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BlackRock is preparing to launch a $30 billion artificial intelligence investment fund with tech giant Microsoft to construct data centers and energy projects to fulfill the growing demands of AI.
The financial partnership, which BlackRock is moving into with its recent infrastructure investment unit Global Infrastructure Partners, can be considered one of the biggest investment vehicles ever launched on Wall Street. Microsoft and MGX, the Abu Dhabi-backed investment company, are general partners within the fund. Nvidia, the fast-growing chipmaker, will advise on factory planning and integration.
The investment instrument goals to fulfill the big energy and digital infrastructure needs in the event of AI products, that are expected to face significant capability constraints in the approaching years. The computing power of AI requires way more energy than previous technological innovations and puts a strain on existing energy infrastructure.
The project, called the Global AI Investment Partnership, goals to lift as much as $30 billion in equity investments and leverage them to lift as much as $70 billion in additional debt financing.
The fund can be GIP's first large fund because the private infrastructure investment group agreed to be acquired by BlackRock for $12.5 billion earlier this yr. The deal is scheduled to shut in October.
BlackRock, the world's largest asset manager, has highlighted the energy sector as considered one of its biggest growth opportunities. “Mobilizing private capital to construct AI infrastructure comparable to data centers and power will open up a long-term, multi-trillion dollar investment opportunity,” BlackRock CEO Larry Fink said in an announcement.
The soon-to-be-launched fund is the most recent tool from a significant asset manager to fulfill the ever-growing energy needs of generative AI and cloud computing. Earlier this yr, Microsoft agreed to speculate $10 billion in renewable power projects run by Canadian company Brookfield Asset Management. Microsoft has committed to meeting one hundred pc of its energy use through carbon-free energy purchases by 2030.
“The country and the world will need more capital investment to speed up the event of the vital AI infrastructure. This type of effort is a vital step,” said Brad Smith, president of Microsoft.
MGX was founded earlier this yr with the backing of Abu Dhabi sovereign wealth fund Mubadala to advance the country's advances in artificial intelligence, and there have been talks of investing in Open AI's next round of funding.
In 2017, Blackstone announced plans for a $40 billion infrastructure vehicle backed by Saudi Arabia, and Brookfield raised $28 billion last yr for what is claimed to be the biggest infrastructure fund ever.
According to estimates by the International Energy Agency, global electricity consumption by data centers could exceed 1,000 terawatt hours by 2026. That can be greater than double the quantity in 2022.
“Accelerated computing and generative AI are driving the necessity for AI infrastructure for the subsequent industrial revolution,” said Jensen Huang, founding father of Nvidia, in an announcement.
In the United States, home to a 3rd of the world's data centers, electricity demand is rising rapidly for the primary time in 20 years, partly resulting from these energy-intensive facilities. A report from Grid Strategies shows that five-year projections for electricity demand growth within the United States nearly doubled last yr, from 2.6 percent to 4.7 percent.
“There is a transparent have to mobilize significant amounts of personal capital to finance investments in critical infrastructure,” Bayo Ogunlesi, executive director of GIP, said in an announcement.
