Scroll through today’s tech and financial headlines, and you might feel like you’ve been transported back to the early 2000s, a time when data centres dominated the news cycle and were impossible to ignore.
Data centres have always been the unsung heroes behind our digital lives, quietly powering everything from social media to cloud computing and online banking.
However, recent shifts in technology, business needs, and the global landscape have thrust them back into the limelight. Two decades after the dot-com boom first put them in the spotlight, they’re back as the physical epicentre of the artificial intelligence age.
In the late 1990s, data centres symbolised the excitement of the internet’s expansion. Every start-up needed rack space and constant connectivity, fueling a global building spree. A 10-megavolt ampere facility was then considered huge; within a few years, the standard had risen eightfold. Companies built first and asked questions later. Infrastructure was glamorous.
Then came the crash.
When the dot-com bubble burst in 2000, the data centre industry collapsed with it. In Europe, seventeen of twenty-seven pan European operators went under. Survivors turned to efficiency. Virtualisation technology from firms like VMware allowed multiple virtual servers to run on a single machine, cutting energy and hardware needs by as much as 80 per cent. Businesses stopped building their own facilities and began renting space in shared ones.
As the cloud took hold, infrastructure vanished from view. Users no longer cared where their data lived, only that it was accessible. For more than a decade, data centres became a background utility: silent, reliable, unglamorous.
Now they’re impossible to ignore. Artificial intelligence has dragged the physical internet back into public view. Training and running large AI models require staggering amounts of computing power, and therefore energy. Meta plans to spend $600 billion on new US data centre capacity by 2028. OpenAI has already committed $1.4 trillion to infrastructure. Microsoft and Google together announced more than $16 billion in new European facilities this autumn, while AMD predicts its data centre revenues will rise 60 per cent within five years.
This building boom is reshaping the global energy map. A study in Nature Communications this year estimated that by 2028, US data centres could consume 580 terawatt-hours of electricity, roughly 12 per cent of the country’s total power output, up from 176 TWh in 2023. The researchers identified states such as Texas, Montana and South Dakota as optimal sites because of their renewable energy potential and low water stress. Yet the biggest clusters remain in Virginia and California, where tax incentives and fibre networks outweigh environmental concerns.
That mismatch is creating political tension. In parts of the US, rising electricity bills are now blamed on Big Tech’s appetite for power. Georgia, Virginia and New Jersey have all seen public anger over rate hikes tied to utility investments for data centres. “The cost of utility service is the new ‘cost-of-eggs’ concern,” one analyst told MPR News. A typical AI data centre can consume as much electricity as 100,000 homes; some will draw more power than entire cities such as Pittsburgh or New Orleans.
The surge is also colliding with climate policy. To meet the new load, utilities are extending the life of coal and gas plants and building new ones, reversing years of decarbonisation progress. Diesel generators still provide backup power for many facilities. The grid modernisation needed to serve AI is becoming a flashpoint in both national and local politics, an echo of the backlash that followed the dot-com excesses of the early 2000s, when public enthusiasm for the internet collided with economic reality.
But the story is not only American. Governments around the world are racing to host the next generation of AI infrastructure.
In Scotland, abundant renewable power, available land and a skilled workforce are drawing interest from global developers. A new report by Lichfields argues that Scotland could capture a major share of the UK’s projected £44 billion in additional data-centre-related economic activity by 2035. The £3.9 billion regeneration of the former Ravenscraig steelworks, including one of the UK’s largest AI-ready facilities, is already being held up as proof of concept.
Across Europe, the numbers are just as eye-catching. Microsoft’s $10 billion investment in a new AI campus in Sines, Portugal, and Google’s €5.5 billion expansion in Germany rank among the largest single technology investments ever made on the continent. Both companies are promising that their facilities will run entirely on carbon-free power and contribute billions to local economies.
Yet even the most optimistic projections rest on a fragile foundation: energy supply. Tech giants are increasingly backing new forms of generation and storage to secure reliable clean power. Google has invested in Fervo Energy’s next-generation geothermal plants in Nevada and Utah and is exploring small modular nuclear reactors through a partnership with Kairos Power. Microsoft is experimenting with hydrogen fuel cells to replace diesel backup systems. Both firms are betting that long-duration energy storage, batteries capable of holding charge for days, not just hours, will eventually make it possible to run AI workloads around the clock without fossil fuels.
For the energy sector, that demand could be transformative. UBS Securities expects a global “boom cycle” in energy storage over the next five years, with demand rising 40 per cent year-on-year by 2026. The US will lead, but fast-growing markets in the Middle East, Latin America and Africa are close behind. Data centres are becoming the anchor customers for a new wave of grid-scale batteries.
In many ways, the moment feels like déjà vu. The first data centre boom was built on optimism, a belief that more capacity would mean more opportunity. The second is propelled by the same conviction, amplified by artificial intelligence and geopolitical competition. Where the dot-com era chased connectivity, today’s race is about sovereignty and sustainability. This time, the builders are not start-ups but superpowers.
The differences are profound. Modern data centres are larger and more complex, each drawing the power of a small city and requiring coordination between tech companies, utilities and governments. Their environmental and social footprints are impossible to ignore. Every new facility is a case study in the contradictions of the digital economy: decarbonisation targets versus data growth, public infrastructure versus private profit, local impact versus global ambition.
For years, we talked about “the cloud” as if it floated somewhere above the real world. But the AI revolution is forcing a reckoning with its physical underpinnings, the concrete, copper and cooling systems that make intelligence possible.
The internet has always been material; we just stopped noticing.
Now, as AI drives a trillion dollar build out of the world’s computing infrastructure, data centres have reclaimed centre stage. They are once again where technology, politics and economics collide, and where the future of the digital age will be decided.
One thing that hasn’t changed over the past two decades is the importance of choosing the right strategic data centre partner. Whether it’s colocation services, managed hosting, or hybrid cloud environments, having a trusted provider who understands your unique needs can transform IT from a cost centre to a growth enabler.
For example, our Goswell Road facility – situated in the heart of London – features autonomous biometric access systems, a dedicated Network and Security Operations Centre, and a host of Tier 3 specifications including 24/7 on-site security, multi-carrier connectivity, cold-aisle containment, and low PUE for energy efficiency. This means your business benefits from unmatched security, reliability, and performance right where it matters most.
We invite you to take a closer look inside our Goswell Road data centre with a comprehensive video tour, showcasing the advanced technology and rigorous security measures that power our clients’ success:
Partnering with vXtream means more than just colocating your infrastructure, it’s about aligning with a trusted provider who understands your unique requirements and is committed to enabling your business growth with cutting-edge, sustainable, and scalable data centre solutions.
Image: vXtream London Data Centre © Meesons
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You may be interested in our previous related article: Data Centres, Digitalisation, and the UK’s Surprising Energy Story: Who’s Right?
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