Each datacenter iteration that increases the size and power consumption is a stepping stone towards (possibly) recursive self-improvement in AI tech. I think that's the way to frame the absolutely massive bets being made by (only a few) companies. There aren't many companies or nation states in the world that can marshal the resources and talent needed to keep competing on this path.
It's a race to the the most powerful and transformative technology in history.
Or it might all collapse like a house of cards. But worth a shot.
Huge bets were made on the Internet technology in the US and it paid off even with the dot com bubble bursting.
If we don't stay on top of technology then we will simply be passed by China.
People also said the Internet was going revolutionize everything in the 90s and it did. AI is already pretty impressive and we are just in the infancy of the technology.
The thing is, China seems to be able to keep up with much less invested. I don't know how much it took for them to create DeepSeek and their other power efficient models, but it sure doesn't take much to run them. Meanwhile American AI seems to have a limitless hunger for energy.
China is doing what they have done best for decades - lean on western tech, and improve it's efficiency. They're still clearly behind on SOA developments in AI.
But they are obviously rocketing ahead in energy capacity, which will be the real bottleneck as data centers continue to scale.
Then we should become more efficient. I do get your point that the amount of money available as investment could be responsible for inefficient growth (because the focus is only on the goal).
A solution could be competition locally by a more efficient implementations. There might also be push back by local populations if it causes energy prices to rise.
It's a race to the the most powerful and transformative technology in history.
Or it might all collapse like a house of cards. But worth a shot.