Tomorrow, Hetzner raises prices. Cloud servers up 30-40%. Dedicated boxes up 20%. If you are running anything on their infrastructure, your bill goes up on April Fools' Day, and the joke is on you.
They are not alone. Alibaba Cloud is hiking up to 34%. OVH pushed 60%+ increases earlier this year. The era of cheap European cloud is ending, and nobody is coming to save it.
But the price hikes are the least interesting part of what is happening right now.
The Pincer Movement
Last week, Sanders and AOC introduced legislation to ban new data center construction above 20 megawatts until Congress passes comprehensive AI regulation. A construction moratorium. Let that sink in.
Two days later, Hawley and Warren sent a letter demanding the EIA establish mandatory annual energy reporting for data centers. The bipartisan part is what should worry you - when the populist right and the progressive left agree on something, it tends to actually happen.
So on one side, you have operators raising prices because power costs are eating them alive. On the other, you have politicians trying to either freeze construction or mandate new compliance burdens. And in the middle, you have the grid itself - where average connection wait times in primary markets now exceed four years.
Price squeeze from below. Regulatory squeeze from above. Physics squeeze from reality.
Who This Hurts
The hyperscalers will be fine. They have the lobbyists, the capital reserves, and the political relationships to survive a regulatory gauntlet. A moratorium on new builds above 20MW would actually help them - it freezes the competitive landscape with their existing capacity intact.
The ones who get crushed are the mid-tier operators. The companies building out 5-50MW facilities for AI inference, edge compute, managed hosting. Too big to fly under the regulatory radar, too small to fight the political battle. They get the compliance costs without the lobbying muscle.
It is the classic regulatory ratchet: rules written to constrain the giants end up strangling everyone else.
The Power Reality
Here is what the senators do not seem to understand, or do not care about: the constraint on data center growth is not regulatory. It is electrical.
Virginia data centers already consume 40% of the state's electricity. Grid connection waits exceed four years. Construction costs are running $488 per square foot, up 18% year over year. Companies are literally buying farmland in Wisconsin just to secure power interconnects.
You do not need a moratorium to slow this down. Physics is already doing it. What you need is a grid that can keep up, and a moratorium does the exact opposite of helping with that.
Meanwhile, the industry is adapting in ways regulators have not caught up to: 800-volt DC power distribution replacing AC, liquid cooling becoming mandatory, operators choosing new geographies based entirely on time-to-power rather than proximity to customers.
The future is being built by whoever can get electrons to racks fastest. Everything else - regulation, NIMBYism, political theater - is friction. Real, costly friction, but friction nonetheless.
The Opportunity Nobody Talks About
When everyone is raising prices and regulatory uncertainty spikes, something interesting happens: customers who were previously happy start shopping. Hetzner's price hike tomorrow will push thousands of deployments into active evaluation of alternatives. Not all of them will move, but all of them will look.
For operators with existing capacity, existing power, and competitive pricing, this is a gift. The customers come to you. You do not have to convince them their current provider is too expensive - the invoice does that for you.
The squeeze hurts, but it hurts everyone. And in an industry where switching costs are real but not infinite, the operators who held the line on pricing are about to have a very good quarter.