Blackstone and its Burgeoning AI Data Centre Empire

Blackstone Continues to Invest in Data Centre Operations Across the US, Amid a Rapidly-Evolving Global AI Boom, as Data Centres Seek to Meet Energy Demands

Customer demand for AI is rapidly growing in the data centre sector and Blackstone is working hard to lead the charge.

The private investment banking company has witnessed rapid technology growth in the wake of its US$10bn takeover of data centre operator QTS in 2021. In addition to being the world’s largest private equity firm, the company is currently overseeing the development of large data centres that will be equipped to handle increased AI and computing needs.

Describing the investment as one of its greatest ever, Blackstone continues to place focus on data centres amid a rising global demand for power.

Investing in the ‘AI revolution’

The data centre industry is currently undergoing copious amounts of pressure, amid a rising demand for power and energy. During a time of digital transformation, attributed to the growth of generative AI (Gen AI), the sector is keen to continue investing in new technologies to grow their digital economies.

The data centre colocation market in the United States alone is expected to reach heights of US$279.1bn by 2034, according to Future Market Insights. This has been attributed to the industry seeing substantial digitisation as it evolves to support customer needs.

As a result, large enterprise investment in data centres can ultimately contribute to greater innovations.

In December 2023, Blackstone company picked up the pace with its data centre investments by entering a joint venture with leading data centre company Digital Realty. This was part of a wider plan to develop four hyperscale data centre campuses. The decision came in the midst of the data centre industry seeking to confront the growing demand for hyperscale data centre space during an age of fast-paced digital transformation. 

At the time, President and COO of Blackstone Jon Gray said: “Data centres are experiencing once-in-a-generation demand growth, driven by cloud adoption and the AI revolution. Digital infrastructure is one of our highest conviction investment themes as a firm, and this transaction with a trusted data centre operator in Digital Realty is another example of how we are investing behind this trend.”

Data centre demand during an energy crisis

However, the data centre industry also needs to evolve sustainably. Greater power needs are coming during a global energy crisis that is witnessing supply being unable to meet current demands.

As AI and other new technologies continue to be in high demand worldwide, the data centres that facilitate this growth will double their electricity consumption in just two years. With this in mind, rather than developing for the sake of it, data centre companies and investors will need to consider greater energy efficiencies in order to meet sustainability goals.

Mark Kidd, EVP & GM for Data Centres and Asset Lifecycle Management at Iron Mountain, previously told Data Centre Magazine that the global need for data centre power is now creating competition for key power-generation components.

He said: “Considering this pressure on the green grid, some data centre operators may be tempted to select transitional solutions such as gas, but these delay addressing the core problem which is total decarbonisation. The gulf between short-term and long-term power strategies will widen in 2024, raising questions for the industry and its customers.”

Blackstone formalised its Emissions Reduction Program in 2021 to include an overall target to reduce emissions by 15% on average across its new investments. This applies to where the organisation controls energy usage during the first three full calendar years of ownership.

With increasing numbers of private investment firms continuing to invest heavily in data centre companies, this ultimately raises questions over uneven distributions of power, as disruptive technologies continue to contribute to rising numbers of data centres.

As the demand for energy and new technologies continues to rise, data centre companies can do a lot to ensure that their operations are equal parts ethical and sustainable by supporting local communities and investing in renewable energy methods.

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