Posted on 05/31/2026 9:23:43 PM PDT by SeekAndFind
In five years, we’ll all likely be chuckling and shaking our heads over AI. Because today, the tech feels free and limitless, doesn’t it?
People are generating endless content: images, videos, memes, code snippets, social posts. Companies are bolting AI onto products by default, the way every Fortune 500 company suddenly discovered they were “sustainable” five years ago.
There’s much deliberation on AI right now, and it splits into two main camps of thesis:
The majority — those who will die on its hill of promise, convinced we’re months away from effective altruism, UBI, and sentient toasters.
And the minority — usually older, more experienced types — who don’t fully understand it, but look at numbers, remember the dot-com bust, and think this rhymes. We’ll leave that debate to the dinner parties.
What interests us is something more boring. Physics. Because here’s the thing: AI isn’t free.
Every token represents electricity. Something your average developer, product manager, user, or investor gives precisely zero thought to.
Electricity means power plants, transmission lines, grid infrastructure — yes. It also means hot sheds; capital-intensive data centres and all the equipment, cooling systems, and real estate that go with them. Real things. Physical things.
We are surrounded by hype without consideration for the physics.
Right now, there’s a disconnect between the physical cost of this technology and the price users pay for it.
That gap is being covered by Wall Street, venture capital, pension funds, hyperscaler balance sheets, and strategic spending on “growth” (a word which here means “losses we’ve chosen to rebrand”).
The question is: what happens when that gap closes?
No outright collapse, but financial discipline arrives. A novel concept in Silicon Valley. Low-value usage disappears first. “AI slop” dies because the people generating junk stop when it costs them actual money. Turns out nobody’s willing to pay real dollars to have a chatbot write their LinkedIn thought leadership posts. Tragic.
Serious users — those deriving profit or genuine productivity gains — remain. Growth slows but doesn’t stop. GPU upgrade cycles stretch from two years to three or five or seven. Valuations compress. The froth comes off but the infrastructure remains important.
The boardroom shifts from “infinite logarithmic growth” to “focus only on what’s profitable.” Less bubble burst, more long, slow leak of disappointment. A bit like ESG.
Now overlay structurally higher energy prices. You know, the thing everyone was told wouldn’t matter because we’d all be running on solar and unicorn farts by now. If power becomes materially more expensive while capital markets tighten simultaneously, the economics get a lot harder.
Inference costs rise. Training LLMs gets hella more expensive. Shareholders start feeling like they’re holding the next NFT apes. Spending slows sharply. Many AI firms disappear. Hyperscalers pull back, maybe with taxpayer assistance (they are, after all, strategically important to those in power — funny how that works).
GPU cycles extend further. Seven-plus years between major upgrades becomes normal outside the top tier. Markets correct hard. Confidence takes a long time to rebuild.
This is not the end of AI, but a reset. Users will fondly remember the “good old days” when it was free. When one could generate a movie scene and post on X about how they just ended a billion-dollar production company’s business model. Peak delusion makes for great content.
There is also the upside case, though we admit it’s included here much like a “minority” conspicuously placed on a corporate board — a box-ticking exercise.
In this scenario, AI meaningfully increases productivity across enterprises. It reduces costs durably. It embeds itself in everything from coding to logistics to research. The sentient toaster.
Higher energy prices don’t kill demand because efficiency gains outweigh them. Hardware cycles remain short. Today’s valuations look justified in hindsight and Jensen Huang’s leather jacket gets its own wing at the Smithsonian.
For anyone familiar with us, you’ll know we think this is the most unlikely scenario. And yet it’s by far the consensus view. Which, if you’ve been paying attention to consensus views over the past decade (“inflation is transitory,” “ESG is the future,” “commercial real estate is fine”) should tell you something.
The gap between expectations and likely reality remains wide open. For Insider members, you’re familiar with the portfolio positioning and Nasdaq hedge.
The key variable isn’t whether AI is impressive or useful (it is). The key variable is whether AI becomes a true profit engine or remains a subsidised cost centre dressed up in a hoodie and a TED talk.
If profitable and productivity-enhancing, current valuations are justified and the gravy train keeps chugging. If it remains mostly hype layered over weak economics, spending contracts, hardware cycles extend, and we could have an absolute humdinger of an economic “event.”
A ten-year stagnation would require something extreme: demand dropping significantly, hyperscalers becoming hyposcalers, capital markets wanting nothing to do with AI, and energy remaining expensive — all at once. Stranger things have happened. Just ask anyone who bought Peloton at $170.
Almost 50 years of history show this eventually reverts to the mean… and the pendulum swings the other way.
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What's not to love?
And anybody who opposes I’m wary is a communist China collaborator. How convenient.
The push to build data centers omits the lead time to stand up power, water, heat mitigation, sound mitigation, networking and actual server frames. The GPU/RAM/NVMe storage has been hoarded ahead of the build out. Much of that hardware will be aging out technically before it is ever powered on to generate revenue. The data center is technically obsolete before it can go online.
Im already bored with it. I don’t think its going to be what is being hyped.
I'm thinking the same thing about bulldozers, which is why I'm putting all my $$ on ditch-digging.
Depends on what a person or company is using it for. Some can and do spend a million dollars a day or more - but they are using advanced models with a lot of calculations. Molecular biology, coding, real time monitoring of a decentralized environment, movie making etc will burn a lot of tokens because it is running a lot of heavy, or constant, calculations. The cost for the biggest “power” users has only been going up this last year. For us regular folk the free or the $20 a month plans work just fine. But those are not the best models and the tasks are simple.
I find it helpful for several things in my line so I pay $20 just so it doesn’t time me out. And it remembers an entire conversation so I have ongoing threads where I ask for feedback, take it to the real world, then tell it the results the next day, and what I need, and it gives me relevant feedback. I’ve got several weeks-long conversations going back and forth until I get it right.
Next I will start tinkering with images and video and see what agents may be useful to me. It’s much more complicated and complex and may need to switch to a different AI for those. I’m not much into video or imagery but do need it so I’ll dabble and see what it can do. Oh I also had it redesign some web pages for me. I pasted in the code and told it what I wanted changed and it gave me new code. Worked perfectly. So it can be useful depending what your needs are. These are simple tasks. I’m sure large enterprises are doing way more difficult tasks AND/OR have many thousands of employees using it thus running up a massive bill.
Here’s an idea... Go back to school and get a plumbing certificate, or an electrician’s certificate, or an HVAC certificate, learn how to lay a floor, or become a masonry worker... These are the jobs that will still be there in the future.
If you work with computers or as an office clerk... You’re looking at an unemployment line that will only get longer and longer.
Bflr.
I think Elon will keep Grok free far longer than the others. Its part of his brand. What I fear is Grok being overloaded by hundreds of millions of Hindus and other 3rd world clown acts.
All that AI slop that has in invaded You Tube? Half comes from India as they try to make a few bucks a day from it. They use free online AI tools. But they can build an AI computer that can churn You-Tube slop locally. About $2000.
bfl
Accept AI for what it is becoming: The World’s Greatest Excuse!
Not only will it be the excuse for Execs to lay off thousands, it will be the excuse for every late transaction, every fowled up shipment, probably every late homework assignment.
“AI did it. The AI didn’t ship your product. The AI lost your transaction.”
Mark my words.
.
Real AI will need to run without electrical power plants and be based on a biological matter otherwise it will always be dependent.
Let them build as many as they want, however, the must be powered by green energy and can only used recycled water.
IF YOU LIVED ON A WELL IN A RURAL AREA & DATA CENTERS WERE GETTING ALLOWANCES OF 9 TIMES YOUR WATER ALLOWANCE-—YOU WOULD HAVE A DIFFERENT THOUGHT & PICTURE.
IF YOU WERE RETIRED & HAD ABOUT 99% OF YOUR NET WORTH IN YOUR PROPERTY VALUE & IT WOULD PLUMMET TO ZERO WITHOUT WATER-—YOU MIGHT HAVE ANOTHER THOUGHT.
CREATE POWER??? TO SOME EXTENT, YES-—
CREATE WATER????? IN AREAS ALREADY ARID & CALLED “DESERTS”-—NOT SO MUCH. THE MORE ARID -—THE MORE A TARGET OF DATA CENTERS.
IF COUNTY CANNOT COLLECT TAXES FOR THE USUAL VALUE OF PROPERTY-—THEN ENTIRE COUNTY BUDGET IS IN SHAMBLES.
CANNOT SELL THE REAL ESTATE WITHOUT WELL PRODUCING WATER
REAL ESTATE VALUES PLUMMET
MORTGAGE COMPANIES WILL CEASE LOANING PURCHASE MONEY
SCHOOLS WILL FAIL
BUSINESSES WILL FAIL
R E AGENTS WILL NOT HAVE INCOMES
WHERE WILL THE INFLUX OF THOUSANDS OF DATA CENTER WORKERS LIVE??? NO WATER MEANS NO WATER-—FOR ANYONE.
EXACTLY HOW MANY “DATA CENTERS” ARE NEEDED, ANYWAY???
MY VALLEY COMMUNITY IS ABOUT 5500 -—MOSTLY RETIRED.
SUDDENLY-—2,000 DATA CENTER EMPLOYEES ARE NEEDED???
WE ARE RETIRED -—BUT NOT SEEKING A JOB WE ARE NOT QUALIFIED FOR & THOSE EMPLOYEES WILL ALSO NOT HAVE WATER AT THEIR HOMES....IF THEY HAVE CASH TO BUY, BECAUSE MONEY LENDERS WILL BALK.
THERE ARE FAR MORE ATTACHED PROBLEMS THAN BENEFITS FROM DATA CENTERS.
WHAT IS THE LIFE OF A “SERVER” & HOW MUCH OF THAT CAN BE RECYCLED?
OR IS THIS ALL ANOTHER VERSION OF WINDMILL BLADES & SOLAR PANELS-—NOT RECYCLABLE???
...The key variable is whether AI becomes a true profit engine or remains a subsidised cost centre dressed up in a hoodie and a TED talk....
Sounds like the perfect new toy for gubmints big and small
low cost energy
https://tae.com/tae-technologies-ukaea-advance-development-of-core-fusion-technology/
We’re not there yet
So where does quantum computing fit within these scenarios? It doesn’t look like it’s there at all.
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