Developer proposes hyperscale data center at former Eastern Kentucky steel mill

In a July 10 letter addressed to the community, Mayor Samuel Simpson wrote that a consultant working on behalf of the developer reached out to Simpson in June. The consultant, with Missouri-based Gateway City Consulting, had concerns that a moratorium on data center applications passed by the city that month could impede the potential project. 

Simpson wrote the email from the consultant was the first time he had heard about the project being proposed at the former AK Steel mill site, currently a 425-acre brownfield site. He wrote the consultant “wanted the city involved in evaluating the project, its potential benefits, and the protections the city would need before any path forward is considered.” 

The company responded  it would seek to build eight, two-story buildings for its hyperscale data center, investing anywhere between $8-12 billion on the computer infrastructure to power the data center. The data center would have the capacity to use 2 gigawatts of electricity, a little more than 10% of all electricity produced in the state of Kentucky during a recent summer. 

The potential electricity usage of the proposed data center, when fully operational, would be double the electricity usage of another hyperscale data center proposed by investor-owned company TeraWulf at an industrial park shared by Greenup County and Boyd County.

The company also said it plans to hire thousands of workers during the construction of the data center, and hire 200 full-time employees making an average salary of $125,000 once the data center is operational. The company wrote Russell could expect tens of millions of dollars in local property tax revenue if the project moves forward. 

The company said it anticipates the proposed data center will use approximately 55 million gallons of water on an annual basis. Russell Water Company, the municipal drinking water utility for the city, produces more than 500 million gallons of drinking water annually, according to a state utility data portal.

Prospective hyperscale data center developers have sought access to available land, electricity infrastructure and water sources across Kentucky as a part of a nationwide surge by technology companies to build data centers fueling power-intensive services including artificial intelligence. 

Counties and cities across the state have enacted temporary bans, or moratoriums, on local data center construction responding to backlash from residents concerned about the impacts of hyperscale data centers on water usage, electricity bills and the environment. The GOP-controlled state legislature in recent years has passed statewide sales tax breaks to incentivize hyperscale data centers to locate in the state. Bills filed by both Republicans and Democrats in the state legislature to regulate data center impacts did not pass this year.