Texas has emerged as the country’s leader for data center readiness, according to a new study, with the Lone Star State set to rake in billions from the industry’s rapid expansion.
Texas is the state most equipped for artificial intelligence infrastructure, according to a new data center readiness index benchmark by AI-services and regulatory firm Labrynth. Oregon, Illinois, Florida and Georgia rounded out the the top five.
Labrynth is an AI-focused firm that develops technology and consulting tools for heavily regulated industries, with the goal of helping companies and governments navigate rules more quickly and efficiently.
The company’s new benchmark examines energy supply, grid reliability, water supply, permitting, workforce and more to determine how states are prepared to support the massive wave of AI data center development.
Texas has already become the country’s fastest-growing data center hub, fueled by abundant power, incentives and available land. Virginia, home to the largest data center market in the world, came in 10th, reflecting an industry shift toward efficiency and power capacity needs.
Companies including OpenAI, Tesla, Google, Apple, Meta and Microsoft are projected to spend more than $650 billion on AI infrastructure this year, with total investment expected to top $3 trillion by 2029, according to BloombergNEF.
Dallas-Fort Worth remains the world’s second-largest data center market, but the corridor between Austin and San Antonio is rapidly emerging as a major cluster, with more than 70 projects planned between Temple and San Antonio and roughly 5,600 megawatts under construction in the Austin and San Antonio metro areas.
Texas’ grid manager, the Electric Reliability Council of Texas, estimates the state’s energy needs could climb more than 70% by 2031, largely because of data center growth. The grid operator expects data centers alone to require more than 22,000 megawatts by 2030.
While the boom is bringing construction jobs and economic activity, it is also raising mounting concerns about power use, water supply and the strain on local communities, prompting some governments to explore restrictions or temporary moratoriums as Austin weighs its own approach.
Eaarlier this week, Texas Agriculture Commissioner Sid Miller called for a statewide temporary moratorium on large data center developments until state officials assess the impacts on the state’s electric grid, water supplies, agricultural land and rural communities.