Artificial intelligence gets cheaper

“The cost of AI performance is falling at an exceptional rate, according to a new report from Epoch AI, a research nonprofit. Epoch tracked how much it costs for AI models to achieve given scores on five tests, covering mathematics, hard sciences, and games of skill such as chess puzzles. Across all five tests, Epoch estimates that the minimum cost of reaching a given score has fallen about 47 percent per quarter since 2023, a roughly 13-fold decline each year. According to Epoch’s analysis, that’s about four times faster than the fall in DNA sequencing costs, one of the fastest price declines in history,” reports Human Progress.

““AI has gotten cheaper more quickly than any other transformative technology in history. The cost of achieving a given level of AI performance has fallen about 47% per quarter since 2023, or 13× per year. That price drop is four times faster than DNA sequencing, six times faster than compute, 18 times faster than lithium batteries, and (in the century up to 1973) 54 times faster than electricity.”

Data centers are using water more efficiently than in the past. A company report shows that “Amazon’s data centers used just 0.12 liters of water per kilowatt-hour of compute in 2025, about one-seventh of the industry average and less than half of Amazon’s rate of 0.25 liters in 2021,” noted The Doomslayer.

A think-tank says that “the total water use of all U.S. data centers constitutes less than 0.5% of American freshwater use and there is not a single instance of AI infrastructure raising water prices anywhere in America. AI data centers are a boon for the country, driving economic growth.” The largest U.S. data center consumed less water than three square miles of farmland did.

Data centers are accused of raising people’s electric bills, but that’s not true in most of the country. “Data centers didn’t raise electric bills nationally from 2015–24. Surprise! Actually, they modestly lowered them. That’s because big fixed grid costs get spread over more kilowatt-hours, and new demand can unlock economies of scale,” says James Pethokoukis of the American Enterprise Institute. He cites a study by Asa Watten, John Bistline, and Geoffrey Blanford.

There is not much correlation between how many data centers are in a state and how fast electricity prices rise in the state. Electricity bills rose 13% year over year in Virginia, which has “the highest concentration of data centers in the world.” That’s more than the national average increase of 6%. But other states with lots of data centers saw electricity prices rise slower than the national average. “Texas, for example, is second only to Virginia with more than 400 data centers.” But electricity “prices in the Lone Star state increased about 4% year over year in August, lower than the national average.” The state with “the third most data centers in the nation” had its electricity prices increase “about 1% in August 2024 over the prior year period, far below the average hike nationwide.”

Data centers cut property taxes on homeowners, by providing lots of additional property to tax. The more property there is to tax, the less tax needs to be imposed on each property. Data centers use very few government services (unlike homeowners, who use things like schools and parks), so data centers don’t add much to a county’s costs. Democratic-run Loudoun County, Virginia, has lots of data centers and lower property taxes than other Democratic counties in northern Virginia, like neighboring Fairfax County and Arlington County. Data centers generate almost half its property tax revenue, enabling it to tax homeowners at lower rates despite Loudoun County’s rapidly rising government spending under Democratic control.