Yesterday, OpenAI made an alarming disclosure: An assortment of its most advanced AI models, including one that has not yet been released, had autonomously broken out of the company’s internal systems and hacked into the databases of another tech firm, Hugging Face, to steal some information. OpenAI’s report seemed to augur the very sort of disaster that IT professionals have been warning about since last year, when Anthropic’s top models began demonstrating the ability to orchestrate and automate severe cyberattacks.

OpenAI’s models were not exactly trying to take over the world. The company says that it was running some routine evaluations in what is known as a “sandbox”—a walled-off environment that limits internet access, lest the bots simply search for the test’s answers. But these AI systems, including GPT-5.6 Sol, which is available to consumers, broke out of the sandbox and accessed the open web by exploiting a previously undetected vulnerability. The models discovered that the answers to this particular evaluation were on Hugging Face, a company that hosts and publishes many AI models and papers, and then broke in to steal them.

[Read: Chatbots are becoming really, really good criminals]

“We consider this incident to be an unprecedented cyber incident,” OpenAI wrote in a blog post, which also noted that the company is partnering with Hugging Face to investigate and address the issue. An OpenAI spokesperson pointed me to the blog post in response to a request for comment, and Hugging Face’s CEO, Clement Delangue, pointed me to an X post in which he wrote that the companies are collaborating and that “we strongly believe there was no malicious intent on their part.”

The first-order implications of the incident are the same that have arisen from countless AI-driven cyberattacks: Advanced agents are capable of more and more skilled hacking, and the internet is full of rickety and vulnerable code. Lax digital security may have been fine when hacking was a rare skill. But now the speed, scale, and sophistication of AI hacks mean that everything is vulnerable—tech companies, hospitals, banks, electrical grids, the military.

When Hugging Face first reported that it had been hacked last week, it noted that “autonomous, AI-driven offensive tooling is no longer theoretical.” That analysis stemmed from the company’s own investigation into the hack, for which it used a Chinese-developed AI model called GLM-5.2. That Hugging Face used this particular model actually underscores one of the major risks of this moment: GLM-5.2 is free to download, giving cyber capabilities to anybody with an internet connection and technical know-how. Defenses are not keeping pace with this new reality, and neither are AI companies: Prior to the release of GPT-5.6 Sol, a U.K. government agency tasked with evaluating advanced AI systems found universal jailbreaks—ways to hack the AI itself so it can take, for instance, criminal actions—during multiple rounds of testing. OpenAI said that it had mitigated those vulnerabilities, but the U.K. agency said that it expected future tests “to surface similar jailbreaks.”

But jailbreaks are clearly not even necessary for things to go haywire. The Hugging Face hack showed advanced AI systems deciding upon and then orchestrating a high-grade cyberattack on their own—the models working against, rather than according to, human instruction. Models are ruthless in their pursuit of a goal, sometimes taking disastrous shortcuts. Imagine, for example, a bot tasked with reducing the federal deficit that institutes an elaborate and hard-to-detect accounting gimmick, or a customer-service agent that issues absurd discounts in pursuit of customer-satisfaction ratings. In the case of GPT-5.6 Sol and the unreleased model, “all evidence suggests that the models were hyperfocused on finding a solution” for an evaluation, OpenAI wrote in its blog, “going to extreme lengths to achieve a rather narrow testing goal.”

[Read: Assume you will be hacked]

This unwanted behavior is a predictable and alarming result of how the entire AI industry is developing its models. The past year’s advances in AI coding and agents—that is, all the frenzy about Anthropic’s Claude Code and OpenAI’s Codex—have been the result of an overriding emphasis in AI training through a process called “reinforcement learning.” This involves giving AI models lots of hard problems—math proofs, coding challenges, what have you—and then providing positive feedback for correct answers and negative feedback for incorrect ones.

In many reinforcement-learning paradigms, the ultimate aim is just for the AI to arrive at the solution—it doesn’t matter how it does so. This is the AI equivalent of Mark Zuckerberg’s infamous dictum to “Move fast and break things” in Facebook’s early years. Last year, while I was working on a profile about Anthropic, one of the company’s researchers, Joshua Batson, told me that the new reinforcement-learning-trained models are getting “really good at solving coding problems, but they end up learning to solve them at all costs,” making them “bloody-minded.” More recently, Anthropic reported that its own advanced cyber model, Claude Mythos Preview, had taken “reckless” behaviors to accomplish various tasks and also, in one instance, had broken out of a testing sandbox. In that case, Mythos had been asked to do so—but the model then posted details about the exploit, unbidden, on the internet.

To be clear, this sort of AI “reward hacking” is a known problem that tech companies are putting lots of effort into addressing. But these incidents keep cropping up regardless; if anything, research suggests that they may become more common. Meanwhile, OpenAI, Anthropic, and Google DeepMind are under tremendous economic pressure to make their models more and more capable, which means that the bloody-minded reinforcement learning is all but certain to accelerate.

The AI boom has showered some of the nation’s most prominent companies in market value. OpenAI and Anthropic are now the two most valuable private companies in the world. Google, Microsoft, and Nvidia have become larger than ever. But among the biggest winners has been Caterpillar, a purveyor of yellow trucks and cranes. Caterpillar’s stock has more than doubled in value over the past year, making the company worth six times as much as Nike. Its ascent has little to do with the construction vehicles (both real and toy) that it is known for. Instead, Caterpillar’s success comes from its giant gas-powered engines that are helping power the nation’s data-center build-out.

For all the attention given to improving model capabilities, the most important inputs to AI are not bits but atoms and electrons. To train and run its models, the AI industry needs to build. Data centers are incredibly complex technological and industrial operations—they require tech companies to erect power plants, build wastewater facilities, and set up all manner of electrical equipment, power lines, and advanced-cooling equipment. That calls for concrete, steel, silicon, glass, copper, and liquefied natural gas.

This data-center construction has long been frenzied, but now it is fast approaching an inflection point that is both awesome and alarming. The major players—Amazon, Google, Microsoft, Meta, and Oracle—are on track to spend more on data centers by the end of the year than they bring in from their operations. That means tech giants whose non-chatbot businesses bring in tens of billions of dollars every year will likely need to take on debt to keep paying for their AI ambitions. From the launch of ChatGPT, in late 2022, through the end of last year, these firms’ capital expenditures—most of which go toward data centers—well exceeded half a trillion dollars. The companies intend to spend a similar amount in 2026 alone. And next year, their AI investments will likely exceed $1.1 trillion, according to a recent report from J.P. Morgan.

[Read: Inside the dirty, dystopian world of AI data centers]

Silicon Valley has long enjoyed a straightforward advantage: Its products and services cost relatively little to make but generate tremendous revenues. But operating a data center is in many ways more like running a steel mill than a smartphone app. In particular, data centers require stunning amounts of electricity, especially as AI models have gotten more powerful. Five years ago, a standard data center might require 10 or 50 megawatts of power, enough for tens of thousands of homes. A year ago, data centers demanding a gigawatt or two of power were considered gargantuan. This week, Meta announced that it is more than doubling the size of its flagship AI data center, which will increase its peak power needs to five gigawatts. A data center proposed in Utah, if completed, will demand nine gigawatts of power. That’s several large cities’ worth of energy pulsing through a few big warehouses, all dedicated to bots.

Electrical grids typically don’t have enough energy to supply these megaprojects, and so the fastest way to bring a data center online is to build your own power plant. That’s where Caterpillar comes in: The company has an enormous number of back orders for its power equipment, as does every major natural-gas-turbine manufacturer in the world. In May, Elon Musk reportedly spent at least $1 billion to buy an energy company with a fleet of combustion turbines, likely to power his AI model, Grok.

Power is only one part of the challenge. A data center requires wiring together dozens of cutting-edge AI chips onto a refrigerator-size rack, then linking thousands of those racks in a building. Those chips run hot, up to 200 degrees Fahrenheit, and are typically cooled by some combination of water and industrial fans; get too close to one of the racks, and you may break a sweat.

OpenAI’s self-proclaimed goal of making “intelligence cheaper, better, and more abundant over time” really amounts to powering and cooling data centers as efficiently as possible—in other words, getting really good at HVAC. And then there’s the complex global supply chain of mirrors and lasers and rare-earth minerals that go into the chips used to train and run AI models.

As the AI industry pours more money than ever before into data centers, executives have begun sounding like they are in the construction business. OpenAI CEO Sam Altman has said that the biggest constraint on his company is “electrons”—that is, power. Musk, Microsoft CEO Satya Nadella, former Google CEO Eric Schmidt, and others have said the same. Meanwhile, Nvidia CEO Jensen Huang recently said that a lack of skilled “plumbers and electricians” will be the AI boom’s “hardest” bottleneck to overcome.

Still, Silicon Valley seems to have only just begun reckoning with what it means for its primary business operations to be in the material realm. You cannot vibe-code a data center. In perhaps the clearest sign of the AI industry’s desperation to keep building, Anthropic, the most safety-conscious firm, is spending $1 billion a month to rent a data center from Musk, who just a few months ago deemed Anthropic “evil.” Anthropic CEO Dario Amodei, for his part, has accused Musk of “disturbing negligence.” Meanwhile, the tech industry is struggling to quell a mounting AI backlash, which has largely taken the form of opposition to data centers. A few days ago, New York became the first state to institute a moratorium on new “hyperscale” data-center construction.

[Read: The AI backlash could get very ugly]

If anything, AI is poised to become even more like drilling an oil well. All the copper, silicon, electricity, and labor that go into building and running a data center are mustered to process and spit out “tokens”—in essence, words—that are the basic unit of AI. The State Department recently announced an international pact to bolster the AI supply chain, called Pax Silica. “If the 20th century ran on oil and steel, the 21st century runs on compute and the minerals that feed it,” Jacob Helberg, the undersecretary for economic affairs, said in the announcement. Financial markets and investors are already beginning to treat tokens as the raw inputs to modern civilization: Various firms are launching such markets for compute, akin to how you can trade oil, steel, and corn on a stock exchange.

By dominating the digital world, Silicon Valley has already exerted indirect control over the physical one. Today’s data-center build-out is a whole new beast. From the most concrete aspects—cooling, power, land—to the most abstract financial instruments, AI has morphed into a heavy industry.

Updated at 3:41 p.m. ET on July 16, 2026

There are two competing schools of thought over just how water-intensive AI is. In one, the technology is horribly thirsty. Data centers will exacerbate droughts throughout the country and “drain the great lakes,” as one popular Reddit thread puts it. The former Representative Marjorie Taylor Greene has taken up the issue, sarcastically posting at one point: “How dare the peasants complain about data centers stealing their water and driving the cost of electricity!!”

The other school, populated by Silicon Valley types, holds that “The Data Center Water Crisis Isn’t Real,” as an article in the right-wing publication Pirate Wires argued in December. The issue with water “is totally fake,” “insane,” and has “no connection to reality,” OpenAI CEO Sam Altman said a few months ago.

As with so many debates around AI, the arguments are not always presented in good faith. But unlike, say, the ambiguities over how much work a chatbot can or should be trusted to do, water use seems like it should be measurable, with clear facts supporting one side or the other. That is not the case. Does AI waste a ton of water? Not necessarily. Sometimes. It really depends. “We don’t have the real ground-truth numbers on data-center water use to put everyone on the same page,” Eric Masanet, a sustainability researcher at UC Santa Barbara who studies data centers, told me. Neither data-center operators nor utilities provide much insight; what public information exists can be contextualized, recontextualized, and distorted to suggest basically anything.

[Read: Generative AI is an engineering disaster]

Yet the water issue is tremendously consequential—not only for the well-being of residents in all of the counties where new data centers are popping up but also for the future development and regulation of AI itself. Just this week, when New York Governor Kathy Hochul signed the nation’s first statewide data-center moratorium, her office cited the “massive amounts” of water that hyper-scale data centers could require. In a drought-stricken county or during a heat wave, a data center may seriously burden local water supplies. Where water is abundant and utilities can afford new infrastructure, data centers may pose little issue.

Outside of water-stressed regions, “it’s not really a major concern for now,” Fengqi You, an energy-systems expert at Cornell, told me. “But as the sector grows, who knows?” Turning any particular case into a sweeping pronouncement produces little but heightened emotions and confusion. As ever, the truth is far more nuanced and conditional than activists or tech executives admit.

The problems start with the framing. How much water do data centers use? is not a particularly useful question. On a national scale, these buildings do not use an alarming amount of water. In 2023, data centers used slightly more than 17 billion gallons of water for cooling, as much as about half a million Americans collectively use in a year. This may seem like a lot out of context, but it’s less than a tenth of a percent of the total amount of water used by U.S. farms that year.

Things can look different at the county level. A Meta data-center campus under construction in Lebanon, Indiana, could, at its peak, demand 8 million gallons of water a day: This would be a drop in the bucket in New York City, but it’s more than double the peak demand of the town. Every data center demands a distinct evaluation, and the picture can quickly shift. Water use depends on the local climate, the local water supply, and the makeup of the regional electrical grid, as well as on the design of the actual data center. For Meta’s Indiana data center, city officials have said that planned upgrades mean there is “nothing to indicate” that they will run out of water. Meanwhile, in Newton County, Georgia, a local official has said that “we just don’t have the water” for all of the data centers trying to move in and that the county must “race” to improve local water-recycling facilities.

Rather than worrying about the quantity of water, it’s best to ask how a particular data center uses water. In general, water is always used for the same thing—to keep the computer chips inside these buildings cool—but there are many different methods for doing so. Broadly speaking, data centers can either expel the heat those chips generate with cooling towers, which evaporate water, or with air-cooled chillers or similar technologies that use electricity to vent away hot air. Think of cooling towers as human sweat, which passively cools us down as it evaporates, and chillers as car radiators, which use a chemical coolant and then blow air to physically push out the heat.

The AI industry has settled on the car-radiator approach for many of its biggest, most controversial data centers. They run water directly into the servers to pull away heat, cycle the water down through an air chiller, and then—crucially—reuse it. That’s how OpenAI’s Stargate data center in Texas, Meta’s Hyperion data center in Louisiana, Microsoft’s Fairwater data centers across the country, and many other enormous facilities operate for most of the year. Such closed-loop systems don’t lose water to evaporation, which is likely what Altman was referencing when he called concerns over water “insane”: Once these data centers have water, they don’t need more of it, in theory, because it’s never used up.

The real incentive for closed-loop systems is convenience. Building out local water infrastructure or tapping into a reservoir can take years, using groundwater is controversial (groundwater doesn’t replenish quickly, and using it can pollute the environment), and you can’t realistically bring water from Lake Michigan to your data center in dusty Arizona. Water availability can be a serious bottleneck to new data-center construction. A closed-loop system with air chillers bypasses these problems.

[Read: AI is taking water from the desert]

So why doesn’t every data center just use chillers? For starters, air chillers require substantially more electricity compared with cooling towers to expel the same amount of heat. “Can data centers use zero water? Yes, that’s very easy,” Shaolei Ren, an AI and sustainability researcher at UC Riverside, told me. “But the downside, the cost they have to pay,” is using more electricity—10 to 65 percent more, by various estimates. One nine-gigawatt facility being considered in Utah would require nearly as much power as New York City.

Data centers’ almost surreal power demands are largely being met by combustion turbines, many of which are built by the tech companies themselves (to avoid waiting on upgrades to the local grid). And generating electricity—including from these private power plants, which burn fossil fuels—needs water too. In 2024, Meta’s “indirect” water consumption—referring to the water used during power generation—was 19 billion gallons. That’s 23 times its direct water consumption, and most of it went to data centers.

[From the April 2026 issue: Inside the dirty, dystopian world of AI data centers]

Few industries consistently report indirect water use, in part because many of the estimates are flawed. Indirect use comes from averaging the water footprint of all the power sources on a regional grid—which includes hydroelectric plants that consume huge amounts of water due to evaporation from dams and lakes. In other words, indirect water-consumption figures can arguably under- or overestimate any individual plant’s contributions. Paradoxically, the AI industry’s decision to avoid using water to dissipate heat from inside its data centers might expand some facilities’ overall water footprint. “If you use water to make your cooling more efficient on-site, you will use less electricity,” Jonathan Koomey, a data-center and sustainability researcher, told me. “It’s not a simple matter of water use bad on-site.”

It might be possible to design data centers that use both less electricity and less water. In cooler climates, for instance, data centers can pump in outdoor air; this is what Amazon does at its mega data center in northern Indiana. In summer, spraying small amounts of water into the outside air can bring down the temperature enough to do the same. Data centers are also beginning to experiment with allowing the chips to run at higher temperatures, which reduces the overall cooling demands. And, of course, the rather obvious way to build data centers that put less strain on the environment is to opt for renewables—which consume almost no water—instead of natural-gas turbines.

Until these approaches are the norm, people will understandably worry about the effects these sprawling facilities will have on their communities. Assessing how any data centers will affect nearby reservoirs ultimately requires the scarcest resource of all when it comes to these facilities: accurate and precise information. Tech companies want data centers up and running quickly, so they contract with shell companies that negotiate behind closed doors and under nondisclosure agreements. Residents might find out about new construction only after shovels are in the ground.

Already, rising temperatures and prolonged droughts are out of any individual’s control; now a big industrial facility arrives, under the cover of night, that may or may not exacerbate many problems caused by the climate crisis. This sense of confusion goes a long way toward explaining why data centers’ environmental impacts have become one of the key battlegrounds in the AI backlash—the primary issue, in many cases, is not lack of water so much as lack of control.

This article originally referred to a facility under construction in Utah. In fact, that proposal is still being considered, and construction has not begun.