Data centers as the new energy villain? That might be a problem
When people outside the energy sector think about the grid, it’s usually only after something goes wrong, such as a blackout or a surprise bill spike. Lately, the culprit for the public thinking about energy has come from a new source of consternation: data centers.
As consumers raise the red flag on data centers, politicians across the spectrum are rushing to respond. The message is simple and politically powerful: these tech companies should pay for necessary grid upgrades and everyday ratepayers should be shielded from higher bills.
Those goals are admirable and easy to sell, but without being careful the public posturing is crossing into an old, risky territory: trying to regulate what electricity uses are valid and which ones should be restricted.
Already, we’re seeing legislative and regulatory moves aimed at directly capping data center energy use. On their face, such proposals look sensible: slow the pace of new demand until the grid and communities are ready. But past experience warns that deciding which end uses “deserve” power and which don’t is a fraught policy path.
A History Lesson
The first moment the United States seriously wrestled with the limits of energy supply was the 1973 oil crisis. Governments responded with direct, visible rationing policies to conserve energy: gasoline limits, lower speed limits, even daylight saving time alterations. Those measures were widely framed as patriotic sacrifices and, for the most part, were accepted because alternatives were scarce.
Later in the decade, however, the debate shifted from practical rationing to moral exhortation. President Jimmy Carter famously asked Americans to change daily habits — the “wear a sweater and turn down the heat” moment — and it landed badly. People felt their everyday lives were being micromanaged by the government. What began as a temporary collective sacrifice turned into a cultural backlash against conservation framed as involuntary sacrifice. The lesson from that era is straightforward: policies that intrude on personal choices and daily comforts risk political and cultural rejection.
Similar dynamics are at play today. Well-intentioned campaigns to phase out gas stoves or limit gas hookups in new homes collide with public resistance because they touch personal freedoms and conveniences. Efforts to outright ban gasoline vehicles — as opposed to letting consumers choose EVs voluntarily — have likewise met political headwinds.
How does this manifest at the industry level? Let’s use cryptocurrency mining as an example. At the height of crypto’s rise, amid concerns that mining operations risked overwhelming local grids, policymakers asked whether governments should decide which digital activities are worthy of electricity.
Some local and state actions did curb energy-intensive mining in certain places — and New York’s 2022 restrictions on some Proof-of-Work operations became a prominent regulatory signal. But broader, sweeping bans and punitive approaches largely failed to become the norm (see the failure of the federally proposed Digital Asset Mining Energy Tax). People rejected the idea of the government picking winners and losers in electricity consumption.
Flash forward to today’s moment: Data centers