Argentina courts AI data centres with no regulation and tax breaks

Argentina's southern Patagonia region is emerging as a popular destination for data centres, with the country's president, Javier Milei, making a push to attract them. President Milei has vowed not to regulate artificial intelligence and is offering tax breaks to large projects in the sector, although the Senate has yet to approve the measure.

Patagonia's vast empty land, cool air, strong winds, and natural gas from the Vaca Muerta shale formation make it an attractive location for data centres. Notable tech figures, such as Peter Thiel, representatives of OpenAI, Amazon, Google, Oracle, and data centre companies, have met with Milei and his aides in recent months.

Green Capital, a Polish renewable energy company, plans to build a $3 billion data centre in Patagonia which would be leased to big tech firms for AI computing. The Argentine government's incentive scheme aims to slash the corporate income tax rate to 15% from 25% for AI and other emerging industries, but the payoff for Argentines remains unclear.

Data centres typically employ few people, and Milei's proposed incentives do not require companies to reserve local computing capacity or disclose energy and water use. Critics argue that Argentina is pushing to deploy AI without safeguards against risks such as mass surveillance and cyberattacks.

As Pope Leo XIV visits Argentina, concerns about the potential risks of AI in the country are on the rise. Some ranchers in Patagonia are looking for alternative income sources, such as data centres, as the wool industry declines due to drought, overgrazing, and rising production costs. While construction of the planned data centre is not expected to begin until 2028, residents in nearby Trelew remain concerned about the environmental impacts and lack of information regarding water usage and energy sources.