Discussion
"Put simply, every time somebody builds a data center, they form a completely separate entity that owns the chips, owns the debt, and, in many cases, owns most of the risk. These SPVs only pay out to their creditors in the event that customer revenue flows in, which means that they are dependent both on the speed of construction of said data centers and their customers’ ability to pay."
#EdZitron, 2026
https://www.wheresyoured.at/the-subprime-data-center-crisis/
"The scenario I’m talking about is one where the vast majority of AI data centers go unused, and because the vast majority of data centers are paid out of customer revenues, 80% or more of the funds invested in AI data center debt will be lost."
#EdZitron, 2026
https://www.wheresyoured.at/the-subprime-data-center-crisis/
(1/2)
"None of this is written to be alarmist or hyperbolic, and represents a rational position when compared to the fact that we have over 15 times the amount of data center capacity than we need, and there is little compelling evidence that there’s more than a few billion dollars in total demand."
#EdZitron, 2026
https://www.wheresyoured.at/the-subprime-data-center-crisis/
As I've said before, the "AI" datacentre industry is like the intensive dairy industry, an inherently unsustainable real estate scam.
(2/2)
@strypey This is such an excellent article. But depressing. It was the final proof of my suspicio that this time they are going to collapse the entire global economy.
@violetmadder @strypey I think it will all collapse so thoroughly that they won't be able to do that. Rather we will all be picking over the corpses of data centres for graphics cards for gaming.
"... data centers (which are taking 18-36 months to complete) will start turning on, which will require them to start having paying customers at a scale that the market can’t actually support ... it’s much more likely that the collapse of the subprime data center bubble will happen in fits and starts as capacity comes online and, assuming Anthropic and OpenAI don’t swoop in, goes unused."
#EdZitron, 2026
https://www.wheresyoured.at/the-subprime-data-center-crisis/
(1/?)
Or, the grifters will keep the game of financial musical chairs going, by indefinitely delaying the completion of most "AI" datacentres. There's a wide range of things they could blame for the delays, from construction supply chains to labour organising.
Enabling them to artificially inflate demand-to-capacity ratios, using the same massively overinflated demand projections they've used for the current crop of datacentres. And on that basis, go out begging for funds to build even more.
(2/?)
Again, if you are a decision-maker at KiwiSaver, it's part of your due diligence to investigate what Ed Zitron, Cory Doctorow and others are saying about the risks of investing in the "AI" bubble, and get our money out of anything it touches ASAP!
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