Cryptocurrencies, AI, and the Unknown
Predicting the future is a futile task. Acting on a politician’s promises is even riskier.
Even if we were confident that a nation’s leader intended to follow through on his or her manifesto, black swan events—from wars and pandemics to natural disasters—can dramatically alter an administration’s priorities. But with that in mind, let’s try to unravel what we can expect to happen to the data center industry after the landslide election of Donald Trump.
What Now? Trump, Data Centers, and the Next Four Years
Climate, Sustainability, and the Power Grid
The chances of the world staying within the 1.5°C threshold were already slim enough. With the re-election of a climate change denier, those dreams are dead. The question, instead, is simply: how much worse will it get? The last time Trump was in office, he pulled the United States out of the Paris climate agreement, but the terms of the treaty stipulated that the country would abandon its carbon reduction plan only in the final months of his term. This time, he could retire within a year. Trump also criticized the Inflation Reduction Act, the largest bill to address climate change, which includes $128 billion for renewable energy and grid energy storage, $30 billion for nuclear power, and $37 billion for advanced manufacturing (including zero-emissions industrial technology). It also included the world’s largest hydrogen subsidies.
These programs are expected to be cut, along with any larger subsidies for renewable energy. However, it is not yet known whether Republicans will gain control of the House of Representatives, and many Republican states have benefited from IRA investments, so they may not vote to completely repeal the energy and manufacturing tax credits.
The next president has also repeatedly falsely claimed that wind turbines kill whales and cause cancer. He has falsely claimed that it is the most expensive form of energy and said that “wind sucks.” Shares of major wind turbine manufacturers, including Orsted, have fallen sharply since his election victory.
Several large wind projects are planned along the U.S. East Coast that will, in part, help power data centers. Unlike solar and onshore wind, offshore wind requires federal approval, and Biden has pledged to reach 30 GW of offshore wind by 2030. Nearly 20 GW of that is still awaiting permits, which are now at risk, and Trump has threatened to halt offshore wind projects on “day one.”
Trump has instead called for a drilling boom in the U.S., which could reduce the cost of oil and gas, the latter of which is increasingly used by the data center industry. However, deregulation of liquefied natural gas exports could actually push prices higher as local markets compete with foreign markets.
Major offshore lease sales, pipeline approvals, hydraulic fracturing on federal lands, and a return to coal are expected. The president-elect has also spoken out as pro-nuclear. At a long rally in Pennsylvania in August, Trump called nuclear energy “a great energy.”
He added: “To push our country into the future, including the electricity demands of artificial intelligence and cryptocurrencies, which is a very important topic, it’s coming up more and more, and we have to stay on top of it, we have to be on top of it.” cutting edge, otherwise China and other countries will take it. They are both: AI and cryptography.
“We will make a historic commitment to operate advanced small modular nuclear reactors. “Building these giant plants that cost $20 billion and aren’t even being built…” He then falsely claimed that France was deploying several small modular reactors (SMRs).
Trump supporter Peter Thiel has invested in several SMR companies. The technology is still unproven, but the data center industry has embraced it as a way to continue expanding.
More broadly, Trump has promised to quickly approve electricity infrastructure projects once he takes office. It is expected to weaken or eliminate environmental assessment and other sustainability rules that delay infrastructure projects.
The data center industry, struggling with a grid crisis, could benefit from new energy projects, although it is worth noting that Trump made similar promises during his last term. However, the sector could risk losing its net-zero ambitions and relying on an increasingly polluting grid.
Despite political machinations, renewable energy has reached a stage where it is often cost-effective. Hyperscalers and other data center operators are expected to continue to use renewable energy PPAs for both internal sustainability goals and economic reasons.
The industry should also plan for longer timeframes than Trump’s single term: future presidents can re-implement environmental and climate rules, so projects that span decades should be more cautious. Additionally, ambient temperatures and floodplains are expected to increase.
A key Trump campaign promise was to detain and deport undocumented immigrants en masse, as well as others. He pledged to use the National Guard and “go a step further” if necessary. According to the Pew Research Center, the construction industry employs about 1.5 million undocumented workers, or 13% of its total workforce.
If that many workers were to be removed from an industry already struggling with a labor crisis, it is expected to have a profound impact on construction times and costs. However, such an operation would be tested for legality and would likely face lengthy court battles.
Stricter policies on new immigration will be easier to pass and will also have an impact on the available workforce, but they will not be as dramatic as a mass deportation. At the same time, there is likely to be a reduction in regulations, labor protections and environmental reviews, which will speed up the time it takes to get construction projects underway.
Perhaps the biggest risk the Trump presidency poses to the global economy is tariffs.
He has threatened to impose tariffs of 10% on all goods imports, and up to 60% and 100% on China and Mexico, respectively. These tariffs are paid by the importer, not the exporter.
This cost would be passed on to the consumer and increase inflation. It would also likely lead to retaliatory tariffs from other countries.
This could have a huge impact on various data center components, including semiconductors. After decades of declining U.S. semiconductor manufacturing, the Biden administration passed the CHIPS Act to pump billions of dollars into local factories. However, the distribution of the funds has been slow. Trump has called the law “evil” and suggested trading it for tariffs, though Republicans in the recipient states will likely fight to keep some CHIPS funds. TSMC and GlobalFoundries have reportedly concluded negotiations for their subsidies, with the Biden administration rushing to shell out the money before January. Given the time it takes to build chip factories and the global nature of the various components, the tariffs would not cause an immediate dramatic increase in U.S. production, but they would increase chip costs.
At the same time, the incoming president has threatened to weaken U.S. protection of Taiwan, where the world’s most advanced semiconductors are produced. If it falls into China’s hands, it would fundamentally and dramatically change the global server market.
Both the first Trump administration and the current Biden administration have restricted sales of high-end chips to China, and tensions continue to rise. The new administration is expected to further escalate the trade war and push for decoupling of the world’s two largest economies.
Rare earth metals and other critical components could be at risk from the simmering conflict, while companies like Nvidia, Broadcom, and Qualcomm are at risk from their exposure to Chinese markets. Cryptocurrency and AI
The keynote speaker at the Bitcoin Conference in Nashville, Tennessee, Trump said he would “ensure that the United States is the cryptocurrency capital of the planet.” Cryptocurrency prices skyrocketed on news of his victory and could help revive an industry that has been struggling to turn a profit as mining costs continue to rise.
Over the past two years, cryptocurrency firms have increasingly turned to AI workloads to diversify their portfolios and capitalize on the latest boom. This will continue, but if the cryptocurrency renaissance holds steady, it is expected that they will continue to build crypto facilities, which means another competitor for network connectivity that traditional data centers will have to deal with.
As for AI, Trump has indicated that he will not intervene as massively, so less regulation is expected on large language models and the size of AI clusters. Trump’s campaign manifesto includes a promise to repeal Biden’s 2023 executive order on artificial intelligence.
However, individual companies that have been the target of their ire, including Google and Meta, could face hurdles from specific investigations. TikTok is a wild card: Trump tried to ban it or force its sale to American companies in the final days of his presidency, Biden has now ordered its sale, but Trump has since made his beliefs in favor of TikTok clear.
More generally, a more passive focus on governance is expected to undercut antitrust regulations and pave the way for more mergers and acquisitions. However, many of the largest companies are global, so mergers and acquisitions would still be subject to regulatory scrutiny abroad.
New corporate tax cuts and the extension of the 2017 tax cuts will boost corporate earnings, much of which will likely go to share buybacks and mergers and acquisitions. Government, Elon Musk, and Space
Trump has promised to significantly cut government spending, but it is not known how seriously he will do so or how deep those cuts will be. Elon Musk, the financier, has said he would help cut about $2 trillion in spending (the U.S. government spent $6.7 trillion in its last full year), but it’s unclear how or if he’ll be given the authority to do so.
Numerous government agencies are facing budget cuts or total shutdowns. This would also include its own data center infrastructure.
Biden-era data center-specific efforts, including the White House Task Force on AI Data Center Infrastructure, could be at risk. The Department of Energy is currently considering building an AI testbed for data centers, establishing standards for data centers, and charging for network upgrades; all of these issues are evolving.
In the meantime, Musk may be taking advantage of his new access to the White House and ramping up his own business. Generative AI startup xAI could benefit from bills that help supply electricity to ever-larger data center clusters.
Meanwhile, SpaceX could be one of the big winners of the election. Both Musk and Project 2025 (a policy initiative published by the conservative American think tank Heritage Foundation) have called for the satellite internet service Starlink to be the largest beneficiary of the $42 billion Broadband Equity, Access and Deployment (BEAD) program, of which it is not currently a member. We’re spending a billion dollars to put cable all over the country, even in the northern part of the state where there are two farms, and they’re spending millions of dollars to have cable. Elon can do it for free.”
BEAD has yet to fund any projects and has faced significant criticism from Republicans. Network operators like AT&T, Brightspeed, and Windstream were expected to benefit, as were fiber providers like Corning.
Now, however, that could be handed over to Starlink and, potentially, Amazon’s Project Kuiper. FCC Commissioner Brendan Carr is expected to be Trump’s nominee to lead the agency, and has also said Starlink should be on the agenda and suggested devoting a third of BEAD’s budget to
There are still many unknowns to resolve in Trump’s second presidency, but one thing is certain: he will dominate headlines and attention for much of his term. Your actions will have a profound impact on the economy, health care, education, defense, and much more. However, it is also important to note that the American presidency has its limits. Other factors will affect the economy and the data center industry. The industry is still booming and won’t be immediately threatened by a Trump presidency. The industry continues its journey toward denser racks and larger data centers to serve growing AI workloads. Whether the AI business can become sustainable before investment dries up remains a much bigger question for the industry than who will be in the White House in January.
