Blackstone (NYSE:BX), the world’s largest alternative asset manager, is eager to meet its newest tenant — your data. In a well-timed purchase, Blackstone spent $10B to acquire data center operator QTS Realty in 2021. Since then, the demand for AI, machine learning, and digital infrastructure has skyrocketed — leading companies like Microsoft (NASDAQ:MSFT) and Meta (NASDAQ:META) to house their data in QTS facilities.

QTS is currently constructing over $15B worth of new data centers, seizing what could be one of its most lucrative investment opportunities to date. Despite the swift leasing of QTS buildings, America isn’t entirely prepared for the data revolution that is now underway.

Code fast and break things: Data centers already consume ~2.5% of US electricity, and as AI usage grows, so will the demand for more data centers. However, resources are scarce, and local communities and utility companies are hindering digital expansion.

• Energy companies in Northern Virginia and California struggle to supply power to new data centers due to transmission issues and power capacity constraints.
• In states like Virginia and Oregon, local communities are pushing back against data center projects, fearing that the megastructures will increase residents’ utility costs.

The Big (resource) Short(age)

An average data center can consume 1-5M gallons of water and require more than 100 megawatts of electricity daily. With hundreds of data centers in development, analysts predict a 2x increase in water usage and a 3x increase in electricity consumption by 2030. Unable to rely on utility companies, data center operators are considering alternatives, including:

• Prioritizing locations with low electricity costs and ample water supply — often found in the middle of nowhere (a.k.a. rural Indiana or Oregon).
• Adopting clean energy sources to complement or entirely replace external power usage, such as by building micro-nuclear reactors.

Big tech solution: There’s nothing you can’t solve with billions in excess cash on your balance sheet. Microsoft and OpenAI’s Sam Altman are investing in emerging energy technologies like fusion, which has the potential to generate unlimited electricity at a low cost.