May 14, 2026
The growth of generative artificial intelligence (AI), cryptocurrency, and cloud-based storage has increased demand for data centers and has intensified debates around how state and local governments should respond to and regulate such facilities. Data centers are the backbone of the internet. They are large facilities that hold the infrastructure needed to run computers and networks, including servers and data storage systems.
Proponents of data centers have claimed that they support economic growth, job creation, and the expansion of tax bases. Others, however, have disputed those claims and raised concerns about data centers’ substantial energy and water demands, sound pollution, increased strain on electric grids, and rising utility costs for residential ratepayers. This policy brief explains the recent drastic increase in data center demand, examines how federal, state, and local governments are attempting to balance these competing priorities, and explores recent developments in New York State.
