Americans have started asking questions about the data centers suddenly popping up across the country. Communities have rightfully begun to question whether these data centers belong near their neighborhoods, and how the intrusion caused by these structures will impact their lives. While neighbors host these conversations, their elected representatives offer incentives to lure in these lucrative tax opportunities. These dichotomous priorities—maintaining residents’ living standards versus inviting purportedly profitable industry to the state—shape the conversation around data centers.
Minnesota has not escaped these discussions. Developers have proposed building thirteen hyperscale data centers across the state. State legislators noticed the increasing interest to build these data centers in Minnesota and drafted H.F. 16 during the 2025 legislative session. Legislators included a number of different laws aimed at regulating data centers in H.F. 16., while simultaneously offering incentives designed to lure hyperscale data centers to the state. Minnesota’s governor Tim Walz signed H.F. 16 into law on June 14, 2025.
The rush to construct new data centers across Minnesota mirrors a trend seen across the country as digital storage needs grow. Over the past several decades, business, academic, and government systems have largely switched from analog data storage systems to digital storage systems. These digital systems rely on data centers to store, process, and transmit their data. Data centers also store and process the information used by everyday people in their normal internet usage, whether for personal, business, or leisure needs. Without data centers, users could not store photos in the cloud, complete banking transactions from the comfort of their home, or enjoy video streaming.
While all these factors contribute to the rise of data centers, another factor explains the recent push for data centers: artificial intelligence (AI). Like online banking or Netflix streaming, AI systems such as ChatGPT require data centers to process, store, and transmit information. However, training AI models and then utilizing those models requires significant amounts of data. To analogize, developers create a “brain” for their AI models. At their inception, AI models start with little to no information in their “brain.” Over the course of months, these models are fed information from vast data sets, and slowly but increasingly absorb and retain large amounts of information. This training process requires data and must occur before the AI model is usable. Once the model is trained, the AI model uses its “brain” to answer queries. It can take the AI models quite a bit of processing power (and therefore, data) to comb through their “brain” to answer queries. These AI queries use more processing power than a typical Google search, where Google simply matches keywords from a user’s query to results it finds on websites. Due to AI’s high data usage, along with its growing adoption, there has been an increase in data usage. Investors now see a profitable emerging market in AI, and have thrown hundreds of billions of dollars into developing AI data centers and AI computer chips. The recent boom in the AI industry requires more data centers devoted to AI to support its increasing workload. The U.S. Department of Energy predicts that AI data centers will be one of the main forces behind increasing energy needs in the country in the coming years.
Minnesota’s legislators need to consider several different factors when regulating data centers in the state. Data centers bring in jobs and tax revenue, which is an obvious win for any community in the state. However, they also bring huge environmental concerns. Data centers require massive amounts of water and electricity. The centers have also caused significant friction in the communities where they have already been developed. Concerned citizens raise objections to data centers because they worry about decreased quality of life standards due to the increased noise, light, and air pollution data centers bring with them. Residents also worry about paying higher electricity bills, as data centers require expensive upgrades to the local grid. Cities have rezoned residential land just to allow these massive industrial projects in their towns. Government officials and tech companies have repeatedly made secretive deals, which has only further cemented a deep sense of unease and distrust between residents and planned data centers. Data centers push for NDAs that limit the information citizens can access about planned projects in their backyards.