AI's Expanding Impact: Data Centers, Cognitive Effects, Financial Risks, and Creative Controversies
The rapid rise of artificial intelligence (AI) is reshaping multiple facets of society, from infrastructure development to cognitive capacities, financial stability, and creative industries.
Nevada's Tahoe-Reno Industrial Center, a historic area once known as the Richest Place on Earth during the mid-1800s gold and silver boom, now hosts some of the largest AI-related data centers in the United States. Switch operates a 1.3 million square foot datacenter with 130 MW capacity here, alongside planned expansions by Microsoft, OpenAI, Amazon, Anthropic, Google, Meta, Oracle, and the Stargate consortium. These AI datacenters consume significantly more energy and water than traditional Internet operations. For example, a single ChatGPT query uses roughly ten times more electricity than a standard search. Water usage at US datacenters has surged and could approach 80 billion gallons annually by 2028. This demand impacts drought-prone Storey County, Nevada, and downstream communities such as the Pyramid Lake Paiute Tribe, which advocates for water-resource protections. To mitigate environmental effects, the industrial park invested over $100 million in a reclaimed-water reservoir and pipeline system in 2023 to reduce reliance on river water.
Meanwhile, the cognitive and societal effects of AI are under scrutiny. A Science Weekly podcast by The Guardian, presented by Ian Sample with contributions from Madeleine Finlay and neuroscience professor Sam Gilbert, examined whether AI is making humans less capable of critical thinking and resolving complex problems. The discussion raises questions about whether society is experiencing a "golden age of stupidity" due to over-reliance on AI, even as AI dramatically accelerates task completion that once required hours or days.
On the economic front, the Bank of England's Financial Stability Report highlighted concerns over a potential sharp correction in tech stock valuations, particularly in AI-focused equities. UK valuations are described as the most stretched since 2008 and US levels parallel those before the dotcom bubble burst. AI sector growth, fueled by trillions in debt, risks financial instability if credit market connections deepen losses during price corrections. While AI firms currently demonstrate positive cash flows, Bank of England Governor Andrew Bailey cautions that not all will succeed. Additional global risks include geopolitical tensions, trade wars, rising government borrowing costs, and heightened cyber-attack threats. Mortgage holders in the UK face increased costs beginning in 2028 with higher refinancing rates and rising monthly payments.
In the creative sector, the adoption of AI has prompted backlash. Valentino faced criticism over AI-generated digital adverts for its DeVain handbag campaign, with social media users labeling the surreal AI visuals as sloppy and demanding more human creativity. Experts note this reflects a broader tension in fashion's AI adoption: the balance between efficiency and artistry. Transparency regarding AI use has not alleviated concerns. Such controversies mirror those faced by other fashion brands like H&M and Guess, which have also employed AI but encountered scrutiny regarding job displacement and product quality.
Together, these developments illustrate AI's profound and complex influence across infrastructure, human cognition, financial markets, and culture, underscoring the need for careful management of its benefits and risks.
