AI data centers need more raw materials. One investor is betting on recyclers.
· Business Insider
Business Insider
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- As hyperscalers race to build data centers, opportunities for recycling are opening up.
- Tazia Smith, the CEO of Closed Loop Capital Management, works with companies that do this.
- Smith spoke to Business Insider's Dan DeFrancesco on Wednesday.
Massive data centers, it turns out, are pretty resource-intensive.
And the AI sector's demand for raw materials like aluminum and copper is only increasing, Tazia Smith, the CEO of Closed Loop Capital Management, told Business Insider on Wednesday.
"That integration and demand for certain resources, as you alluded to, feels pretty structural going forward," she said during Business Insider's Tech Insider video event. "Not a cyclical blip, but a more permanent systemic transition."
Smith's company funds businesses that reuse raw materials in their supply chains. She told Business Insider's Dan DeFrancesco that as AI hyperscalers race to construct data centers across the country, opportunities to recycle at scale are multiplying.
Components inside data centers, for instance, need to be repaired or replaced relatively frequently. Smith said she works with companies that recycle these expensive components, rather than dumping them in a landfill.
"The large players that are focused on AI are also focused on resilient supply chains and material security," she said.
Data centers (or, as OpenAI now wants you to call them, "compute campuses") received a severe drubbing in last week's midterm elections, as voters shot down ballot measures supporting their expansion.
The often gargantuan server farms handle millions of chatbot queries daily, and companies like Microsoft and Meta consider them instrumental to their ambitions to dominate the rapidly expanding AI industry.
A principal critique of data centers has been what some describe as their deleterious environmental impact. Smith said she works with a company that specializes in plugging water leaks inside of data centers to minimize environmental harm.
Another company Smith works with, Moog, repairs valuable computing components like semiconductor chips, so data center builders don't have to buy replacements every 5 years.
"That equals value," she said. "That equals cost savings and opportunity to have wider margins."
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