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The Move to Improve: Why the Midwest is Housing More Data Centers

The Midwest's lower costs, renewable energy, and improved tech infrastructure are luring data centers away from traditional tech hubs like Silicon Valley.

3 Min Read
The Midwest data center industry is on the up

We’re seeing a new crop of large data centers pop up as the rise of AI and other emerging technologies demand an immense amount of power and energy.

Historically, data centers were built close to big tech hubs like Silicon Valley to minimize latency, or closer to coastal areas to better manage the heat generated by the facilities.

But recently, technology powerhouses like Meta are pivoting their location strategy, claiming that the US Midwest is the perfect home for new data centers as heat-heavy states prevent corporations from leveraging free cooling.  

Additional factors driving businesses to consider the Midwest include lower land costs, tax incentives, and lower local populace impact.

Information transfer and interconnect technology have improved significantly, making rural IT equipment much less disadvantaged in recent years. This is still a problem for time-critical, low-latency finance transactions that are routed through a data center, but more generic workloads can easily be offloaded to locations further afield without much impact on perceived performance.

This tips the balance in the ‘cost vs. user experience’ calculation where lower land, construction, and maintenance costs are now very attractive.

Location, Location, Location

Could this current trend turn into a full-blown wave of corporations eager to move away from what traditionally has been the technology capital of the US – Silicon Valley?

Consider that the need for data center space is increasing, and more importantly, the needs of the data center are growing. Soaring power and cooling infrastructure demands are reaching a point where simply using existing infrastructure in a city is prohibitive.

Rural areas give operators the chance to design power infrastructure from scratch, as well as provide more options for how a business can effectively tap into renewables that might be difficult to achieve in existing locations.

The Midwest is a rising clean-energy area. The traditional coal industry is winding down and easy access to solar and wind power is causing a clean energy boom.

Additionally, with these escalating requirements on data centers, the cost to run a facility is naturally increasing. For example, if cooling is one of the primary costs, then it makes sense to evaluate how a cooler climate, even one that is more inland, could reduce some of that overheat. While it might be convenient to place a data center in sunny California because it is close to a company’s corporate headquarters, the resulting cost to keep the location’s temperature down and prevent overheating servers outweighs the price of that convenience.

Heading (Mid)West

The shift of data centers to the Midwest region of the US is driven by a confluence of factors that offer substantial benefits to businesses and the data industry as a whole.

The Midwest’s strategic location offers proximity to major population centers while mitigating risks associated with natural disasters prevalent in other regions. Additionally, the region boasts a reliable and affordable power supply, supported by renewable energy sources, contributing to sustainable operations.

Moreover, the availability of skilled labor and supportive government policies further enhance the attractiveness of the Midwest for data center relocation. Lastly, the improvements in networking technology and the disaggregation of computing power mean that remote data centers are more viable than ever.

James Lupton is chief technology officer at Blackcore Technologies.

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