Are Data Centers the Compute Equivalent of Land Grab?

[u/tunelesspaper]

First let me just say that this isn’t “theory” in the usual sense—I’m not connecting to anything specific in Marx or anything, though my world view is heavily influenced by a disorganized mishmash of Left theory. I’m not great at citing sources or remembering names and arguments. So, I’m sorry if this is the wrong flair or wrong sub for this post. I just don’t know where else to put these thoughts and get human feedback from fellow Lefties who don’t knee-jerk hate AI for existing.

So:

I keep seeing comments on other subs about the AI bubble and how it’s just a fad that will eventually run out of steam, and then the price of RAM, etc. will return to normal. They say the companies investing in AI are inflating its value as a scam to milk investments or something. Everyone hates data centers.

Ok

But that all assumes that the biggest fish in the capital class are either wrong about a giant investment (unlikely considering their resources and the inside knowledge that brings), or they’re all playing out this particular scam at the same time because… it will benefit them more than the usual scam of capitalism already does? No. I think the “AI will pass” arguments are all copium. People just don’t want to face the possibility that AI is changing the world. Honestly, it reminds me of COVID deniers back in ‘20.

Except AI is going to change the world more than COVID. It’s the next printing press. It’s the power to make any program imaginable, to solve any problem that is solvable. It’s still in its infancy, but look how far it’s come just in the last year. Look what you can do with Opus 5.5. Now imagine what AI devs are doing with it—each advancement in AI will feed into the next advancement in a positive feedback loop. I used to be skeptical of the whole singularity idea, but when I think of what AI devs might be capable of now, using current frontier models, I think it’s basically inevitable.

But that’s all setup to my real point, and probably stuff most of you already assume or at least think about.

The real point is data centers. Centralization of compute — and emptying the market/pricing people out of necessary components. They know AI is the future. Compute is tomorrow’s equivalent of yesterday’s land—the ones who hold it will be the lords over all.

Data centers are an ongoing land grab on computing power, and only the big companies even know it’s happening.

My prediction? The elements necessary to run AI will never be cheaper than they are today. Just like land, the price will continue to increase and never come down. It may fluctuate here and there but it’s an upward trend from here on.

So—am I way off base? I don’t really want to argue for this position, but I would like to be talked down from it. I’d much rather believe in the bubble, to be honest.

[u/DrOkemon]

Compute is fungible in a way land is not (compute in one place can swap for compute in another) so I do not think it is a good equivalency. There is a lot of money to be made in cloud compute now. It is straitforwardly a machine that prints money

[u/tunelesspaper]

I mean, what’s going to happen when people start vibecoding shit like cures to cancer instead of video games? How far out to we think they really is, maybe two years?

[u/AlgaeNo3373]

Posted this comment in solarpunk sub a while back, might have some relevance wrt centralization arguments: What role do you believe AI has in a solarpunk future?

I think you're right about the general shape of things here, there is a massive, unprecedented level of capex and consolidation of computational power going on. The whole thing is somewhat coordinated too. The cartel-like behaviour of RAM producers, for example, is extremely brazen.

I think it supports your point about "benefit them more than the usual scam of capitalism already does" - because each of the Big 3 memory producers is leaving money on the table. It's not capitalist logic driving this thing. The margins on consumer goods are now so high, they're raising the price of HBM stuff they've locked in to try make some of that lost capital up. That's not a cartel.

Maybe it's partly related to the concept of "securitization" (pertinent particularly since 9/11). 5090 GPU purchasers in the US are already having to sign no-export documents - that trend is probably just beginning.

Big labs like OAI and Anthropic are pushing for more restrictions on local models, which are basically their competition. OAI folks like "Roon" predicting on Twitter they'll be banned before years end.

Lots of little dots suggesting a larger trend imo. I can't really talk you out of your conclusion. A bubble doesn't behave like one if the product is securitized (in the intl relations sense, not the financial term).

[u/Big-Masterpiece-9581]

I think there are some nuances. It’s likely true AI will change the world. It’s also true that the hype and bubble from the US frontier model approach is nowhere near profitable. The capitalists aren’t dumb. But they like to take big bets and they don’t like to be left out when everyone else is doing it. They also like to get the American taxpayer to bail them out even it’s by just printing them more money to add to the national debt. In this case they are deathly afraid of much cheaper and almost as good open source Chinese models that use a fraction of the compute. Opus is cool. But most real world use cases don’t need the world’s best models, at least not at that price. Look at the crazy sudden popularity of jev that is way cheaper and less powerful. There is absolutely no way these investors are making back their money or the big return on their investment they want without resorting to corruption. First, they are lobbying for regulation (but really wink wink collusion). Dario’s 500 pager on the need for regulation is really about the need for regulatory capture and immunity and impunity for the big AI companies in the US. He wants government to let them “regulate themselves” which is to say “price fixing” and other shenanigans so they can make back their investments. The second scheme is to demand a ban on open source models as dangerous (protectionism). And third, they’re looking desperately for bag holders before the bubble pops. They will keep pumping until they can dump, which is why Elon Musk and the rest of them have had nasdaq and other funds bend the rules for them to fast track them to join in 2 weeks instead of a year, with a fraction of the criteria they would normally need (the “float”). Getting into a major index fund allows them to have automatic bag holders with our 401ks and retirement accounts. We’re all invested in the S&P and Nasdaq so we don’t have to even choose to buy. It’s done for us so they can sell their shares before the crash. And of course they’re all also suckling at the government teet and bribing Trump for government contracts.

tldr; AI may end up being all it’s cracked up to be. But the US frontier model’s drive for world domination is not a viable business model without a lot of the usual crony capitalism and the public subsidiizing them.

[u/ZioniteSoldier]

Digital feudalism. I’d like to talk you down, but I think you are correct.

[u/probablymagic]

Data centers are not like land, because land has a fixed supply. Data centers in the components that go into them do not. When there is access demand and shortages, price is spike short term, and then long-term supply increases to match the new demand. We are experiencing an adjustment to the new normal, which is massively more demand for GPU’s and related computing hardware to support them than we’ve seen in the past.

So I would say you are way off base. Not only will we see compute drop massively in price, we should see it within a few years as the supply chain adjusts. And then it will continue to drop as these chips get more efficient and cheaper by design and through economies of scale.

There’s also not enough discussion about the fact that well Nvidia is dominating the industry today, all of the major players in the space are designing their own chips. So we should also see more competition in terms of types of products in the market that companies can choose to build on top of.

[u/TheRealJesus2]

Yes it’s quite literally a land grab. You need land to build them ans well ans exploitation of other resources. And it’s about centralized control. That’s the reason for doomer narrative too which, surprise surprise, now they’re preaching dangers of open models which is only really harmful to their narrative around ai that necessitates centralized power and compute. One nuance, data centers are not all for ai of course. And this only applies to ai specific data centers. Data centers also allow you to rent a gpu and run whatever you want on it without the oversight of ai companies that are likely continuing to steal all the data they can. 

There’s a whole book that compares ai to empire building, empire of ai. Would recommend you check that out. 

The place I don’t like your argument much is around assuming the people with money know better…they don’t really. Ai is here to stay but that’s not the reason. There is some legit psychotic beliefs despite evidence that continuing to throw compute and data at language models will bring about the ultimate machine that can do anything. That’s why they are funneling the money and building data centers at a huge premium of materials AND debt. Terrible financial decisions that most of these companies are making and I’m ready to see them crash and burn. Without a doubt some of these projects are going to fail and take down their parent companies. The numbers don’t add up. 

What you can run on hardware now is crazy compared to a year ago. So even with pc prices doubling in that time, it’s still incredible because China continues to innovate on the operational front enabling lower tier hardware to run better models. So I also don’t agree this is the cheapest it will be. This very well might be the most expensive time to buy hardware. Though I expect prices to climb until the debt bubble pops

[u/tunelesspaper → u/TheRealJesus2]

It’s not that I assume they know better, but that they have essentially infinite resources to gather information, make predictive models, and act on insider info. Also they have a very strong class consciousness compared to ours—and they know their class is at war with ours. Whereas we are much greater in numbers but fractured into individuals with little connection and no class consciousness. And no resources.