(The Center Square) – West Texas has become a prime destination for Artificial Intelligence (AI) technology and data center development.
AI is seen as a necessary component to bring additional energy sources online faster and more efficiently and Texas is seen as a primary destination to do this, industry leaders say. Businesses continue to flock to Texas, wanting to invest and expand operations there; surveys ranking Texas as the top state for business cite a skilled workforce, low taxes, and an already rich energy abundant landscape.
The support of Gov. Greg Abbott, the state legislature and Texas’ regulatory framework and President Donald Trump prioritizing domestic energy production and winning the global AI race are also key factors for choosing Texas, industry leaders told The Center Square. U.S. Sen. Ted Cruz, R-Texas, has also proposed a policy framework outlining how Congress can support this effort, including streamlining federal permitting for AI infrastructure modeled on Texas policies.
Multiple AI–ready data centers are expected to be built in primarily west Texas and the panhandle as global companies like Damac, Google, Nvidia, OpenAI and others have announced they are pouring a record amount of capital investment into the region. This is after big tech companies have already relocated major operations to Texas in Austin and surrounding areas.
Oracle and OpenAI’s $500 billion Stargate project will soon become operational at its flagship site, Stargate I, in Abilene. This facility is expected to generate more than five gigawatts of capacity, which will run more than two million chips, The Center Square reported. OpenAI, Oracle and SoftBank are also building five more Stargate sites nationwide, including one in Shackleford County, Texas.
In Amarillo, Fermi America in partnership with the Texas Tech University System, is developing a next-generation electric grid to support AI technology and build “the world’s largest energy-driven Artificial Intelligence complex.”
Poolside, an AI-start up, and CoreWeave, a cloud-infrastructure provider, are planning on building a 500-acre data-center complex in west Texas, The Wall Street Journal reported. Its long-term plan is to build out a data center “with two gigawatts of computing firepower, the electric-generation capacity of the Hoover Dam,” the Journal notes.
The locations were chosen “to take advantage of natural gas produced” in the oil rich Permian Basin, where Texas is leading the U.S. in oil and natural gas production, The Center Square reported.
Existing natural gas record output, and the potential for nuclear power production in west Texas, is a key factor for AI companies choosing west Texas, industry officials have told The Center Square. Fermi plans to integrate the largest nuclear power complex in America, choosing its site at the confluence of several of the largest natural gas pipelines and located above one of the largest known natural gas fields in the country in the Permian Basin, The Center Square reported.
In rural Dickens County, Canadian-based Galaxy Digital Holdings purchased a cryptocurrency facility, Helios, for $65 million, the Lubbock Avalanche-Journal reported. Galaxy leased the facility to CoreWeave for 15 years to provide AI hardware infrastructure, the journal reported.
“The long-term intent is to completely shift the Helios data center campus from supporting bitcoin mining operations to AI and HPC data center infrastructure,” a Galaxy spokesperson told the Journal. “Blockchain and crypto have already redefined financial systems, and AI is now set to reshape industries at an even greater scale. At Galaxy, we see these technologies converging – where decentralized networks, AI, and high-performance computing will create entirely new economic and technological paradigms. At the same time, we’re diversifying our business model and creating a significant and diversified source of stable revenue uncorrelated to the price of digital assets, allowing us to maximize cash flow and deliver the greatest value for our shareholders.”
Thousands of acres in west Texas in rural areas are also being offered for sale for AI and data centers listed by Dallas brokers, for example. “The Dallas-Fort Worth metroplex has emerged as the epicenter for data center developers and tech companies looking to expand their operations,” one brokerage states.
Local officials in west Texas and the panhandle have argued data centers and energy companies building massive facilities in their rural communities will add exponential value, including providing new and sustainable job creation and a windfall in tax revenue for local government, infrastructure and school districts. Others have expressed concerns about the costs to local communities, including diverting limited water supply from farmers and ranchers in already drought-stricken areas.
