United States data centers are consuming more electricity than ever before. In the third quarter of 2024, their power demand reached 46,000 megawatts (MW), a huge increase driven by artificial intelligence (AI) and cryptocurrency mining.
According to forecasts, this demand will grow to 59,000 MW by 2029. Digital services, cloud computing, and AI apps make data centers grow quickly.
Texas leads in data center power consumption, supplying 8,796 MW to these facilities. Virginia follows closely with 6,967 MW, mainly powering cloud providers like Amazon, Microsoft, and Google. These states host the biggest hyperscale data centers. They need a lot of energy to run servers and cooling systems.
The Power-Hungry Digital Boom: What Fuels the Surge?
Three main culprits drive the energy demand of data centers in the U.S.
AI’s Insatiable Energy Appetite
The rapid development of AI is a major factor behind the increasing energy use. AI models require vast computing power for training and operations. OpenAI, Meta, and Google use powerful GPUs and servers, which require constant electricity. AI’s energy use will likely rise as more companies embrace machine learning and automation.
Training large AI models like GPT-4 requires thousands of GPUs, consuming up to 1 gigawatt-hour (GWh) per model. AI chatbots, image generators, and automation tools are increasing electricity demand.
Goldman Sachs Research projects that AI-driven data centers will consume an additional 200 terawatt-hours of electricity annually from 2023 to 2030.
- By 2030, AI-driven data centers could account for 30% of all global data center power consumption.
RELATED: The Carbon Countdown: AI and Its 10 Billion Rise in Power Use
Cryptocurrency Mining’s Energy Drain
Bitcoin and other cryptocurrencies require massive computational power to validate transactions through mining. In Texas alone, crypto miners contribute heavily to electricity demand. Despite price fluctuations, mining operations continue to expand, pushing energy grids to their limits.
Bitcoin mining uses over 120 terawatt-hours (TWh) of electricity each year. This amount is more than what entire countries, like Argentina, consume.
The U.S. accounts for 37% of the world’s Bitcoin mining operations. Texas is emerging as a key hub due to its deregulated electricity market and lower energy costs.
Also, as crypto mining hardware gets better, miners are using liquid-cooled servers. This needs an extra cooling setup, which raises energy use even more. While some mining operations are adopting renewable energy, the majority still rely on traditional electricity sources.
Cloud Computing’s Growing Footprint
Businesses and individuals store massive amounts of data online. Cloud computing providers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud operate huge data centers that run 24/7. The rising demand for remote storage, streaming services, and real-time apps means these facilities must use more power.
By 2026, cloud computing workloads are expected to triple. This growth comes from enterprise applications, video streaming, and online gaming. 5G networks and edge computing are increasing the number of smaller data centers. These distributed centers add to the overall electricity demand.
Streaming platforms alone—such as Netflix, YouTube, and Disney+—consume over 200 TWh annually, with a large portion of this electricity coming from data centers. As demand for high-resolution video content, including 8K streaming, grows, the energy needs of these platforms will continue to rise.
Can the Grid Keep Up?
With data center energy needs skyrocketing, utility companies are adjusting their infrastructure and investments. Dominion Energy Virginia, for example, has 40.2 gigawatts (GW) of contracted capacity waiting for connection to the grid—almost double its 21.4 GW in July 2024. This reflects the growing interest in expanding data center operations in key states.
Southern Co., a major utility provider, raised its five-year capital plan by $14 billion. The new total is $63 billion. This increase will help enhance electricity generation and transmission. The company expects over 50,000 MW of additional power demand by the mid-2030s, with data centers accounting for 80% of this increase.
While energy companies prepare for rising demand, some experts warn of potential grid instability. The PJM Interconnection is the biggest electricity market in the US, serving 65 million customers. It expects data center power demand to rise to 26.7 GW by 2029. That’s a fourfold increase. Meeting this demand will require major infrastructure upgrades.
Despite concerns, industry leaders do not see an immediate energy crisis. Some experts argue that increased efficiency in AI and computing could balance demand. However, if data center growth continues at this pace, power shortages could become a real challenge in the coming years.
The Renewable Energy Race
To meet sustainability goals, many tech companies are investing in renewable energy sources. Microsoft and Google have committed to operating 100% carbon-free data centers by 2030. However, the speed at which renewables can replace traditional power sources remains uncertain.
Energy providers are also stepping up. Exelon Corp. plans to invest $38 billion over four years in grid enhancements, including renewable energy projects. However, some experts believe renewables alone cannot sustain the rapid growth of data center power needs.
Hyperscale data centers are increasingly signing long-term power purchase agreements (PPAs) with wind and solar farms. Google, for example, signed a 1.6-gigawatt PPA in 2023 to power its new AI-driven cloud regions. Amazon and Microsoft are also investing heavily in wind and solar projects to offset their growing data center footprints.
The surge in U.S. data center power demand is driven by AI, cloud computing, and cryptocurrency mining. AI training models, high-res video streaming, and global Bitcoin mining are stressing the power grid like never before. Utility companies are spending a lot on expanding the grid. However, it’s unclear if this growth will be sustainable in the long run.
Renewable energy solutions are in development. However, it’s unclear if they can fully meet the growing demand. In the next few years, we’ll see if upgrades to infrastructure and clean energy can meet the rising demand for digital services. If not, power shortages and environmental concerns could reshape the future of data center expansion in the U.S.
