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Hey everyone—
Welcome to The Under Report, your weekly intelligence brief about the stories that move the world without making headlines.

I started this weekly newsletter to make geopolitics clear and accessible to everyone. We can understand the world without bombastic headlines, partisan moralization, or fear mongering. I'm so glad to have you all along for the ride and I can't wait to grow more.

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— Eric

Data centers are quickly becoming the digital world's most critical infrastructure. Inside these power hungry buildings server racks store data and crunch numbers. They're protected with redundant power systems, fire suppression, industrial cooling mechanisms, and tightly controlled access. Outside are high-voltage substations, water lines, and fiber optic trunks connecting it to the wider internet.

The purpose of them is to turn electricity, storage capacity, and data into power. The more data center space a nation controls the more power they can wield in an increasingly digital future. As demand for AI, streaming, and surveillance grows, so does the need for capacity, power, and resilience. But there's an interesting catch here, a nation's data centers do not necessarily have to be located within its borders.

This is kicking off a global race to find the best price point for digital supremacy.

In 2022, data centers (not including crypto mining) used between 240 and 340 terawatt-hours of electricity globally, according to the International Energy Agency. That’s about 1 to 1.3 percent of the planet’s total usage.

In the U.S., data centers consumed 4.4 percent of electricity in 2023 or around 176 terawatt-hours. A DOE-backed study from Lawrence Berkeley National Lab projects that by 2028, that number could climb to 12 percent, especially if AI demand continues to explode.

McKinsey puts the global bill for data center expansion at $6.7 trillion by 2030. That includes infrastructure to support traditional cloud services, but the lion’s share is driven by AI. Between inference and model training, generative AI consumes massive amounts of power and cooling.

One great way of driving demand is connecting it to existential risk. This is exactly how the US and China view data center access at the moment. Even a slight advantage in artificial intelligence is enough to shift the balance of global power. The question is: where can nations secure their computational capacity in the best conditions for the best price?

Australia, Iceland, Canada, and the Nordics are positioning themselves as AI-era resource hubs. They offer stable grids, cooler climates, and abundant renewable energy. This drops the price point for compute, but renewables can only produce so much energy. At some point prices climb and locals bear the price for nationalized data centers.

We've already seen this with the explosion of cryptocurrency mining. Since low price points for power increased profit margins on crypto there was a race for bargain basement energy prices. The AI data center race is exponentially more valuable and the race is becoming global a energy-constrained regions like Northern Virginia hit power ceilings.

New builds are now shifting inland and overseas. The goal: sovereignty over compute capacity.

The Gulf is emerging as a new frontier. The U.S. and Gulf states are pursuing massive data center partnerships. The U.S. secured a $20 billion AI data‑center and energy infrastructure deal with Saudi-based DataVolt. Meanwhile the UAE has launched a 5-gigawatt data center project in Abu Dhabi to anchor American cloud and AI operations in the region.

Another is the European turn. OpenAI's “Stargate Norway,” a $1 billion data center in northern Norway, will soon host 100,000 Nvidia GPUs—powered entirely by renewable energy—emerging as Europe’s first major AI infrastructure hub. China on the other hand, is ahead of the game.

After a three-year data center construction boom, China faces a capacity glut. The government plans to create a state-run national cloud platform to link underutilized centers and sell excess compute capabilities via a unified network. This initiative is being developed in collaboration with MIIT and state telecom operators. Since China's data centers are located within their borders and they are able to export capacity, this gives the CCP a notable advantage.

However, being able to maintain data is different from being able to use it effectively. The US has thus far led the way in defining the horizon of artificial intelligence. Either way, the race is on and time is of the essence.

Data centers are the battlegrounds of the digital age. Their location, power source, and ownership structure are now matters of geopolitical strategy. This is about shaping the future of intelligence, sovereignty, and economic power.

Eric Czuleger is a journalist and travel writer who has lived and worked in over 47 countries. He holds a masters degree from the University of Oxford and he is completing a National Security degree from the RAND school of public policy. He's the author of You Are Not Here: Travels Through Countries That Don’t Exist, and host of the “The_Under_Report” TikTok channel.

📚 Liked today’s brief? Dive deeper—check out my book You Are Not Here: Travels Through Countries That Don't Exist and explore the world’s unrecognized countries.

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