LONDON (IT BOLTWISE) – The Bank of England is investigating the growing practice of investing in data centers as speculation on the future of artificial intelligence. This development could pose significant risks to financial stability as demand for AI infrastructure is expected to reach $6.7 trillion by 2030.
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The Bank of England has launched an investigation to analyze the increasing practice of financial investments in data centers as speculation on the future of artificial intelligence (AI). This development could pose significant risks to financial stability, as demand for AI infrastructure is expected to reach $6.7 trillion by 2030, McKinsey & Co. reports.
Although data center lending is currently a niche market, it could become a critical source of financing. The Bank of England warns that many AI companies may not live up to high expectations and this could lead to a correction similar to the dot-com bubble of the early 2000s.
The investigation was launched after the Bank of England noticed that more and more money was being diverted from hiring staff to building data centers. Since there are few AI-native stocks and the tokenization of private AI stocks is not yet ready at scale, investing in data centers is one of the few ways to place big bets in the AI space.
The Bank of England is concerned that these emerging lending practices require scrutiny due to their potential impact on financial stability. If the projected scale of debt-financed AI and energy infrastructure investment becomes a reality this decade, risks to financial stability could increase. Banks would be affected directly through their loan suspensions to AI companies and indirectly through the provision of loans and credit facilities to private credit funds and other financial institutions exposed to AI-influenced asset prices.
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