Good News! Data Centers Will Shrink

[The Washington Post featured this oped in October 2026]

In 1946 NIAC, the ancestor of today’s computers, weighed 30 tons, could fill a house, and gulped 140 kilowatts just to add numbers faster than a bookkeeper wearing green eyeshades. Today the phone in your pocket can translate ancient Greek, recognize your face, fly a drone, and remind you that Rocky Marciano finished Joe Louis in the eighth round in 1951. NASA would have been delighted with the first three.

Keep that history in mind as technology companies place the largest physical bet since the pharaohs decided immortality required a big delivery of stone. Today’s projects are not pyramids but data centers – windowless warehouses stuffed with chips, cooling systems, and enough electrical gear to shock Nikola Tesla. Suddenly they are villains. Democrats attack the projects over electricity prices, water use, and subsidies. Some prominent Republicans have joined the resistance, though President Trump remains a cheerleader. Data centers have achieved something rare in American politics: irritating voters on both sides at once.

While politicians fight over whether to oppose them, investors and engineers should wrestle with a different question: What will a data center look like in ten or twenty years – and what, exactly, is worth owning?

Gordon Moore supplied an answer sixty years ago. The Intel cofounder observed that the number of components that fit on a chip rises exponentially. Experts have pronounced Moore’s Law dead almost as often as humanities professors have pronounced capitalism dead. Both keep outliving their obituaries. The precise engineering has changed – chips are stacked, cooling improves, software gets leaner – but the direction remains stubborn: we extract more computing from less.

Computing has migrated from a room to a desktop to a laptop, and then to a phone. Now it lives in wristwatches, earbuds, doorbells, and even devices not suitable for mention in a family newspaper. Why assume the data center has reached its final physical form?

Today in Ohio, a SoftBank-backed campus is rising, with commitments from OpenAI and Nvidia, hundreds of billions in long-term contracts, and plans for ten gigawatts of power.

Investors and communities locking in 20- and 30-year commitments should ask a sharp question: how much land, electricity, and equipment will be required to produce a unit of intelligence? That number will keep falling, as computing migrates into smaller devices.

Your car should not need to consult a 500,000-square-foot-box warehouse in Kansas before swerving around a pothole.

There is a catch, and a nineteenth-century English economist spotted it long before anyone had heard of a Bluetooth. William Stanley Jevons noticed that more-efficient steam engines did not cut Britain’s coal consumption. Because cheaper steam power created more uses for it, Britain needed more coal, not less.

AI could spark a powerful Jevons effect. If intelligence is ten times cheaper, entrepreneurs may devise twenty times as many uses for it. Hospitals, tractors, and household appliances will grow smarter. At some late-night hour, your refrigerator may develop strong opinions about your cholesterol and refuse to surrender the Häagen-Dazs.

Two apparently contradictory things can therefore happen at once: the world can consume vastly more computing while requiring less infrastructure for each unit of it.

Therefore, communities should welcome new investment but insist that developers pay the costs of power, water, and grid upgrades. They should be especially skeptical of subsidies that assume today’s physical footprint lasts for decades. Regardless, data centers are not the villain behind every rising electric bill. A recent EPRI study estimates that data-center growth from 2015 through 2024 modestly reduced U.S. residential electricity prices because large, steady customers spread fixed grid costs across more hours. Of course, if utilities choose to build out for a giant new customer and then stick households with the bill, families will pay more. That is not a law of computing. It is a bad contract.

Investors face a different question. What survives when the technology inside the building improves and the building itself begins to resemble a giant box stuffed with fast-aging silicon? Some data centers may become like dreary indoor shopping malls in the internet age, expensive shells hoping for another use, like an indoor skating rink or pickleball courts.

But investors should also remember this: although railroads made horses less valuable, rights of way held their value. A site with contracted power, transmission access, and fiber has something far harder to replace than chips: a place at the front of the electric line. Securing that access can take years. In a constrained grid, it is not merely real estate but a shortcut through the bottleneck. The building is just a box. The valuable asset may be the right to plug in.

America should build data centers along with more energy capacity. AI may prove as transformative as its evangelists claim, and starving it of infrastructure would be foolish, especially as China plows ahead. But it would be equally foolish to draw a ruler from today’s acres, megawatts, and cooling towers straight through to 2050.

In 1946 we needed a house to hold a computer. Now we hold one in our palm. Don’t bet that the house has won.