higher bills. Palihapitiya predicts a significant public relations crisis for big tech if unchecked.
“This is a very complicated thing now… if you want to take big tech, which is already viewed negatively, and make their perception even worse… if you start to finger point to them and say these guys are the reason my electricity costs have doubled in the last five years, that is no bueno for them.”
He argued that companies like Google, Meta, Microsoft, and Amazon need to “find an off-ramp ASAP” to avoid widespread public backlash.
See Also: SPAC King Chamath Palihapitiya Tells Retail Investors To Stay Away From His New SPAC
AI Woes: Excess Energy Consumption And Reducing Jobs?
The sentiment suggests a brewing resentment, where the transformative benefits of AI could be overshadowed by its perceived environmental and economic costs.
“It’s a bad look because what are your offerings doubling, this could take your jobs right,” Palihapitiya added, touching upon the dual anxieties of automation and rising living costs.
A Solution Lying In Space-Based Data Centers?
To mitigate this impending crisis, Palihapitiya pointed towards innovative, albeit futuristic, solutions.
Boloor’s X post summarized Chamath’s vision: “He says limitless solar energy & zero cooling could power the next wave of AI compute,” suggesting that solutions like AI data centers in space could offer a viable alternative to the terrestrial grid’s limitations.
These extraterrestrial facilities, leveraging constant solar exposure and the vacuum of space for cooling, could provide the sustainable, high-capacity infrastructure needed for the next generation of AI without further burdening Earth’s resources. The race for AI dominance now appears to be a race for sustainable power.
Price Action
Here is a list of some AI-linked exchange-traded funds that investors can consider.
| ETF Name | YTD Performance | One Year Performance |
| iShares US Technology ETF (NYSE:IYW) | 23.76% | 31.32% |
| Fidelity MSCI Information Technology Index ETF (NYSE:FTEC) | 21.64% | 30.20% |
| First Trust Dow Jones Internet Index Fund (NYSE:FDN) | 14.05% | 31.02% |
| iShares Expanded Tech Sector ETF (NYSE:IGM) | 24.27% | 33.12% |
| iShares Global Tech ETF (NYSE:IXN) | 24.03% | 29.09% |
| Defiance Quantum ETF (NASDAQ:QTUM) | 33.72% | 76.66% |
| Roundhill Magnificent Seven ETF (BATS:MAGS) | 18.96% | 38.23% |
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, declined on Friday. The SPY was down 0.0015% at $669.21, while the QQQ fell 0.42% to $603.18, according to Benzinga Pro data.
The futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were higher on Monday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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