Welcome to Backchannel. This is the weekend briefing for subscribers of The Closer, where we decode power plays in dealmaking, business, and influence. This week, we’re diving deep into an overlooked yet critical resource reshaping the future of AI and global tech infrastructure: water.
Every week, we publish a Jumpstart edition on Monday, three days of Negotiation Nuggets, and our bumper Backchannel edition on Fridays. It’s part of our broader mission: to build the most unflinching, high-signal analysis of global dealflow and strategic moves.
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– Bradley
Water and Compute/AI
Modern computing infrastructure—particularly the data centers driving cloud services and artificial intelligence—quietly depends on one of the planet’s most precious resources: water. From cooling massive server farms to sustaining the electricity that powers them, water acts as an essential yet frequently overlooked backbone of the digital economy. As AI-driven computational demands soar, so too does the industry’s reliance on increasingly scarce water resources, setting the stage for critical conflicts where technological advancement intersects with environmental constraints and financial speculation.
Increasingly, these conflicts are being shaped not only by physical scarcity but also by the shadowy, high-stakes market for water rights. Private equity funds, institutional investors, and major endowments have started strategically acquiring farmland, aquifers, and senior irrigation rights, betting heavily that the growing water needs of data centers will drive up the value of secure water supplies. Entities such as Harvard University’s endowment and private investment firm Greenstone are already deeply embedded in controversial water rights acquisitions, leading to high-profile disputes and litigation, such as Harvard’s groundwater battles in California and Greenstone’s profitable transfers of Colorado River water rights in Arizona.
Below, we explore how water and computing infrastructure are deeply intertwined, highlighting specific flashpoints emerging from this crucial intersection. Companies like Oracle and OpenAI are responding by pursuing ambitious and innovative solutions—including landmark projects like Stargate in the U.S. and UAE—aimed at mitigating their dependence on volatile water rights markets. Grounded in real-world examples and global business trends, we unpack near-term risks, outline strategic shifts toward recycled water and zero-evaporation cooling technologies, and assess how the battle for water rights is reshaping the geography, economics, and future trajectory of the AI industry.
