Local Opposition Threatens to Derail U.S. AI Data Center Boom, Brookings Warns

The AI gold rush faces its first major roadblock—and it's coming from Main Street, not Wall Street.

Not In My Backyard, Not For Your AI

Forget chip shortages or power grid constraints. The next big squeeze on artificial intelligence infrastructure might be pure, old-fashioned community pushback. As tech giants scramble to build the data center farms needed to fuel the next generation of models, they're running headlong into local residents armed with zoning laws and environmental concerns.

It's a classic clash of narratives. Silicon Valley sells a future of boundless intelligence and economic growth. Suburban and rural communities see construction noise, water usage spikes, and transformed skylines. The friction is turning planning meetings into battlegrounds, where permits are delayed and projects get scaled back.

The Infrastructure Bottleneck Nobody Predicted

This isn't just about aesthetics. Every delayed megawatt of computing power represents a potential slowdown in the breakneck pace of AI development. The industry's growth projections, often baked into eye-watering stock valuations, assume the physical hardware will simply appear where needed. Local opposition throws a wrench into those meticulously crafted, spreadsheet-perfect forecasts.

The irony? The very communities that might benefit from the jobs and tax revenue are often the ones putting up the fiercest resistance. It's a decentralized, grassroots challenge to one of the most centralized technological pushes in history.

So, while venture capitalists bet billions on the promise of artificial general intelligence, the entire endeavor could be held hostage by a town council vote over a substation upgrade. Sometimes, the most advanced algorithms in the world still can't solve a good old-fashioned zoning dispute. Especially when the projected ROI for the data center doesn't account for the plummeting property values next door.

Local opposition to data centers fuels growing AI techlash

Experts noted that despite data centers’ vital role in the developing economy, financial, economic, and environmental issues have sparked demonstrations around the nation. In Ohio, Georgia, Virginia, Arizona, and Indiana, plans to construct data centers have been delayed due to concerns about rising electricity costs, light and noise pollution, and potential risks associated with AI.

In 2024, U.S. data centers used around 183 terawatt-hours (TWh) of electricity, which is roughly equal to Pakistan’s total yearly energy use, according to a Pew Research Center analysis published in October.

According to the Brookings report, the data center expansion coincides with a growing “techlash” against the AI industry, which has sparked organized opposition and protests nationwide over concerns about automation’s potential to displace jobs, energy consumption, and environmental impacts.

The report also revealed that voter concerns roiled recent elections in New Jersey, Virginia, and Georgia, where opposition to data centers was part of campaign promises.

Against this backdrop, the experts warned that if these community concerns are not addressed, data center construction may slow. They also warned that AI growth may be delayed and AI revenue streams may be curtailed, all of which WOULD limit the benefits of AI that tech companies and government leaders have promised.

To avoid weakening AI growth and revenue streams, the experts urged AI companies to establish viable community benefit agreements (CBAs) to address public concerns. They suggested that these agreements should be developed cooperatively with host communities and be legally binding, showing reciprocity between data centre developers and the communities where they are located.

In particular, the experts said communities must be aware of the cost of data centres, understand who is responsible for paying, assess local advantages and hazards, and have backup plans for the long-term development of AI.

The Brookings report also revealed that communities across the U.S have begun to establish various types of community benefits agreements.  For example, the report cited that Cleveland has employed CBAs for several economic development initiatives since 2013. The report noted it distinguishes between “standard” agreements, which cover corporate investments under $20 million, and “expanded” agreements, which cover more costly initiatives.

Private data center expansion grows amid rising community resistance

The Brookings report comes as the TRUMP administration supports expanding AI data centers nationwide and increasing demand for processing capacity. Trump launched Stargate, a $500 billion AI infrastructure project funded by OpenAI and Oracle, in January 2025. He also advocated for long-term protections to prevent communities from being left with data centers that provide no advantages.

An aggressive expansion from the private sector is matching that federal push. Data from the tracking site Data Center Map revealed that major tech companies like Amazon and Nvidia have announced multibillion-dollar investments to build data centers and AI infrastructure. These will add to a global network of about 10,700 data centers, with about 4,000 in the U.S.

However, some developers are already moving cautiously in response to community backlash.

On January 23, The Register reported that Applied Digital, formerly known as Applied Blockchain, announced it had begun construction of a 430 MW plant in the Southern United States. However, it has not yet disclosed the site. 

The CEO claimed that this is being done to safeguard the little community where it is situated, particularly because he believes they are not prepared for “national media attention.”

Get seen where it counts. Advertise in Cryptopolitan Research and reach crypto’s sharpest investors and builders.