Between trying to ‘save’ TikTok, offering to buy Greenland, and mooting a plan to rename the Gulf of Mexico to the Gulf of America, US President-elect Donald Trump has been pretty busy since his election victory last November.

But as Washington prepares for the second Trump inauguration on Monday, the reality of the 78-year-old Republican’s return to the White House is beginning to hit home.

A convicted felon and climate change denier who was twice impeached for his behavior during his last spell in office, Trump and his ultra-conservative agenda will have profound implications for the lives of ordinary Americans, while his views on international relations, and occasionally erratic decision-making, mean diplomatic incidents abroad will likely be myriad over the next four years.

For American data center operators, many of whom are planning multi-billion dollar investments during Trump’s term in office, the incoming administration’s pro-business stance could mean their lives are about to get considerably easier. But Trump’s foreign policy could lead to their supply chains, particularly those relating to AI components, becoming a lot more complicated.

Donald Trump and US data centers

The US data center industry has enjoyed exponential growth in recent years, powered largely by America’s hyperscale tech companies, the likes of Amazon, Microsoft, and Google, building massive data centers to run their cloud platforms.

This trend has been supercharged by the AI boom, with figures from Goldman Sachs, released last year, suggesting $1 trillion will be spent on AI data centers, components, and associated infrastructure over the next few years.

Much of this investment is going to the US, which, according to data from Synergy Research Group is home to 51 percent of all hyperscale data centers in the world. China, the second biggest location, houses just 16 percent of facilities.

These “strong fundamentals, particularly having the largest cloud market in the world,” are likely to spur further growth, regardless of who sits in the Oval Office, says Niccolo Lombatti, TMT industry analyst at BMI.

“The US has continued to grow its data center market consistently over the past years, irrespective of new presidents,” Lombatti says.

This is partly because the role played by the federal government in driving more data center investment to the US has been “much smaller when compared to municipalities and individual states,” he explains.

Indeed, state governments and smaller local authorities have regularly offered tax breaks and other concessions to attract data center operators, with many politicians seeing digital infrastructure projects as a good way to boost GDP in their regions.

However, Lombatti adds: “We believe the impact that the next US administration will have on the local data center market will be positive given its focus on AI-related infrastructure, though its overall contribution to the country’s computing capacity growth rates will be marginal in the broader context.”

Indeed Trump has already claimed an investment win, announcing earlier this month that UAE property firm Damac is to invest billions of dollars into developing data centers in the US. Damac says it intends to construct 2GW of data center capacity over the next four years.

Gassing up the US energy market

The question of how the AI revolution will be powered is one that has been occupying the minds of those in the data center and energy sectors. Data center power consumption in America is set to reach 35GW by 2030, more than double its 2022 level.

Trump’s stance on climate change, which he referred to in an October 2024 speech as “one of the great scams of all time,” means that, under his leadership, it is likely the US will look to prioritize the use of environmentally damaging fossil fuels such as oil, coal, and natural gas to meet these power needs. His selection of Chris Wright, an oil and gas executive who has previously said “there is no climate crisis,” is a likely indicator of the direction in which US energy policy is heading.

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Chris Wright: loves fracking fluid – Gage Skidmore/Flickr

Wright, who famously drank a cocktail of fracking fluid containing bleach in an effort to show that it was not harmful, was confirmed in post last week. At his confirmation hearing, he appeared to take a more nuanced view on climate change, describing it as “a global challenge we need to solve.”

However, at the hearing he also reiterated false claims that “wildfires are just hype,” despite the fires in Los Angeles that have been raging for the past two weeks, destroying hundreds of homes and killing 27 people. Research published last year in the Nature journal showed that climate change led directly to a 15.8 percent increase in the amount of burnt land globally between 2003-2019, and that figure is set to continue rising.

Whatever Wright’s personal views, it is likely that Trump’s “Drill baby, drill” policy will increase the amount of new drilling permits granted for fossil fuel production. Under the outgoing Joe Biden administration, the amount of new permits granted was minimized, with a heavy focus on renewable energy.

Trump has previously stated his opposition to wind energy, bizarrely describing the wind as “bullshit” and incorrectly stating that offshore turbines kill whales and onshore installations are a big danger to birds. Though experts have repeatedly debunked these claims (“other aspects of human life are far more damaging,” biologist Anne B. Clark told Mashable last year), Trump is expected to limit new offshore wind projects.

The incoming president has expressed his support for nuclear energy, describing it as “a great energy,” so the new administration could encourage more nuclear projects. For his part, Wright sits on the board of SMR company Oklo.

But all this means, at least in the short term, data center operators may be tempted to take advantage of more fossil fuel power, despite most companies in the industry striving to meet challenging net zero targets.

Natural gas, which is more environmentally damaging than renewable energy but has a smaller carbon footprint than coal, is expected to enjoy a surge in popularity, particularly with Trump tipped to remove restrictions on US gas exports imposed during the Biden presidency, which may spur greater production.

Karthik Subramanian, energy industry analyst at Lux Research believes natural gas will “play a big role” in the future of the US grid.

“With the Trump administration coming in, I am expecting a lot of natural gas-based incentives and a focus on gas power generation,” Subramanian says. “We have seen companies like Exxon Mobil and Chevron publicly state their interest in supplying power, rather than just supplying oil for data centers, which is quite a big jump."

He adds: “While Trump's general stance on wind turbines may slow down wind energy deployments, I do not see his general anti-climate stance significantly impacting other sectors. Sectors like nuclear may even continue to see an uptick since there is bipartisan support at the Senate.”

Chipping away at the semiconductor ecosystem

The Biden administration’s time in office was characterized by an escalating tech trade war with China centered around semiconductors and other components required to build advanced AI systems. The US government has been keen to ensure that China remains two nodes behind US companies when it comes to advanced chip production, citing reasons of national security.

As a result, AI chip vendors such as Nvidia and AMD have been banned from supplying their leading-edge products to Chinese clients, and Dutch company ASML has been told it cannot export its EUV lithography machines, which are critical to the manufacturing of advanced chips, to China.

Beijing has hit back with sanctions of its own, restricting Western access to chip-making materials such as gallium and geranium, most of which are manufactured in China.

Trump could exacerbate the situation, having mooted a plan to impose tariffs on foreign chip firms during a lengthy rant opposing the CHIPS and Science Act, a President Biden initiative that has seen billions of dollars of federal funding handed to chipmakers to spur US manufacturing.

Speaking on Joe Rogan’s podcast in October last year, Trump said that, instead of funding chip businesses, tariffs should have been imposed instead. "All you had to do is charge them tariffs," Trump said. "If you put a tariff on the chips coming in, you would have been able to - just like the auto companies, no different. More sophisticated, no different."

It is not clear what sort of tariffs Trump would impose and on which companies, though it would seem his comments were directed at Taiwan’s TSMC and South Korean firms Samsung and SK Hynix, all of which have received CHIPS Act funding to build factories in the US.

Michael Orme, chip industry analyst and co-founder of research company Signum Intel, says “anything Trump does will add to the damage the Biden administration has done to industry's ecology and web of global supply chains,” and “may short circuit it” completely. This is “a serious threat,” Orme says.

He believes China will continue restricting access to materials as it grows its domestic chipmaking capabilities. “China could create major supply problems for US chip companies such as Nvidia, AMD, Qualcomm, Intel, and Broadcom,” Orme says. If nothing else, he adds, this would “raise the industry's input prices on top of any such effects from Trump's mooted tariff policy, the details and phasing of which are unknown until executive orders start flying out of the Oval Office.”

Orme adds: “For the semiconductor industry, hence for its clients across the world's most important sectors, whether AI data centers, medical devices, or legacy chips for autos and IoT devices, a future of geopolitical distortion, supply chain volatility, and rising prices beckons.”

Crypto data centers on the comeback trail?

Among those celebrating most loudly when Trump was elected on November 5 were the crypto bros.

Trump has been on a journey with cryptocurrencies. In 2021 he described Bitcoin as “a scam against the dollar,” but has since taken a pro-crypto view, and says he plans to create a “strategic Bitcoin reserve” that would see the US buy up and hold a significant amount of digital assets. The price of Bitcoin has surged since the election.

Meanwhile, Trump has appointed crypto enthusiast David Sacks as his crypto and AI czar. Sacks, along with fellow Trump-backing tech entrepreneurs Elon Musk and Peter Thiel, is a former member of the so-called PayPal Mafia, a group of former founders and staff at the payments platform who have gone on to form their own tech businesses. He is a partner at VC firm Craft Ventures, and, according to the Washington Post, is already drawing up a legislative program for cryptocurrencies which could, among other things, remove a requirement for banks holding digital assets to consider them as balance sheet liabilities.

All this could be music to the ears of crypto data center operators, though, in the face of growing regulatory scrutiny, many have pivoted in recent years to offer GPUs and other cloud AI infrastructure instead. The most notable example is CoreWeave, which started out as a cryptomining operation but began pivoting to AI in 2019 following one of the periodic crypto crashes. It is now one of the biggest players in AI infrastructure, supplying GPUs to the likes of Microsoft.

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Bitcoin mining rigs. Is crypto on the comeback trail? – Marathon

Could some of these companies start pivoting back to crypto? BMI’s Lombatti says growth in the crypto data center market “is entirely plausible and to be expected,” but cautions: “Crypto data centers will continue to account for only a small portion of the broader data centre asset base, both in the US and globally.”

He continues: “Some caution on the previous bullish outlook is warranted when examining the hierarchy of data center use cases. We believe the second Trump administration will prioritise resources for data centers to be allocated to AI-related use cases, as this technology becomes increasingly critical to US national security.”

Therefore, Lombatti says, “although there may be a greater number of crypto data centers bidding for real estate or other related assets, we do not expect any major shifts in the near term in the growth of computing capacity supplied by crypto data centers in the US, as they will still have to compete with other platforms seeking to deploy facilities for different use cases, some of which may be more important to regulators.”

Challenges for Trump and data centers

Lombatti says the Damac pledge could be the first of many new data center investments in the US if the Trump administration promises to cut time to market.

“An increasingly important key investment criterion for data center investors in developed markets, particularly in the US, has been the speed at which platforms can deploy their infrastructure to maximize returns within their designated periods,” he says. “We expect investors to increase their deployments in the US under the new presidency if the second Trump administration can enhance the speed, scale, and cost-efficiency of bringing new data centers to market.”

However, he adds that the US market faces two key challenges. The first is that land and resources in Tier 1 markets, such as Northern Virginia, are in increasingly short supply, meaning US companies are starting to look abroad.

“We have seen a growing amount of US-based platforms deploying data centers in neighboring markets connected by modern subsea fiber-optic infrastructure, such as in Brazil, to mitigate the previous issues,” Lombatti says. “These markets, to different extents, have started to offer more appealing investment conditions and generally lower initial costs of investments and operating expenses that enable platforms to lower both their total costs of ownership and lease rates to US-based customers.”

The Biden administration last week moved to make more land available for data centers with the President signing the US Leadership in AI Infrastructure Executive Order, which directs federal agencies such as the Department of Defense to open up their land for large-scale data center developments.

However, Lombatti says Trump will need to go further if such a scheme is to pay off. “The project involves a series of conditionality clauses, including the usage of clean energy sources and US-manufactured semiconductor technologies,” he says. “These can dampen investor interest in the scheme, particularly from platforms that cannot procure the designated hardware or technical requirements.

“It is also the case that Federal Land plots may not appeal to investors if these are located in sub-optimal locations, such as away from fiber lines and customers looking to deploy latency-sensitive use cases.”

He adds: “Although there are no formalized plans about this at the moment, we expect that if the new administration looks to boost investment by making data center deployments quicker and potentially cheaper, it may involve engaging with local councils or bypassing them in extreme cases.”

Local politicians are the second fly in the ointment, Lombatti adds. “Council approvals of projects have been increasingly delayed in Tier 1 sub-markets, with project rejection rates rising due to waning community support for some new developments as facilities move closer to residential areas,” he says.

Lawmakers across the US have shown increasing skepticism about data center projects in the face of local opposition and concerns about the strain the facilities put on water and power infrastructure. Last week, for example, a bipartisan group of Virginia legislators pressed ahead with measures that would see greater oversight placed on data center operators.

Lombatti argues that if Trump’s administration wants to supercharge the AI data center build-out, it may need to intervene directly, pointing to other markets such as the UK, where the Labour government has been active in ensuring digital infrastructure projects are given the go-ahead, even if they are opposed by local councilors.

“Though politically sensitive, there is a global trend of central governments intervening in data center regulation for their Tier 1 sub-markets, driven by AI's increasing importance to national security and its potential to enhance employment and growth, particularly in the US,” Lombatti says.

“There is a possibility that the second Trump administration may pursue greater Federal oversight over municipal rejections of data center building proposals. This approach has shown positive effects on investor confidence.”

Additional reporting by Zach Skidmore