AI Data Centers' Water Consumption Breaks 264 Billion Gallons in 2025 as Devastating Drought Hits Nearly 63% of U.S.

https://www.barchart.com/story/news/2339834/ai-data-centers-water-consumption-breaks-264-billion-gallons-in-2025-as-devastating-drought-hits-nearly-63-of-u-s

According to market research firm Mordor Intelligence, nearly 1 trillion liters of water were consumed by AI data centers in 2025. That amounts to roughly 264 billion gallons for the year, or the annual water usage of 1.8 million Americans. AI data centers are currently consuming 550 million gallons of water per day. That’s roughly the same rate of water consumption as the entirety of the world’s bottled water industry.

Now, with drought conditions spreading across large portions of the country, questions are mounting about whether communities can sustain both.

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The warning signs are becoming increasingly visible in Tennessee as well. The Tennessee Valley Authority (TVA) recently issued a stark update on water conditions across its service area, with TVA General Manager of River Management James Everett noting that runoff levels are currently the fourth-lowest recorded in 152 years of recordkeeping. In practical terms, less rainfall and runoff means less water flowing into reservoirs, rivers, and other critical water supplies that communities depend on.

The timing is drawing attention because Tennessee is simultaneously becoming a major hub for artificial intelligence infrastructure. In Memphis, Elon Musk’s xAI data center has emerged as one of the most resource-intensive AI facilities in the country. The company’s expansion plans could require millions of gallons of water per day for cooling operations, according to local utility estimates and permitting documents. While supporters argue the project will bring jobs and investment to the region, critics question whether massive new industrial water demands make sense as utilities across the Southeast warn of increasingly strained water resources.