Tech companies look to Argentina's windswept Patagonia to build massive data centers
As tech giants known as hyperscalers race worldwide to build server farms and run into roadblocks amid anti-data-center campaigns, projects in initial stages in Argentina are developing without much public attention.
Argentina's rugged Patagonia is attracting investors seeking to build large data centers due to the region's cool temperatures, renewable energy, shale gas reserves, and ample land. Tech giants, or "hyperscalers," are racing to construct server farms but face obstacles from anti-data-center campaigns. In Argentina, there has been minimal public opposition to data centers compared to countries like the United States, where critics argue they strain local power grids, harm the environment, and raise utility bills.
Proponents of data centers argue they are crucial for the AI boom, generate significant tax revenue, and can be made more sustainable.
Located at the southern tip of South America, Patagonia features jagged mountain peaks, desert landscapes, and massive glaciers. In Argentina's Neuquen province, near the company's Loma de la Lata thermal power plant, electricity generator Pampa Energia is seeking approval for a data center that could consume up to 500 megawatts of energy sourced from the nearby Vaca Muerta formation, one of the world's largest shale gas deposits.
Indigenous Mapuche families reside in the rural area and have a history of conflict with energy companies. Pampa Energia initiated the project after receiving inquiries about data center possibilities this year.
President Javier Milei, who assumed office in December 2023, has spurred investor interest in Argentina, particularly through his RIGI incentive regime, which provides tax breaks and regulatory stability. Two years ago, Argentina was largely overlooked by investors. For instance, OpenAI announced in October 2023 a data center partnership with local firm Sur Energy, valued at up to $25 billion, with a capacity of up to 500 megawatts.
Argentina currently hosts only modest data centers, primarily concentrated in Buenos Aires. The country lags behind regional counterparts, with Amazon and Google expanding data centers in Chile and Uruguay, respectively, while Paraguay is developing a similar facility backed by Taiwan.
Hadassa Lutz, co-founder of Cloud2Ground, a U.S. advisory firm specializing in data centers, notes that while Argentina boasts ample power, these assurances alone are insufficient. Investors may await the implementation of Milei's proposed Super RIGI legislation, a more expansive tax incentive framework expected in 2027. The Patagonia region's allure stems from its energy resources, favorable climate, and access to hydroelectric power and shale gas.
However, infrastructure and connectivity challenges persist, with experts urging caution against interpreting announcements as concrete project commitments.
Written by urgent.news from Economic Times Tech's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
