There is a building boom happening in rural America, but it has nothing to do with farming. Big tech is bringing massive data centers to towns across the country and it’s stirring up a mix of controversy. Depending on who you ask, the new data center boom is either one of the best or one of the worst things to happen to their rural towns.
The data center boom is primarily being fueled by artificial intelligence (AI), which requires tons of computing power. At their core, data centers are physical storage spaces for a vast array of servers, storage systems, networking equipment, and other critical IT infrastructure to process, store, manage, and disseminate large volumes of digital data.
Data centers in rural America are not a new phenomenon, but the preference of companies for rural over urban locations is a shift. Traditionally, most data centers were built closer to metropolitan areas given their access to power, water, and internet and wi-fi infrastructure. It also put them closer to Fortune 500 companies and government agencies that have heavy computing and storage needs.
Artificial intelligence and its high resource demands have dramatically changed the data center market, however. The main reasons for placing them in rural areas now include:
Lower Land and Construction Costs – Large data center campuses require hundreds of acres; rural land is much cheaper and more available than urban or suburban sites, enabling developers to build at scale with future expansion in mind.
Power Availability and Reliability – Data centers consume massive amounts of electricity and often seek proximity to major power transmission lines, substations, or renewable energy projects like wind and solar farms. Many rural sites offer direct access to low-cost, reliable electricity and the ability to negotiate customized power arrangements.
Relaxed Zoning and Regulation – Permitting is faster and regulatory hurdles are typically reduced in rural jurisdictions compared to urban areas. Local governments are typically more eager to attract investment and may offer incentives or bypass lengthy approval processes.
Climate and Natural Disaster Risk – Cooler rural climates reduce energy needed for server cooling. Rural sites are often chosen to avoid high-risk areas for flooding, hurricanes, or earthquakes, providing business continuity advantages.
Edge Computing and Network Needs – As digital infrastructure needs to be dispersed closer to users and devices (the “edge”), rural sites play a key role in reducing response times and improving overall network performance.
Data center developers promise job creation, infrastructure investment, and local tax revenue. Some regions have reported millions in new annual revenue from hosting data centers, often reducing the tax burden on residents. Data center builders also frequently offer investments in local infrastructure, including roads, water systems, electric grids, and especially broadband and fiber-optic connectivity.
Supporters also say the presence of data centers can serve as a catalyst for bringing advanced internet connectivity to previously underserved areas, narrowing the digital divide and enabling new opportunities. This could be especially beneficial for farmers as more and more farm and ranch work can be facilitated via the cloud.
Critics argue that data centers place a massive strain on local water and energy supplies and create relatively few permanent jobs after construction is complete. They also claim that tax incentives frequently given to attract these facilities can shift infrastructure and utility costs to local taxpayers, with minimal long-term economic lift for the community. Other complaints include a loss of farmland, high water use, and increased traffic.
A recent Bloomberg News analysis of wholesale electricity prices found that electricity now costs as much as +267% more for a single month than it did five years ago in areas located near significant data center activity. That research is HERE.
The subject has become a dividing line in many communities, and larger more powerful politicians now want to get involved. Representatives Blake Moore (R-UT) and Jim Costa (D-CA) recently introduced legislation that would require the U.S. Departments of Energy, Interior, and Agriculture to study the impact of artificial intelligence (AI) data center expansions in rural America.
“AI Data Centers are expanding rapidly and using more energy and water than entire cities. That energy demand is driving up utility costs for consumers,” Rep. Jim Costa said. “My legislation ensures we take a hard look at how this growth impacts rural communities that are powering the AI industry, and make sure families aren’t left paying the price.” You can learn more HERE. (Sources: The Wall Street Journal, CoBank, NPR, McKinsey & Co.)
