Orange County, CA – March 19, 2025 – The North American datacenter industry is teetering on the edge of a crisis, with occupancy rates nearing 100% and power shortages choking growth. Positive Phil, an Orange County-based podcast host and energy commentator, is sounding the alarm as artificial intelligence (AI) workloads and Bitcoin mining operations drive unprecedented demand for electricity, exposing vulnerabilities in the grid and sparking a race for innovative energy solutions. “Datacenters aren’t just running out of space—they’re running out of power,” Phil said. “This is a wake-up call for the industry and the energy sector alike.”
For more insights, visit www.positivephil.com or reach out at info@positivephil.com.
The Datacenter Boom: A Perfect Storm of Demand
Datacenters have evolved from modest server rooms into sprawling, power-hungry complexes that underpin the digital economy. Today, they house cloud computing, streaming services, e-commerce, and an explosion of new workloads tied to AI and cryptocurrency mining. “A single modern datacenter can draw 50 to 100 megawatts (MW)—enough to power tens of thousands of homes—and that’s before you account for the cooling systems keeping racks of GPUs from overheating,” Phil explained. With over 6 gigawatts (GW) of new capacity under construction across North America as of early 2025, the pace is breakneck. Yet, nearly all of it is pre-leased, leaving new entrants scrambling.
AI is a major culprit. Training large language models or running inference for real-time applications requires massive computational power, often measured in teraflops, and datacenters are stacking high-density racks to keep up. “AI isn’t a sideline anymore—it’s a core driver,” Phil said. “Some estimates suggest it accounts for 15-20% of datacenter workloads now, and it could hit 40% or more by 2030.” Bitcoin mining adds another layer of strain. Miners operate fleets of specialized hardware—ASICs (application-specific integrated circuits)—that run nonstop, solving complex cryptographic puzzles to validate transactions and earn rewards. A single mining farm can consume 20-30 MW, and clusters of them are popping up wherever electricity is cheap, from Texas to upstate New York.
The result? Datacenter vacancy rates have plummeted to historic lows, with available space snapped up in weeks. “If you’re a company needing 5 MW or more, you’re looking at a two-year wait—or longer,” Phil noted. “This isn’t just a supply issue; it’s an energy crisis masquerading as a real estate problem.”
The Grid: A History of Strain and Adaptation
To understand today’s datacenter energy woes, it’s worth rewinding to the grid’s origins. The North American power grid, a patchwork of regional systems, traces its roots to the late 19th century when Thomas Edison’s Pearl Street Station began lighting up New York City in 1882. Early grids were local, powered by coal-fired plants and small hydroelectric dams, serving factories and homes within a few miles. By the mid-20th century, the system had sprawled into a vast network of high-voltage transmission lines, linking cities and states. The Federal Power Act of 1935 and the creation of entities like the Tennessee Valley Authority marked a shift toward centralized planning, but the grid remained a fragmented beast, operated by a mix of utilities, cooperatives, and federal agencies.
For decades, this setup worked. Peak demand grew steadily—driven by industrial booms, suburban sprawl, and the rise of air conditioning—but utilities built new plants to match. Coal dominated, supplemented by natural gas, nuclear, and hydropower. By the 1990s, the grid was a marvel of engineering, delivering 3-4 terawatt-hours (TWh) annually across the U.S. and Canada. Yet, cracks were forming. Aging infrastructure, underinvestment, and the shift to deregulated markets left many regions vulnerable. The 2003 Northeast blackout, which left 50 million people in the dark, exposed how tightly coupled and fragile the system had become.
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Fast forward to 2025, and the grid is under siege. Annual U.S. electricity consumption has climbed past 4,200 TWh, with datacenters alone accounting for 2-3% of that total—roughly 100-120 TWh—and growing fast. “The grid was built for a world of steady, predictable loads—think factories and refrigerators,” Phil said. “Now it’s facing spiky, unrelenting demand from datacenters that don’t sleep.” Utilities are swamped with connection requests, some numbering in the thousands per region, as developers race to secure power for new facilities. In Virginia’s “data alley,” home to the world’s densest cluster of datacenters, Dominion Energy has warned of multi-year delays. Similar stories echo from Arizona to Illinois.
The Present: Power Shortages and Transmission Woes
Today’s grid is a victim of its own success—and its limitations. Designed for centralized generation—think massive coal or nuclear plants pumping out steady gigawatts—it struggles with the decentralized, high-intensity needs of datacenters. Transmission lines, the highways of the power system, are a bottleneck. Built decades ago, many operate at 230 or 345 kilovolts (kV), insufficient for the 500 kV or higher capacity needed to move bulk power to new sites. Upgrading them is a slog—permitting can take 5-10 years, tangled in environmental reviews, landowner disputes, and regulatory red tape. “You can’t just string new wires across a state overnight,” Phil said. “A single transmission project might cost $1 billion and still get stalled by a lawsuit.”
Substations, where voltage is stepped down for local use, are another choke point. Modern datacenters demand 50-100 MW at a pop, but substations often max out at 20-30 MW without costly retrofits. In some areas, utilities are imposing moratoriums on new connections, leaving developers in limbo. “I’ve heard of projects where the land’s bought, the permits are in hand, but the power’s four years out,” Phil said. “That’s a death sentence for a fast-moving industry.”
Meanwhile, the rise of renewables complicates the picture. Wind and solar, now 20% of U.S. generation (up from 5% in 2010), are intermittent—great when the sun shines or the wind blows, but useless during a calm night. Datacenters, with their 24/7 uptime requirements, can’t lean on them alone. Battery storage helps—lithium-ion packs can smooth out gaps—but scaling it to datacenter levels (think 100 MW for hours) remains pricey, with costs hovering at $300-400 per kilowatt-hour of capacity. “Batteries are a bandage, not a cure,” Phil noted. “You’d need a football field of them to keep a big facility humming overnight.”
Natural Gas: The Stopgap Savior
Enter natural gas. Cheap, abundant, and reliable, it’s become the go-to for datacenter operators desperate to bypass grid delays. In 2024, U.S. natural gas production hit 105 billion cubic feet per day (Bcf/d), thanks to shale fracking in places like the Permian Basin and Marcellus Shale. Gas turbines can be installed on-site, delivering 20-50 MW with relative ease. “You drop a turbine next to your datacenter, hook it to a pipeline, and you’re live in months, not years,” Phil said. “It’s not green, but it works.”
The numbers back this up. Gas accounts for 40% of U.S. electricity, and its flexibility—plants can ramp up or down in minutes—makes it a lifeline for datacenters facing grid uncertainty. Companies like Equinix and Digital Realty are increasingly exploring “behind-the-meter” setups, where gas powers facilities directly, skipping utility middlemen. Emissions are a trade-off—gas emits half the CO2 of coal per kWh—but it’s a compromise many are willing to make. “Bitcoin miners love it,” Phil added. “They’ll park next to a gas well and run their rigs off flare gas that’d otherwise be wasted.”
The Future: A Multi-Pronged Energy Outlook
Looking ahead, the datacenter energy story is a tug-of-war between necessity and innovation. The grid won’t fix itself overnight. The U.S. Department of Energy estimates $1-2 trillion in upgrades are needed by 2050 to modernize transmission and boost capacity—money that’s slow to materialize. “We’re talking thousands of miles of new lines, hundreds of substations, and a political will that’s been AWOL,” Phil said. Regional grids like ERCOT in Texas or PJM in the Northeast are testing “queue reforms” to prioritize viable projects, but progress is incremental.
Natural gas will dominate short-term. By 2030, it could power 50% or more of new datacenter capacity, especially as LNG exports keep domestic supply tight and prices stable (around $3-4 per million Btu). But the long game is renewables and beyond. Wind power, at 10% of U.S. generation, is growing—offshore farms off the East Coast could add 30 GW by 2035, per federal targets. Solar, at 6%, is booming too, with utility-scale projects in the Southwest hitting 1-2 GW apiece. Yet, their intermittency demands backup. “Wind and solar are the future, but they’re not the now for datacenters,” Phil said. “You can’t tell AI or Bitcoin to wait for a sunny day.”
Small modular reactors (SMRs) are the wild card. These mini-nukes, producing 50-300 MW, promise carbon-free baseload power in a compact footprint. Companies like NuScale and TerraPower aim for commercial deployment by 2030, with datacenters as prime customers. “Imagine a datacenter with its own reactor—no grid, no delays,” Phil said. “It’s sci-fi today, but it’s coming.” Regulatory hurdles and public skepticism linger—Chernobyl and Fukushima cast long shadows—but pilot projects are underway, backed by billions from the Inflation Reduction Act.
Energy Harvesting and Emerging Tech
Beyond traditional sources, energy harvesting offers niche hope. Waste heat from datacenter servers, which can hit 50-60°C, is being tapped for district heating in places like Finland and Canada, cutting net energy use. “You’re not powering the datacenter with it, but you’re offsetting the footprint,” Phil said. Piezoelectric systems—generating tiny currents from vibrations or pressure—are in R&D, though they’re years from scale. Ambient RF harvesting, pulling energy from Wi-Fi or cell signals, is another long shot, yielding microwatts at best. “These are cool ideas, but they’re rounding errors for a 100 MW beast,” he added.
Bitcoin miners are pioneering their own fixes. Some partner with wind farms, curtailing operations when power’s scarce, while others tap hydropower in Quebec or geothermal in Iceland. “Miners are energy nomads—they’ll chase anything that works,” Phil said. AI operators, meanwhile, are optimizing software—new algorithms cut compute needs by 20-30%—but hardware thirst keeps rising.
Transmission: The Unsung Hero
Transmission remains the linchpin. The U.S. has 240,000 miles of high-voltage lines, but capacity is maxed out in key corridors. Projects like the $3 billion TransWest Express, linking Wyoming wind to California, show promise—1,500 MW over 700 miles—but completion’s years off. HVDC (high-voltage direct current) lines, losing less power over distance, are gaining traction; China’s 1,100 kV behemoths move 12 GW across 2,000 miles. “We’re behind on HVDC,” Phil said. “It’s expensive—$2-3 million per mile—but it’s the only way to unlock remote renewables for datacenters.”
The Big Picture
The datacenter crisis is a microcosm of a broader energy reckoning. AI and Bitcoin aren’t slowing down—global datacenter power demand could triple to 300-400 TWh by 2035. “This is a marathon, not a sprint,” Phil said. “Natural gas buys time, renewables scale up, SMRs disrupt, and the grid limps along until it’s rebuilt.” For now, datacenter operators, miners, and AI firms are in survival mode, stockpiling generators and praying for breakthroughs.
Positive Phil’s take? “Energy’s the new gold rush—datacenters are just the pickaxes.” For more, visit www.positivephil.com or email info@positivephil.com.
