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AI, Crypto Straining the Texas Power Grid

Amid all the other concerns about the nature of increased artificial intelligence is a new and ominous one for Texas: power drainage.

A blockbuster report from Evan Halper at The Washington Post shows that power companies have vastly underestimated the energy needs of computing power, a big chunk of which is now going toward AI and crypto currency mining. The computing needs of both are rapidly increasing. Data centers used 4 percent of the nation’s electricity in 2022. In 2026, that number is projected to be 6 percent, a 50 percent increase.

Texas is likely to see an enormous amount of energy being directed towards AI and crypto in the next several years. Mitsubishi announced an $800 million data center deal to be built in Dallas this week. Not to be outdone, Prime Data Centers LLC is building a $1.3 billion data center in  Caldwell County. All in all, at least $4 billion worth of data processing has been announced in Texas over the last two years, often in rural counties.

While out-of-state investment is usually welcome, there are problems with these massive centers. First, they do not create many jobs. Built in sparsely populated areas, only about 25 percent of the jobs they create go to locals, mostly in low-paying janitorial and maintenance roles. Companies tend to fly in specialists to handle the work.

Second, by building in rural areas, these power sinks overload the grids. Aging power infrastructure used to providing the needs of small towns buckle under the demand from AI, crypto mining, and other data center processes. It is essentially like introducing a dragon to a small cattle ranching community and having to fight it for access to livestock.

According to the Post report, some companies are trying to get around this in innovative ways. A South Texas data center project from Michael Halaburda and Arman Khalili will drill thousands of feet into the Earth’s crust to try and pull power geothermally.

There has also been talk about expanding the state’s nuclear power capacity. Unfortunately, nuclear plants are very slow to build. Two plants have been greenlit since 2016 and gone nowhere. There is hope that pre-made modular plants might speed up the process, but they are not likely to start hitting the market until at least 2027.

The needs of AI for power is a fairly new thing, but the crypto mining problems are well established. Companies have processed to shut down during peak hours, such as during heat waves, but they have been extremely cagey about sharing documentation with state and federal authorities to prove they actually do so. A single bitcoin transaction uses more power than the average U.S. household requires for an entire month.

The Electric Reliability Council of Texas shows that crypto is already using more power than Houston and Dallas-Fort Worth combined. With the state still struggling to expand its power capacity and refusing to be connected to the national grids, AI is likely to put even more strain on a dangerously overloaded system. 

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Jef Rouner
Jef Rouner
Jef Rouner is an award-winning freelance journalist, the author of The Rook Circle, and a member of The Black Math Experiment. He lives in Houston where he spends most of his time investigating corruption and strange happenings. Jef has written for Houston Press, Free Press Houston, and Houston Chronicle.


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