The AI Daily Brief: Artificial Intelligence News and Analysis - The Right Way to Deal With AI Data Centers

Starting point is 00:00:00 Today on the AI Daily Brief, the right way to deal with AI data centers. Before that are the headlines, updates on Mythos, SpaceX, Neocloud, and much, much more. The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI. All right, friends, quick announcements before we dive in. First of all, thank you to today's sponsors, KPMG, robots and pencils, mission cloud, and out systems. To get an ad-free version of the show, go to patreon.com slash AI Daily Brief, or you can subscribe on Apple Podcasts. And to learn more about sponsoring the show, send us a note at sponsors at AIDailybrief.a.i. Last note, I've been sharing the new training.bysup.a.i.

Starting point is 00:00:44 This is the updated home of some of the programs that we've been experimenting with this year, including the executive catch-up program, as well as the inheritor to Enterprise Claw, which is the Enterprise Grade Version Executive Agent Leadership Program. That is a six-week sprint that will have you not only building agents, but also building the organizational infrastructure, policies, etc., around them that you need. to actually use agents. The next cohort for that launches on June 29th. Sign up now. Again, you can find all the links that are relevant at training.bisupert.a.i. We kick off today with an update in a story that we were covering yesterday, which is around the NSA dimension of the Mythos Fable Ban. Now, the

Starting point is 00:01:23 TLDR of what I was discussing in that initial coverage was that there seemed to me to be a mismatch between what was actually said in the way that it was being interpreted. In short, people sitting around waiting for Fable to return, were looking for a reason that made a little bit more sense than there just being this jailbreak that Amazon had reported, and when they went back and found a story that seemed to indicate that the NSA had been hacked by mythos, it seemed to some to make more sense. Now, commentators with an understanding of NSA operations pointed out that what the director was telling Senator Mark Warner was likely a discussion of a controlled red team exercise rather than some live cyber attack. Shishon Joshi, the economist reporter whose article went viral,

Starting point is 00:02:01 has now provided an update writing, a U.S. official tells me that Senator Warner misunderstood the NSA director of General Rudd in this case. Rudd did use the hours not weeks wording, but the use of mythos in this context was, as widely assumed, part of a red teaming effort, i.e. testing the security of internal networks. The official also told me that the agency's red teams no longer have access to mythos because their authority for accessing it was under Project Glasswing. Yoshi pointed to commentary from a cybersecurity account called Iris C2, suggesting that they had the correct read on what had actually happened. That account noted that, quote, in the case of almost every exercise, the Red Team begins with some kind of initial access to the air-gapped classified network.

Starting point is 00:02:42 Essentially, classified NSA systems aren't generally accessible from the outside, and gaining that initial access is one of the most difficult parts of any attack. IRIS C2 commented that Mythos doesn't suddenly mean that any random person can suddenly hack the NSA. However, they did note that if an attacker manages to gain access, Mythos makes the design and execution of an exploit much faster, reducing the available time to detect and contain an intruder. So the point if we're looking for takeaways is not that Mythos has broken into the NSA, but that it does raise the stakes for cybersecurity by making attackers far more efficient. Now, the bigger detail for many was the throwaway line about the NSA not having access to Mythos anymore, yet another reason

Starting point is 00:03:22 to want this situation to be resolved as soon as humanly possible. Now, staying on the cybersecurity train, OpenAI has updated their cybersecurity model alongside a big new cyber initiative. On Monday, OpenAI announced a significant update to their Daybreak Security Initiative. Daybreak was first launched in May as an answer to Anthropics Project Glasswing. As part of the initial rollout, OpenAI made a preview version of GPD-55 Cyber available to trusted partners. As a point of differentiation to Glasswing, OpenAI invited smaller organizations to apply for access. OpenAI wrote,

Starting point is 00:03:54 Frontier defensive capabilities should not be concentrated in the hands of a few. As AI changes the pace of vulnerability discovery, defenders everywhere need democratized access to these models to find, fix, and protect their infrastructure before attackers can identify and abuse these flaws. With the expansion, OpenAI has now launched the full version of GPD-5-5 Cyber, their first model that's been fine-tuned for cybersecurity work. Like Mythos, the model has reduced guardrails to ensure professionals can use it freely in their work, and OpenAI has updated the Codex security plugin to make their harness

Starting point is 00:04:23 more performant for cybersecurity tasks. OpenAI is claiming that with the new updates, their new cyber model has overtaken Mythos on the relevant benchmark CyberGim. In addition, OpenAI is launching a new initiative called Patch the Planet in partnership with security research firm Trail of Bits. Reporting on their initial testing of GPT-5-5 Cyber, Trail of Bits wrote that they'd found hundreds of bugs in open-source libraries. They've deployed 37 patches so far and have many more in the pipeline.

Starting point is 00:04:48 Over 30 open-source projects have already joined Patch the Planet with the goal of securing the critical software that underpins the digital world. Trail of Bits noted that the introduction of strong AI security models has fundamentally changed the nature of the work. They wrote, If it wasn't already clear from the last several months of security news, this week makes one thing clear. The expensive part of security work has moved. The advantage is no longer in finding bugs, but everything after. Confirming a finding, getting its severity right, writing a patch a maintainer will accept,

Starting point is 00:05:15 and coordinating a disclosure. That is the work that floods of AI-generated reports threatened to bury. The release comes as the Five Eyes Intelligence Agencies, which is an intelligence alliance between Australia, Canada, New Zealand, the UK, and the United States, issued a rare public alert for AI-driven cyber risk. In a bulletin published on Monday, the UK National Cyber Security Center wrote, The evolving landscape of AI is rapidly transforming cyber risk and we must act swiftly to remain ahead. The bulletin called on the business community to assess the changing risk, prioritize cybersecurity practices, and, quote, stay actively engaged as threats and guidance evolve. The agencies warned that the rapid pace of frontier AI development means cyber risk

Starting point is 00:05:52 assumptions can become outdated in months, not years. They also heavily encourage the integration of AI tools into cybersecurity operations, and warn that, quote, cyber risk can no longer be treated as a purely technical issue. This is a core business risk and leadership responsibility. Now, nothing in the bulletin will be surprising anyone who has been paying attention, but it's pretty clear that the intention of the bulletin was to light a fire under the enterprises who perhaps are not spending as much time listening to the AI Daily Brief as they should.

Starting point is 00:06:19 Now, staying in the regulatory space, a story that isn't exactly related to AI, but which is being kind of lumped in as frontier tech writ large, President Trump has called for the construction of a powerful quantum computer in a pair of new executive orders. One order instructs federal agencies, including the Energy Department, to collaborate with private industry to deploy a quantum computer for scientific research purposes. Michael Kratios, director of the White House Office of Science and Technology Policy, said he believes a functional computer can be done by 2008. In addition, the first order instructs the government to migrate to quantum secure cryptography by 2031. The second order deals with protection of intellectual property within quantum

Starting point is 00:06:55 companies and hardening the supply chain for components for quantum computing. This order emphasizes the need for international cooperation to prevent the technology from falling into the hands of adversaries. Now, for anyone who's been paying attention to the quantum story, it is honestly a little hard to tell exactly where the state of the technology is, nor is it particularly easy with its administration to know at any given time what the motivations behind an executive order are. So for this one, I'm going to have to just leave it at the news and make of it what you will. Now, on the market side of the house, SpaceX has signed another multi-billion dollar data center deal as Elon Musk extends his compute empire.

Starting point is 00:07:31 Open source AI startup Reflection AI agreed to pay $150 a month to rent capacity from the Colossus 2 data center. That agreement begins next month and runs through to 2029, putting the total deal value at $6.3 billion. As with the other SpaceX deals, either party can walk away on three months notice. This is also significantly smaller than the Anthropic and Google deals, each running it around a billion dollars a month. Still, with SpaceX coming down from its IPO sugar rush, anything that helps people understand the long term of the business is probably helpful. Reflection AI, meanwhile, used the deal as a way to promote themselves as a domestic open source alternative. In a press statement, the startup said, recent events highlight how important open source is to the

Starting point is 00:08:08 AI ecosystem, with more nations and enterprises recognizing the risks and costs associated with exclusively depending on closed models. They said that the deal signals their strategic importance in the frontier AI ecosystem and that more compute would give them more runway to develop leading open models. Now, reflection is yet to release their first frontier model, but has been working with government partners, including the Pentagon and the Department of Energy's Genesis mission. Now, Sweeks from latent space thinks of what we might be underestimating the potency of SpaceX's new moves. He tweeted, I don't think anyone is correctly doing the math around how SpaceX, the NeoCloud plus NeoLab is currently going to market. SpaceX has already recouped about half its

Starting point is 00:08:45 investment in cursor in compute deals. The other half is paid for if Composer 3 does well. No other company is simultaneously a leading model lab and NeoCloud, at least where GPUs is concerned. It's a crazy effective combo if you've adequately planned out GPU supply if in-house training one goes very well or two doesn't go very well. Which is certainly not to say that SpaceX did well yesterday, actually experiencing a 16% drop, but it wasn't the only AI company running into some trouble. Google stock fell sharply as the market reacted to the loss of two key AI researchers. On Monday show, I covered the departure of Nobel laureate John Jumper, who left DeepMind

Starting point is 00:09:21 for Anthropic just a couple of days after Noam Shazir packed his bags to join OpenAI. The sort of standard reading of the situation is things going sideways at DeepMind, and there were plenty of anonymous quotes to be had to suggest morale was plummeting, as Google lags behind in the AI race. Now, while my personal take was that we have a tendency to overreact, to personnel changes, evidently the market disagrees. Google's stock was down as much as 7.2% on Monday, its largest intraday move since February. That means that if you can attribute this directly to those two employees departing, those departures cost the company over $200 billion in market cap.

Starting point is 00:09:55 Now, it might be reasonable to chalk this up to the market over-indexing on AI headlines once again as they did during the deep-seek moment. But there is also a more fundamental narrative shift happening around Google. Up until very recently, Google had been the top performer in big tech, and even briefly became the largest company in the world. And yet the more that the perception is that Google's models aren't keeping pace with Anthropic and Open AI, particularly on enterprise essential agendic use cases, skepticism has started to creep in. With that as background, Jumper and Shazir moving to rival labs, seems to confirm that point of view rather than simply representing some new trend. Gil Loria, the head of technology research at D.A. Davidson, summed up that viewpoint saying,

Starting point is 00:10:34 Google is losing the war for talent at the frontier of AI. Google had the state-of-the-art model for a few weeks last year, which helped it get credit as an AI winner but has fallen off since, and these departures may mean it is falling behind. Now, I will say I'm sticking to my guns, around reading too much around any personnel moves, and I think Prime Intellects Florian brand is directionally correct when they write, we are in peak Google is done for and will never catch up, which is always followed by them releasing a new model and people going the others are done for. No one has the TPUs and data that Google has. For now, it is for Marcus to debate which side of that equation is more accurate,

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Starting point is 00:14:09 agendic systems platform that is unified, agile, and enterprise proven, allowing you to accelerate growth, reduce operational friction, and deliver real enterprise impact with AI. OutSystems, build your Agentic future. Welcome back to the AI Daily Brief. Today we're going to take advantage of a slightly slower news cycle in which everyone is somewhere between sitting on their hands waiting for Fable 5 to return or going full open source tinker or building out local infrastructure in their basements to try to discuss calmly one of the most contentious issues surrounding AI, which is the impact of data centers. Now, on any given day, I could find a reason to discuss this topic. Especially with midterm elections coming up, it is becoming more and more of a hot button,

Starting point is 00:14:50 and it's also rising in cultural significance. On his popular this past weekend podcast, Theo Vaughn recently went on a data center rant. He said, Nobody wants a data center dude, and the people that want them to me, they seem kind of evil. One of these companies is going to own all this information. There's going to become this social or emotional credit score and then AI is going to try to become our new God. Which, by the way, has to be a contender for the most misperceptions or concerns, depending on your perspective about AI, shoved into a single paragraph. And yet Theo Vaughn here is, I think, more reflective of an emerging mainstream point of view than he is even a leading indicator. AI researcher

Starting point is 00:15:24 Andy Masley recently posted a New Yorker cartoon of a little robot coming into its parents' bedroom, with the mom reaching over to the dad and whispering, it's AI again, he wants another thousand glasses of water. As Andy, who has done more to debunk some of these myths than just about anyone, captioned, this idea will never die. And on those lines, you might have recently noticed that famed activist Aaron Brockovich has started a major campaign against data centers. And on the other side of the political aisle,

Starting point is 00:15:50 former Tea Party conservatives are now planning a nationwide protest against AI data centers. The New York Times quoted comedian Charlie Barron's calling opposition to data centers the most bipartisan issue since beer. Now, when you hear critiques, despite Theo, grabbing some concerns that we've previously heard around things like central bank digital currencies, i.e. the worry about a social credit score. For most people, the two big issues come down to water use and energy prices. Take for example this recent tweet from Indiana resident Valerie Ann Smith. She wrote, Amazon is dropping an $11 billion AI data center right in Indiana. This monster will guzzle electricity for 1 million homes and 300 million gallons of water every

Starting point is 00:16:30 single year, just one facility. Our grid is already crumbling, bills will explode, water shortages in coming, blackouts while they power their AI overlords. And these same tech giants lecture us regular people about climate change? Nicole Dividar, who so far as I can tell from just their Twitter profile, seems to be pretty much as opposite politically as she can be from Valerie Ann Smith, reposted that and reiterated that key point. Amazon's Monster Data Center projected to consume 300 million to 330 million gallons of water every year.

Starting point is 00:16:58 Insane. The way we're going will be the downfall of humanity in every living being. The madness must end. The thinking that nature is here to exploit must end. Now, these numbers do seem at first glance huge. 300 million gallons of water a year seems like just an enormous amount, right? Overall, Amazon recently released full water use statistics for their data centers, and according to their figures, their global data center operations consumed 2.5 billion gallons of water in 2025.

Starting point is 00:17:25 Now, that report did note that water use at its sites had actually fallen 2% from 2024, even though it expanded its data center footprint meaningfully, but still 2.5 billion gallons of water, right? The problem is that relative to many of our other uses of water, these numbers actually aren't particularly large. So to use some comparisons, the 16,000 golf courses in the United States, consume over 500 billion gallons of water a year. That means that a full year of operations for Amazon's data centers is slightly more than a single day of U.S. golf course maintenance. Another frequent point of comparison is almonds. California almonds used between 1.2 and 1.8 trillion gallons of water each year, which is somewhere between 5 and 8 times the total amount of water

Starting point is 00:18:09 used by all data centers in America. One recent study found that the U.S. lost 3.29 trillion gallons of water per year to leaky pipes, about 15 times as much as data centers use. And one of the key sources for the myth of water consumption, author Karen Howe in her book, Empire of AI, had to apologize for her most dramatic claim being a factor of a thousand wrong. Basically, she claimed that a Google data center in Chile consumed a thousand times more water than the surrounding population, but she was off by a factor of a thousand due to a unit mix-up. Howe eventually acknowledged the error and issued the correction, but the book is still out there saying the same thing. In Indiana, The citizens were concerned about Amazon's data center using 300 million gallons of water

Starting point is 00:18:50 per year, the state delivers a little under 500 million gallons of water per day for domestic use, or around 182 billion gallons per year. That means the Amazon Data Center represents 0.2% of water use for the state without including industrial use. And this gets to one of the biggest problems with the data center conversation when it comes to water, which is that if you don't like the thing that the water is being used for, even one gallon is too many. And that's really what a lot of this critique comes back to. Big numbers are politically potent because most people don't have any idea of how much water we actually consume. And these numbers all just sounds so astronomically large that it's very easy to grab attention and get people to think that the water being used is

Starting point is 00:19:30 just too much. Now it's more. For those who think that even this is too much water, the companies in the data center space are working to reduce it even more. InVideo recently touted what they called one of the biggest efficiency leaps in data center history, saying that their new approach to liquid cooling could cut water use to near zero. Now, as I mentioned, the second big issue that comes up around data centers is the idea that they drive up electricity prices. And once again, digging into the numbers, it's a lot less clear than the data center opposition would make it seem. The Institute for Energy Research recently concluded, there is no statistically significant correlation between the number of data centers in a state and its current electricity prices. In fact, prices in the

Starting point is 00:20:11 top 10 data center states are virtually identical to the average across other states. For Furthermore, there is no statistically significant relationship between data center concentration and faster increases in electricity rates. Now, where I think that this does get more complicated is that ultimately, most electricity price pressure is due in some way not just to new data centers coming online, but to costs associated with upgrading an aging grid, a problem that we have to face even without the new data center build out. The Daily Economy explored this research and asked why so many Americans are convinced that

Starting point is 00:20:43 data centers do increase their electricity prices. They concluded, In the short run at the local level, the story is more complicated. A Bloomberg analysis of wholesale electricity prices across 25,000 grid nodes, found that prices have risen as much as 276% since 2020 in areas near major data center clusters. More than 70% of nodes recording price increases were located within 50 miles of significant data center activity. In these regions, data centers create a surge in demand on local grids. When transmission capacity is constrained and the new generation has not yet come online, prices spike. Those higher wholesale costs can then filter into retail bills, at least in the short run, and local customers bear the brunt of this regional

Starting point is 00:21:19 electricity demand. Now, continuing later, they write, concentrated price spikes are not evidence that data centers are inherently incompatible with affordable electricity. They are evidence that grid infrastructure and cost allocation rules haven't kept up. They then point to some of the examples of how policy is racing to catch up with this and make things more fair in the short run as well. They point to, for example, Oregon's Power Act, which requires the biggest electricity users, i.e. the data centers, to bear the cost of infrastructure that is built specifically for them. This is also the same principle behind the White House's rate payer protection pledge, where companies agreed to, quote, protect American consumers from price hikes due to data

Starting point is 00:21:57 center energy and infrastructure requirements and lower electricity costs for consumers in the long term. The five commitments in the pledge included specifically building, bringing or buying new power supply, paying for new power delivery infrastructure upgrades, paying whether they use the power or not, investing in local job creation and workforce development and contributing to electric and community resilience. Now, my personal belief and why I think this is worth talking about, is that as with much in the AI debate, the conversation on both sides gets wildly reductive and extreme. It tends to be snarky reactions, like Mark Andresen reposting Theo Vaughan's post,

Starting point is 00:22:31 saying, I have bad news about your podcast, dude, pointing out the inherently hypocritical position of critiquing data centers when they are the thing that allows his podcast to reach all the people that it reaches, or you have commentary, as Alex Finn said, that just calls this insane dribble. Now, Alex is someone who's incredibly excited about AI, and I think rightly points out that there is a huge excitement gap between, for example, America and China when it comes to AI. He writes, if a large majority of Americans believe the most powerful, prosperous, important technology of our lifetimes is somehow evil, we simply won't be able to keep up with a country that believes it's good. And while I think that that's right,

Starting point is 00:23:05 we're not going to convert people by not taking their concerns seriously. Now, I think that in all of this, maybe the most important actor for finding space in the middle are the labor unions. Labor unions represent multiple constituencies. On the one hand, they are of the communities that have these concerns, and I think take them seriously. I think they are sympathetic to concerns that AI and any big tech is another way to disproportionately benefit the already rich. At the same time, unions representing key skilled blue collar work are also at the forefront of seeing how valuable the data center buildout can be, as the demand for more skilled work from their members just goes up and up and up. The information Zand Davis Vaughn recently wrote a piece

Starting point is 00:23:47 called debunking the myths that AI Data Center critics believe. And I actually think that the title undersells the value of the piece. I think that her lead paragraph nails it when she writes, I've been visiting large AI data center projects in rural and industrial communities in the Midwest, Southeast and West, and I have found that two things can be true at the same time. AI data centers have drawbacks but are better for communities than their residents think, and those communities can win a lot more financial concessions and benefits from the tech firms than they realize. I think right now, communities are being taught to felt like their choices are rollover and let big tech in the data centers do whatever they want with the natural resources surrounding

Starting point is 00:24:28 their homes, or on the other end of the spectrum, get your signs and pitchforks and stop it from happening entirely. I think communities should, absolutely, get to advocate for what they think is right for their communities, whatever it may be relative to data centers. But I think that they're missing that there is a massive middle path where they can be negotiating for the data center builders to effectively give them the world. Anne's article starts to make this a little bit real. She writes, in rural Richland Parish, Louisiana, for instance, hundreds of teachers are set to receive unprecedented $50,000 bonuses this year, funded by a surge in tax receipts tied to meta platforms, which is building a large AI campus there, an existing ordinance mandates that teachers get a

Starting point is 00:25:07 slice of sales taxes and teacher bonuses quintupled due to their activities related to campus construction. Not to be too crass about this, but I think that with the amount of money involved and the stakes of what's being built, we're not just talking about data center builders and owners making sure that people's electricity prices don't go up. We're talking about major intentional economic benefits to the communities if negotiated well. I hope that we can move past the knee-jerk binary phase of this conversation into the How Everyone Wins phase sooner rather than later. For now, that's going to do it for today's AI Daily Brief. Appreciate you listening or watching, as always. Until next time, peace.

The AI Daily Brief: Artificial Intelligence News and Analysis - The Right Way to Deal With AI Data Centers

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