The Energy Crisis

The energy crisis was the leading theme throughout the 2025 COSM conference. And people were really crying rivers about it. With the two most severe loses articulated:

1. We will not be able to scale the AI infrastructure sufficiently enough
2. China will overtake us

Both are - I would say - purely "American" worries.

First of all, nobody knows if AI progress is really limited by energy. Dwarkesh Patel has recently discussed this with Ilya Sutskever - and the headline is "We're moving from the age of scaling to the age of research". Returns from scaling out the AI infrastructure have been diminishing. Ilya argues we need to do other things than just building more capacity. And I could not agree more. The existing LLMs have already swallowed all that was ever written. And probably more. And they still remain language models, increasingly more sophisticated statistical engines, not having a clue what they are talking about.

I'm not saying that LLMs are totally useless. They are a good improvement over traditional search engines. And also the early AI agents help automating some basic tasks (such as in software development).  But the truth is they have still been mostly used in cold marketing and in generating fake content. Both applications - to put it mildly - have very questionable value. True , 20 years ago YouTube grew thanks to cat videos. Will now Twitter and Facebook grow thanks to fake cat videos? I'm not on Facebook and not posting on Twitter, but most content I see there (and it is like 90% of all content) is fake.

But still - at COSM - Eric Schmidt said “the US is on course to run out of electricity in 2028”. That is because “electricity is slower to provision that compute power is.”. True, currently we plan like lemmings to continue building new ultra power-hungry data centers. But before we really run out of electricity, we may realize this (datacenter buildout) road does not lead anywhere anymore.

Then there is China. There is so much anger about this. How come, a socialist, centrally planned economy has taken over the poster child of freedom and capitalism? The answer seems to be simple: capitalism seeks fast ROI. Strategic developments and priorities such as transportation (highways / railroads), energy (generation / transmission), education, healthcare, and even housing, require consistent multi-decade planning. A 50-year horizon is way beyond anything that private capital can comprehend. That is why China has been outpacing the western civilizations that seek quick returns. It is worth noting that many such quick returns have been achieved by offshoring manufacturing to China. Yes it is the western capitalists who have built the Chinese power.

And there was nothing wrong about it, until recently when suddenly globalization fell out of favor, resources have been weaponized, and countries / federations have gone against each other. The truth is though, China still has plenty of cards to play, and I think we should seek good partnerships rather than trying to win against China (which may be difficult / impossible, at least within the next couple of decades or even centuries).