Electricity Will Decide the AI Race

Project Syndicate reports Electricity Will Decide the AI Race

The next stage of the global AI race will be decided not by algorithms or chips, but by electricity – and that puts China at a distinct advantage. While Western tech giants are emphasizing closed, capital-intensive models that demand enormous computing power, China is embracing open-source AI and massively expanding its renewable- and nuclear-energy capacity, thereby positioning itself to deploy powerful AI technologies at scale without breaking the bank.

By advancing open AI models and investing in renewable-energy capacity, China is creating an energy-compute flywheel: more clean power enables more compute, which in turn optimizes the grid. This puts China at a distinct advantage vis-à-vis the West, where energy constraints are creating digital bottlenecks.

These differences reflect a more fundamental split. Whereas the United States and its allies have treated AI as a proprietary technology, China has approached it as public infrastructure, building an open AI ecosystem that reflects the same philosophy it applied to manufacturing: broad adoption, fast iteration, and relentless cost reduction. Chinese open-source models like DeepSeek, Qwen, and Kimi are not just scientific achievements; they are strategic instruments designed for participation, and they are transforming the economics of AI.

DeepSeek’s latest version reportedly matches the capabilities of frontier systems, like those being developed by US companies, at a fraction of their compute cost. Qwen and Kimi’s API prices have fallen by orders of magnitude. In purely economic terms, the marginal cost of “thought” is collapsing. The inference costs of some Chinese models are a tenth or less of those incurred by OpenAI’s GPT-4.

What once was a contest of algorithms is fast becoming a contest of kilowatts, and China is setting itself up to win. In 2024, the country added 356 gigawatts of renewable-energy capacity – more than the US, the European Union, and India combined – with 91% of all new generation coming from solar, wind, and hydro. Battery storage tripled from 2021 levels, and an ultra-high-voltage grid now carries clean power thousands of miles, from deserts to data hubs.

China is also investing heavily in nuclear energy. According to the Information Technology and Innovation Foundation, its nuclear research and development spending is roughly five times higher than that of the US. As its fourth-generation reactors and small modular designs advance from pilot to deployment, nuclear energy is quietly providing the baseload power that intermittent renewables cannot.

Meanwhile, the West’s energy constraints – aging grids, slow permitting processes, and high prices – are creating digital bottlenecks. In the US and elsewhere, data-center expansion is increasingly limited by access to a reliable supply of electricity. Some jurisdictions – such as Virginia and Dublin – face moratoria on new data centers.

Hydropower Electricity

On July 234, 2025, SCMP reported China is building the world’s biggest hydropower dam.

On the eastern rim of the Tibetan plateau, China envisions a future powered by the roaring waters of the Yarlung Tsangpo, also known as the Brahmaputra. The river will be the site of a mega dam – the world’s most ambitious to date – that promises to bring clean energy, jobs, infrastructure and prosperity to the region.

How big is the mega dam?

The dam will be situated in the lower reaches of the Yarlung Tsangpo, where a section drops 2,000 metres (6,562 feet) over a 50km (31 miles) stretch, creating immense hydropower potential. The dam is reportedly located in Medog, a remote county in the city of Nyingchi in the Tibet autonomous region.

When completed, the project will overtake the Three Gorges Dam as the world’s largest hydropower dam. It could generate three times more energy with five cascade hydropower stations – an estimated annual capacity of 300 billion kilowatt-hours (kWh) of electricity, more than Britain’s total annual power output.

It is estimated to cost around 1.2 trillion yuan (US$167 billion), dwarfing many of the biggest infrastructure undertakings in modern history at around five times the cost of the Three Gorges Dam and even more expensive than the International Space Station.

Drill Baby Drill

China’s plan to utilize gravity is more environmentally friendly than either Lake Powell or Lake Meade in the US.

And China is increasing nuclear power.

Meanwhile, the Trump administration plan is “drill baby drill” resources that will eventually run out.

DeepSeek AI is Free, the Comparable Version of ChatGPT Costs $200 a Month

On January 28, 2025, I noted DeepSeek AI is Free, the Comparable Version of ChatGPT Costs $200 a Month

Wall Street is stunned and rightfully so.

ChatGPT vs Deep Seek Open Source

ChatGPT is not open source. While OpenAI, the company that developed ChatGPT, started with an “open” philosophy, it transitioned to a for-profit model and keeps the architecture and source code for its most advanced models, including the one that powers ChatGPT, closed.

“Deep Seek’s biggest disruption is cost. It’s built at a fraction of the price of its competitors. Deep Seek is free to use.”

I fail to see how a proprietary ChatGPT can win this race. And it’s why Elon Musk filed suit against Open AI when it changed to a for profit model.

Elon Musk Litigation

• Breach of founding mission: Musk’s lawsuits claim that OpenAI was established to develop artificial general intelligence (AGI) for the benefit of humanity as a nonprofit organization. He argues that by transitioning to a for-profit company and forming a lucrative partnership with Microsoft, OpenAI abandoned its core principles.
• Withdrawal and refiling: Musk first sued OpenAI in early 2024 but dropped the lawsuit in June of the same year without explanation. He then filed a new, more detailed lawsuit in August 2024.
• Antitrust claims: The lawsuits have also included federal antitrust claims, alleging that OpenAI and Microsoft have engaged in unfair practices that harm competition.
• Injunction attempts: Musk has repeatedly sought a preliminary injunction to block OpenAI’s transition to a for-profit structure, but judges have denied these requests, allowing the case to proceed to trial.
• OpenAI’s defense: OpenAI has denied Musk’s allegations, claiming his lawsuit is baseless and motivated by his own competing AI interests through his company, xAI. OpenAI has released emails from Musk that it says show he previously supported a for-profit model.
• Countersuit: In response to Musk’s legal actions, OpenAI filed a countersuit against him in April 2025, claiming he has repeatedly tried to harm the company. 

Who wins the lawsuit will hinge on whether or not Musk had a binding legal agreement with OpenAI cofounders Sam Altman and Greg Brockman, in what is legally called a charitable trust.

If Musk’s donations to OpenAI created a legally binding trust, the balance of equities tips toward the plaintiffs.

Trump vs Reality

Canada is a global leader in aluminum production due to its abundance of renewable hydroelectric power. 

“If you wanted to replace what we ship to the U.S. on a yearly basis with an equivalent carbon footprint, you would need to build six Hoover Dams,” said Jean Simard, president and CEO of the Aluminum Association of Canada.

Electricity Costs Are Soaring and AI Will Make Matters Worse

Please note Electricity Costs Are Soaring and AI Will Make Matters Worse

Electricity demand for AI data centers is soaring. The result won’t be pretty.

But hey, let’s make aluminum, copper, and steel manufacturing great again with 50 percent tariffs.

Nothing can possibly go wrong, except everything.

Circular Investment Deals in AI Look Similar to the Dot-Com Bubble

Finally, please note Circular Investment Deals in AI Look Similar to the Dot-Com Bubble

Please buy my product, and I’ll use the money to buy yours.

What Does it Mean Synopsis

1. It’s different this time
2. It’s a bubble

Hundreds of billions of dollars are sloshing around in the US in circular investments for models that are no better and arguably worse than China’s open source models.

Can anyone tell me when, where, and how much actual profit comes from this?

Meanwhile, all of this investment flurry helped prevent a recession so far in 2025. Will the luck remain?

Finally, that China is ahead does not mean they stay ahead. However, for what we have spent, the US should be far in the lead.

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