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What does it say when lenders struggle to find insurers to cover the risks of building mega data centres, being built by the big tech companies? While AI is taking off, the size and scale of the data centre investments and the data centres themselves are making projects uninsurable. Meta’s own $30bn data centre investment in Louisiana could only secure $4bn.
The insurability of these projects may create a risk transfer problem for the tech firms behind the data centre investments. If insurers won’t carry risk, then the risk is forced onto the balance sheets of the investors. Putting the tech investors in a difficult position, as they are reliant on the data centres to grow the supply side of AI, and their own profitability.
Then there’s the problem of needing enough power and water to keep the data centres running. With power consumption equivalent to that required to power cities, power consumption and outages are a risk. (See the note about the costs of power outages)
There’s also the small problem of war. The US-Iranian conflict has demonstrated the easy by which Amazon’s data centres can be targeted by drones. Drones that, for a relatively small cost, have been able to damage AWS facilities in the UAE. The only real solution is to bury them deep underground.
To top it all off with a cherry, lenders that refinance construction loans often require insurance coverage.
It’s feeling like a no-win situation. Several competing factors increase the complexity of delivering the AI infrastructure necessary to deliver AI infrastructure. Affecting the balance sheets of the tech firms looking to invest in building data centres.
@Thaddeus Dziekanowski
@Parava Security Solutions
#artificialintelligence
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