The AI buildout is not a regulatory blank slate. Data centers have existed in the United States for decades, yet the expansion of AI and cryptocurrency facilities often gets treated as if lawmakers are meeting electricity, water, and industrial accountability for the first time.
That assumption matters because cryptocurrency and AI pushed resource demands at least one order of magnitude above traditional data centers, bringing a matching increase in power consumption and heat. Both industries also share the same basic pressure: they are arms races, and companies that fail to secure enough computing capacity risk losing ground to competitors.
Most traditional business applications balance computation with storage and networking. AI and cryptocurrency workloads tilt toward computation, so companies chase locations with cheap electricity—even when those areas had no data centers before.
This focus on compute reverses decades of efficiency gains. It also moves the bill away from the companies racing to build capacity and toward the communities that must support it.
Cheap Power Still Has a Public Price
Large computing facilities can force expensive upgrades to electricity grids and local water systems used for cooling. Residents in the surrounding area absorb those costs, whether or not the facility delivers a clear public benefit beyond jobs, investment, or another press release about technological leadership.
One comment captures the underlying accountability problem: “Data centers have existed in the U.S. for decades; why, then, does everyone act as if they are brand-new facilities with no regulatory or legislative framework?” Another asks why every discussion of the sector resembles a gold rush when precious metals have been mined for thousands of years.
The answer is not that the facilities are new. The change is their scale, their concentration on compute, and the speed of the competition. When companies seek the cheapest electricity available, local governments face pressure to approve industrial projects while residents inherit the infrastructure demands.
“We don’t need no stinkin’ hydrants,” wrote one commenter. “If you let an industry go wild, inevitably wild-west rules will apply.” The line is flippant, but the concern is not: weak oversight leaves the consequences to whoever has the least leverage.
TeraWulf Shows How Accountability Gets Complicated
TeraWulf Inc., an American bitcoin mining company, offers a case study in why infrastructure questions cannot be separated from corporate relationships and environmental claims. In 2023, TeraWulf paid $20.3 million in management and service fees to Beowulf E&D, a company owned by Paul Prager; those fees made up approximately 38% of TeraWulf’s total operating and administrative expenses that year.
TeraWulf also leases the land for its Lake Mariner facility from Somerset Operating Company LLC, an entity 99.9% owned by Prager. In 2022, TeraWulf issued Somerset 8.5 million shares as part of a lease amendment, valuing the shares at $11.5 million.
The company’s shareholder relationships add another layer. TeraWulf’s second-largest shareholder was an entity controlled by Bryan Pascual, who was implicated in helping Riot Blockchain’s management hide related-party transactions in 2018.
TeraWulf’s third-largest shareholder was an entity controlled by the wife of John O’Rourke, the former CEO of Riot Blockchain. O’Rourke was charged by the SEC in a $27 million market manipulation scheme and has deep ties to stock promoter Barry Honig, who was barred by the SEC from participating in penny stock offerings.
These facts do not automatically settle every question about TeraWulf’s operations. They do show why investors and regulators need more than a facility’s power capacity or a company’s preferred label when evaluating risk.
TeraWulf’s principal claim to investors is that it is a “zero-carbon Bitcoin miner.” In August 2024, Hunterbrook Media challenged that claim, alleging TeraWulf could not legally substantiate its renewable energy claims without purchasing Renewable Energy Credits, which it had not done.
The company’s wider energy history complicates the “zero-carbon” narrative. In 2020, Prager’s energy company, Beowulf Energy LLC, revived a struggling coal plant in Hardin, Montana, to provide power for a Bitcoin mining operation run by Marathon Digital Holdings.
The result is a familiar technology story with fewer glowing edges: compute demand grows, companies race for cheap power, and communities pay for the systems that make the race possible. As one commenter put it, responsibility may land on “the company with the worst lawyers and/or whoever paid off their congressmen the least.” That is not a governance model. It is a lottery with cooling towers.
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