The modern world runs on data. Everything around us generates data, and we rely on it for every decision. Until recently, data centers were nondescript; however, with rising demand for AI and cloud storage, they have boomed.

Data centers house computers, servers, storage, and networking gear. Keeping data centers running also requires industrial-grade cooling (tonnes of water), backup power, and physical security.

The global data center construction boom is driven by hyperscale sites built to support streaming services, digital payments, remote work, cybersecurity, and generative AI usage. For years, companies relied on cheap power, cooler climates, and fiber hubs. The increased demand has led companies to explore other areas like Texas, the Midwest, rural regions, and even other parts of the world, such as India and Africa. Reports suggest an expected $700 billion investment in AI infrastructure from Amazon, Microsoft, Google, and Meta.

While the data center boom creates new construction jobs and tax revenue for administrators, it also has several side effects, including high electricity and water consumption.

Virginia, which has the largest number of data centers in the US, is offering $1.9 billion in tax breaks to developers, while Georgia offers $2.6 billion, and Texas provides $1 billion annually. Louisiana is offering Meta a $10 billion tax break to build Hyperion. The state legislature has exempted data center equipment, including GPUs, from state and local sales and use taxes. 

Wisconsin, too, is foregoing $2 billion over a period of years in sales tax exemption. However, many states are now rolling back these exemptions, and Texas, Ohio, and Arizona are leading the way. 

Currently, 3000 new data centers are being built in the US, adding to the existing 4,000. 

The Dodge Momentum Index shows that non-residential projects entering the planning stage increased 6.9% month-on-month in July. 

“Data centers and broad-based growth across key institutional sectors supported stronger planning activity in July,” Sarah Martin, Dodge director of economic research, said in the report. Some of the largest projects to break ground in July include the $500 million data center in Petersburg, Virginia, the $500 million DFW20C data center in Texas, and the $500 million Google data center in Buffalo. 

Beyond America

Data centers aren’t just booming in the country, but have become a global phenomenon. In Lesotho, an American company has invested $6.2 billion in a data center and hydropower plant. The US embassy has helped American businesses in Gabon secure a $100 million contract to supply two data centers. 

"The next major cycle of economic growth will increasingly be driven by artificial intelligence, digital infrastructure and the energy systems required to support them. AI cannot scale without physical infrastructure. Every data center requires reliable power, water, fiber connectivity, land, cooling systems, and resilient transmission infrastructure," explained Convalt Energy’s president and CEO, Hari Achuthan.

China is the biggest competitor to American companies in Africa. 

Google has also broken ground on the landmark AI hub in Visakhapatnam, Andhra Pradesh, India. The project is a collaboration between AdaniConneX and Nxtra by Airtel. This project is part of Google’s $15 billion investment over the next five years to establish a comprehensive AI ecosystem in India. 

The data center construction boom is ubiquitous; however, the actual cost of this new-age development remains unanswered.