The state of Utah has been experiencing crazy economic growth with technology and AI development. The strong presence of tech there has earned the state the title of “Silicon Slopes.” It seems that tech in Utah is going to continue to grow, as JPMorgan and Starwood, a large venture capital firm, invested $2 billion for an AI data center in Utah.
$2 Billion for Utah Data Center
Data centers are becoming more and more popular as they provide the backbone for artificial intelligence. The $2 billion will go to building a 100-acre data center campus in West Jordan, just south west of Salt Lake City. The borrower, CIM Group and Novva Data Centers, said that the facility is expected to provide 175 megawatts of power. For context, thats enough power to serve about 175,000 US homes.
This is the second major loan when it comes to data centers. In January, JPMorgan also invested $2.3 billion into a data center for AI in Abilene Texas. Typical loans for data centers have been under $1 billion, but with more demand for AI development, the loans, and profits, may be getting bigger. With more data centers, companies can run more advanced and powerful AI programs. It seems like many massive companies are quickly investing in this area. Jordy Roeschlaub, co-president of global debt and structured finance at Newmark said “It’s evolving fast.”
It’s no surprise that these data centers are popping up in Utah and Texas. Many companies prefer data centers to be near large population centers due to strong fiber-optic networks and easy access to tech and telecommunication servers. In fact, Meta recently announced its plan to invest $10 billion into a data center in Richland Parish, Louisiana. Google also started building two data centers in South Carolina to support the future high demand for Google AI.
Why Utah?
Novva CEO Wes Swenson was an early adopter of the Utah market, as he acquired the site in 2018. Site construction started in 2020 even though there were no leases signed as Utah wasn’t a big data center market. According to Avi Shemesh, co-founder of CIM said “we had to prove our design” in order to attract big offers. Utah has paid off as a location, as the state is relatively safe from earthquakes and other natural disasters. One concern, however, is the lack of water, which is needed to prevent the data center from overheating. Swenson said “virtually everything west of Denver is water scarce… You can’t go into these cities responsibly and use water for cooling.”
Even though water is a concern, it seems like this data center should be safe. CIM and Novva have built a system that reduces the amount of evaporation occurring, which increases the amount of water usage at other data centers. Swenson said “you recirculate the water… it doesn’t evaporate.” Things seem to be looking good for CIM and Novva, but they are aware that things have slowed down. Swenson also said “before the AI surge in 2023, you could reasonably get a pretty good path to power in three years”, but “that is moved now to five or six.”
Featured Image Credit: Christina Morillo; Pexels: Thank You!
