America's reddest state chases billion-dollar boom as others sour on massive emerging industry

As Americans weigh the costs and benefits of massive data centers emerging in their towns to fuel the artificial intelligence (AI) boom, the country's reddest state could be poised to capitalize on billions of dollars in investment that other states are increasingly reluctant to welcome.

With wide-open spaces, abundant energy and a business-friendly environment, Wyoming has many of the ingredients tech companies are looking for as they race to expand their AI infrastructure in the U.S.

The opportunity comes as the rapid buildout of data centers has sparked political fights across the country over their enormous electricity demands, water use and tax treatment.

As some states and communities consider new taxes, restrictions or even moratoriums on data center construction, Wyoming has a chance to position itself as an alternative. Supporters argue the projects could bring billions of dollars onto local tax rolls and potentially ease the burden on homeowners.

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Virginia has long been the nation’s data center hub, while Wyoming is emerging as a potential destination for the next wave of AI infrastructure investment. (Lexi Critchett/Bloomberg via Getty Images)

And Wyoming already checks many of the boxes data center developers are looking for.

"Data centers need a few things. They need land, they need affordable energy, they need to avoid natural disasters, and of course they need regulatory approval," Jared Walczak, vice president of state projects at the Tax Foundation, told Fox News Digital.

The Cowboy State also already has high-capacity fiber running along major interstate corridors, Walczak said, giving developers another key piece of infrastructure.

"If more states start imposing discriminatory taxes just on data centers, then places like Wyoming, at least as long as they don't do likewise, can become even more attractive," he said.

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As states weigh the costs and benefits of data center development, Wyoming could stand to attract billions in AI investment with its abundant land, energy and favorable business environment. (Yasuyoshi Chiba/Contributor/AFP/Getty Images)

Wyoming is wrestling with some of the same questions confronting communities elsewhere.

Cheyenne officials rejected a proposed one-year moratorium on new data centers in May following public debate over electricity rates, water use and other concerns. Wyoming lawmakers have also considered reclassifying data centers as industrial property, a move that would subject them to a higher property tax assessment rate.

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But Walczak argues that attracting the facilities could deliver a significant payoff for Wyoming homeowners.

"You have potentially billions of dollars worth of taxable property coming into a couple hundred acres," he said. "And that's the sort of increase in the tax base that can allow significant property tax relief for every other payer in the jurisdiction."

Wyoming is emerging as a potential hub for AI data centers as tech companies search for locations with ample land and access to affordable energy. (George Rose/Getty Images)

"Wyoming's been having a lot of conversations about lowering property taxes," Walczak added. "This is a great way to do that."

He pointed to Loudoun County, Virginia, the country’s largest data center market, as an example of how that tax base can benefit residents.

"Data centers provide about 45% of all local tax revenue to Loudoun County," Walczak said, adding that the average homeowner would pay an estimated $5,800 more annually in property taxes without the industry.

Wyoming’s abundant land and energy could make the Cowboy State an increasingly attractive destination for billions of dollars in AI data center investment. (Patrick T. Fallon/AFP/Getty Images)

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The economic upside comes with a broader debate over who pays for the infrastructure needed to serve the power-hungry facilities.

Walczak said data centers can avoid pushing those costs onto residents if operators pay for the additional generation and transmission capacity they require.

For Wyoming, that leaves policymakers facing the same question confronting states nationwide as they look to capture a piece of the AI investment boom without leaving residents to shoulder the costs.