BlackRock is getting serious about artificial intelligence (AI) infrastructure. The largest asset manager in the world is collaborating with Microsoft to launch a $30 billion AI investment fund.
The goal? Build data centers and energy projects to handle the exploding demand for AI products. People close to the matter say this fund will be one of the largest on Wall Street.
Chipmaker Nvidia and MGX, a company backed by Abu Dhabi, are also partners in the fund.
Hi demand, meet supply
The energy demand from AI is skyrocketing. AI products need far more power than older tech ever did. This growing demand is putting pressure on current energy systems.
The new fund is meant to tackle that, building infrastructure to prevent bottlenecks that could slow down AI progress.
BlackRock’s new infrastructure investment unit, Global Infrastructure Partners (GIP), is taking the lead.
This will be GIP’s first major fund since BlackRock agreed to buy them for over $12 billion some months back, though the deal hasn’t even been finalized yet.
Larry Fink, the founder and CEO of BlackRock, told investors this year that he hasn’t seen this level of demand for AI in his 50 years in finance.
The AI investment fund is a big part of BlackRock’s strategy to capitalize on this surge. AI systems need massive amounts of electricity, and the current energy infrastructure just isn’t ready to support it.
Earlier this year, Microsoft made a $10 billion commitment to renewable energy projects in Canada through Brookfield Asset Management.
They’ve also set a goal to match 100% of their energy consumption with zero-carbon energy by 2030.
Brad Smith, the company’s president, said that the world is going to need much more capital investment to build the AI infrastructure we need.
Energy demand is through the roof
But AI is also driving up an insane increase in energy use.
The International Energy Agency (IEA) estimates that global electricity consumption by data centers could hit over 1,000 terawatt-hours by 2026. That’s double the amount used in 2022.
According to a report from Grid Strategies, electricity demand growth in the U.S. over the next five years is expected to almost double, jumping from 2.6% to 4.7%.
Both Microsoft and BlackRock did not respond to Cryptopolitan’s requests for comments.
But it’s pretty clear that this fund is all about preparing for the future of AI. Tech companies are racing to build data centers loaded with Nvidia’s graphics processing units (GPUs).
These GPUs are quite literally critical for running AI models like OpenAI’s ChatGPT.
But they burn through a lot of power, and the rush to set up new data centers has led to a bottleneck in infrastructure.
Microsoft is feeling the strain. In July, they reported that their capital spending for the fourth fiscal quarter reached $19 billion.
This includes assets bought under finance leases, which is mostly going toward building out infrastructure for Azure, their public cloud service.
Azure is where companies like OpenAI get the computing power they need to run their AI models.
