Why Are Data Centers Building In Places That Don’t Have Much Water?

That's the billion-dollar question about the data center boom.

Why do they want to build these things in Oklahoma? And beyond that, there is a pattern of projected build-outs that seem to target drought-prone areas of the country.

Is it evil? Is there a conspiracy afoot?

These aren't warehouses where somebody stores a bunch of boxes. They're enormous buildings packed full of computers that generate tons of heat that has to go somewhere... In most of these plans, water is part of that answer.

So, why?

Well, start with the stuff Oklahoma has. We have land. A lot of land. And compared to places where these companies could build, our land is really cheap.

Oklahoma's Electricity Pricing

I know it's hard to believe at the moment, but Oklahoma has some of the cheapest electricity in the nation, especially compared to the richy-rich states. And we have plenty of ways to make it. Wind, natural gas, solar, and a whole entangled infrastructure that ties us to the broader grid.

From the perspective of a company looking at a map and trying to figure out where to spend billions of dollars, that's a pretty attractive combination.

Cheap land. Cheap power. Room to expand later. That's the big draw, along with the fact that no local politician, regardless of party, can resist the temptation of selling the future for a quick buck.

There's another level of conspiracy starting to brood right now, too.

Why Data Centers Care About Oklahoma Regulations

When a company chooses one state over another, it's not just looking at the price of the land and the entire cost of running the business.

How much are the permits, and how long will they take? What environmental rules apply? How much does a state value water? What does it require when it comes to electricity? Did someone mention tax shelters and incentives? How much is the state going to get in the way?

Maybe those aren't the exact words that get tossed around in a boardroom, but you know it's part of the calculation. And I'm not saying that's a bad thing. It's just business.

Companies are supposed to look for the best bang for their buck, right? If you were going to open a business, you'd look at all the same stuff too, but the current state of Oklahoma isn't doing big tech any favors.

Look outside. It has been an incredibly hot summer across the state, and every county in Oklahoma is currently experiencing some level of drought. Some counties are drier than others, but we're all really dry at the moment.

That's the wrench in the gears of progress. Because if cheap land, cheap electricity, and fewer regulatory hurdles are part of what makes Oklahoma attractive to these companies, what happens when the thing they need most is the thing Oklahoma is already short on?