While Montana might not be viewed as an artificial intelligence hotbed, it is considered among the top states in the country with potential to “power the AI revolution.” An analysis CNBC published last July based on grid reliability and average market electricity price named Montana as the No. 3 state in the country for its potential to power data centers. Despite that, only a handful of relatively small data centers have been built in the Treasure
State, and several operations have come and gone.
But the state of play could change — quickly — as proposals for new data centers garner traction in energy, economic development and political circles. Big Tech’s race to deploy AI, which the Brookings Institute has described as “the transformative technology of our time,” is spurring a corresponding rush to build data centers, massive warehouse-like buildings filled with stacks of chip-laden servers that have been likened to the “backbone” supporting AI.
The push for infrastructure to support the technology is also on display in Montana, as data-center developers and energy executives work to capture a piece of a rapidly growing market. Preliminary agreements that NorthWestern Energy, Montana’s largest utility, has signed with three companies in the past 14 months have given Montanans a general idea of how much electricity these large new data centers would require, but information about their water usage is in short supply. Wary of project developers’ tight-lipped approach to discussing their proposals, environmental watchdogs warn that a hands-off strategy could turn Montana communities into “sacrifice zones” to serve the data-processing needs of some of the world’s largest companies.
Data center experts that Montana Free Press interviewed in recent weeks said the lack of transparency could be by design. Project developers have been hustling to secure hundreds of millions, or even billions, of financing dollars before local pushback and potential regulatory changes spook investors in a competitive market that some industry insiders have described as a “global arms race.”
Aaron Wemhoff, a mechanical engineer who studies data centers’ environmental impacts as part of a consortium focused on energy-efficient electronic systems, told MTFP that center developers are running up against a power supply bottleneck and opposition from nearby residents wary of environmental impacts.
“I think that is what is setting the pace of development,” Wemhoff said. “What you’re seeing is that a lot of data centers are now being built in rural locations (where) there’s a little bit less resistance and perhaps they’re getting friendlier governments.”
Whether they’re inclined to support or oppose them, many Montanans are hungry for more information, and data-center developers have been reluctant to provide it. Montana Environmental Information Center Executive Director Anne Hedges told MTFP that these companies might be looking for “easy pickings” in Montana, but residents of Butte, Billings, Broadview and Great Falls have shown an “overwhelming interest” in the topic at educational events MEIC has co-hosted. Hedges said public engagement with this issue is like nothing else she’s encountered in the 32 years she’s worked for MEIC, an environmental nonprofit that also serves as a corporate watchdog.
“We’ve had to turn people away in a room that holds hundreds,” Hedges said, referring to last month’s talk in Billings, which turned into a standing-room-only event. “It’s fascinating from an academic perspective, but certainly from the perspective of somebody who wants to get regulations in place to protect Montanans from what the richest men in America want to do.”
MEIC is concerned that NorthWestern Energy’s existing customers’ electricity bills will rise to fund power plants, substations and transmission lines to serve new data centers that might shutter in a few years’ time. Running parallel to that issue is uncertainty about what data-center development means for the rivers, lakes and aquifers that support two of the top industries in this arid state — agriculture and outdoor recreation.
Although all data centers that process large volumes of information require a cooling system, there are a variety of ways to run them. Wemhoff said there is a tradeoff involved: evaporative cooling systems require more water but less electricity. “Closed loop” or “open-air” systems typically use less water but are less efficient in that they require more electricity.
“To me, the true water footprint is the water that’s consumed on site, but you also should include the water that’s consumed in the process of generating the electricity that the data center is consuming,” Wemhoff said. Fossil fuel plants often consume significant quantities of water, contributing to a larger water-use footprint, he added.
Montanans still don’t have a fulsome accounting of these new proposals’ water impacts, but some information has been in circulation as companies like Quantica and Sabey approach their projected operational dates. This is what we know as of early February.
A recently formed Texas-based company called Quantica Infrastructure is planning a “high-performance computing” campus to support artificial intelligence — an industry that’s expected to garner trillions of dollars of investment by 2030. Quantica has secured a 5,000-acre property south of Broadview for the project, which it is calling Big Sky Digital Infrastructure.
The project would require a continuous supply of up to 1 gigawatt of power, which is more than the average load NorthWestern Energy uses to serve its 400,000-plus electricity customers. Since facilities that require a lot of power typically generate a lot of heat, the energy footprint can be a helpful proxy for cooling — and therefore water — requirements.
In a Jan. 26 email to MTFP, Quantica wrote that the company aims to minimize its water use to avoid resource conflicts. Details on its cooling system will depend on environmental assessments and its customers’ needs, the company wrote, adding that it does not intend to source water from the town of Broadview, a rural community north of Billings with fewer than 150 residents and a limited water supply.
“We’re evaluating multiple approaches including zero-water air cooling, deep aquifer wells, treated greywater, and direct-to-chip liquid systems that reduce water consumption 20 to 90% versus older data center cooling technologies,” the company wrote. Quantica is looking to move quickly on its project, which will have limited local oversight due to the absence of zoning in that area of Yellowstone County.
Quantica doesn’t currently possess any water rights, according to the Montana Department of Natural Resources and Conservation. Like other users of large quantities of surface water or groundwater, the company would therefore be required to go through an administrative process designed to ensure that existing water users in the area aren’t negatively impacted by new withdrawals, a process that can take years. Despite that, the company anticipates moving forward with site construction this year.
Quantica’s energy-procurement plan includes incorporating “traditional” grid power along with renewable and battery energy storage. It has 45,000 acres of land under lease and on-site solar, wind and battery storage infrastructure have been “quietly” under development, Quantica CEO John Chesser told the Voices of Montana radio program last September. But its near-term power source, at least temporarily, is likely to include coal given its proximity to the high-voltage transmission lines leading out of Colstrip, the state’s largest power plant. Hedges, with MEIC, said Quantica could be one of the customers NorthWestern plans to serve with the nearly 600-megawatt share of the Colstrip plant it acquired last month.
In December of 2024, Sabey Data Centers, a company based in the Seattle area, reached a power-procurement agreement with NorthWestern for up to 250 megawatts of power. A few months later, the company reached a tentative — and still-pending — agreement with the Butte-Silver Bow Commission to purchase 600 acres of government-owned land in the Montana Connections Business Park, an industrial area west of Butte, for $1.2 million.
Sabey is also looking to the Butte-Silver Bow Commission for water to cool its system. More specifically, it plans to use an existing water right that conveyed snowmelt from multiple drainages in the Pintler Mountains to the smelter in Anaconda for nearly a century. When the smelter was operational, as many as 80 million gallons of Silver Lake water would surge down to Anaconda, but daily use now rarely tops 10 million gallons per day.
At an interim water policy meeting last month, Rob Corbin, Sabey’s senior vice president of energy development, told lawmakers the company will use “air-first cooling,” to take advantage of Montana’s cool and dry climate. Water-based cooling using industrial water — the Silver Lake water that Butte-Silver Bow owns — will kick in during the hottest days of the year, Corbin said, adding that there won’t be “routine” water discharge. (Even the closed-loop systems with less evaporative water loss require occasional draining and refilling.)
Despite Corbin’s assurance to lawmakers that Sabey is emphasizing “transparency from Day One,” Sabey’s governmental affairs manager did not agree to MTFP’s interview request. The company has been in communication with Montana Tech Lance Energy Chair Bob Morris, who used the facility’s energy requirements and local climate data to provide rough calculations of the facility’s anticipated water usage at a recent presentation before the Butte-Silver Bow Commission.
According to Morris’ calculations, extra water for cooling will only be required when the outside air temperature exceeds 80 degrees, or between 30 and 60 days of July and August. He said that’s when the evaporative cooling system will kick in, which is estimated to use about 16 million gallons per year. Morris likened the total volume of water required over the course of a year — 44,000 gallons daily — to three garden hoses running continuously at full capacity, describing the usage as a “small” share of an underutilized water right.
Butte-Silver Bow Commissioner Russell O’Leary echoed Morris’ assessment of the underused nature of that industrial water, telling MTFP in a recent interview that water managers rarely fire up the pump to move Silver Lake water these days. Its water is occasionally channeled into Warm Springs Creek to support instream flows during drought years. Otherwise, much of the Silver Lake water flows down to Georgetown Lake, which supplies farmers and ranchers with water for irrigation, O’Leary said.
During the Jan. 27 meeting, members of the public spoke both in support of and opposition to the project. Butte “needs to look to the future,” architect Dan O’Neill offered, arguing that the city should “take what we can get.”
Another Butte resident, Linda Trevenna, countered that Sabey appears to be dodging public scrutiny and has at times offered contradictory information.
“Why is Mr. Morris putting together the presentation for Sabey and using the words, ‘I’m assuming’ (and) ‘this is what I’ve read’? Why isn’t Sabey producing their own defined, guaranteed diagram of what they intend?” Trevenna asked.
A Sabey employee attended the 2-hour commission meeting remotely but spoke little.
At the tail end of 2024, two days after it issued a statement about its agreement with Sabey, NorthWestern announced that it had signed a letter of intent with Atlas Power Group to supply an additional 150 megawatts to its flagship facility, a cryptocurrency mining operation in Butte.
Atlas did not respond to MTFP’s multiple requests for comment. O’Leary told MTFP that Atlas uses a different cooling system than what Sabey is proposing. Atlas’ existing facility is more dependent on air circulation than water-based cooling, he said.
“They have gigantic fans that are out on the roof of the building. They basically pull air in from the outside, run it through the system and push it back out,” he said. “It is a fairly noisy facility. That’s not what is being proposed (in Butte) by Sabey.”
Atlas’ facility is authorized to use a negligible amount of water. According to DNRC, Atlas Power Holdings has a water right that enables the company to use up to 2 acre-feet of groundwater per year, roughly equivalent to the annual water usage of four households.
Atlas purchased the water right from CryptoWatt, a company that launched a bitcoin mining operation in 2018 and later shuttered following legal allegations that the founder created a Ponzi scheme.
It is unclear if Atlas intends to use its expansion for cryptocurrency mining. Hedges said she wouldn’t be surprised if the company transitions to other types of data processing to align with market demands and find a more stable customer base.
“When you get into the bigger data centers that are using these Nvidia chips that really have high power demand and get really hot, air just isn’t as efficient,” Hedges said. “That’s why these companies are moving toward using water cooling.”
Kerri Hickenbottom, a University of Arizona professor of chemical and mechanical engineering, described the current situation as a “black box” where communities are scrambling to learn about data center impacts — and mitigation opportunities — amid exponential growth in AI, cloud computing and government document storage.
“These data centers are just building as fast as they can and cities have really struggled with how to incorporate (them),” said Hickenbottom, who started researching data centers’ water usage when they started cropping up in the Phoenix area.
Some local governments are developing novel approaches to resource concerns, such as requiring data centers to use wastewater for their cooling needs — and to treat it themselves. Data-center developers can also spur utilities to develop more renewable power sources, she noted.
“We’re all responsible for this, too, because we’re using the data,” Hickenbottom said. “If we weren’t using the data, they wouldn’t be building more data centers.”
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This story was originally published by Montana Free Press and distributed through a partnership with The Associated Press.
