Patagonia, a region of Argentina with 17,300 glaciers, has the potential to turn into a data center hotspot. The cool climate and abundant energy resources there are drawing interest from the likes of Amazon, Google, and OpenAI, according to Reuters. However, there needs to be more work on tapping into the resources and equipping high-speed networking, like fiber, to make the place irresistible. There’s also the question of political stability with a presidential election next year.

Argentina, and Patagonia in particular, has some juicy lures for potential hyperscale data center operators, and the cold climate is a bonus. That environment helps keep data centers cool and use less power while maintaining agreeable thermals. Patagonia has tens of thousands of glaciers across the Northern Patagonian Ice Field and the Southern Patagonian Ice Field combined.

Another bonus to would-be Patagonian data center operators are the range of energy sources there. Reuters mentions hydroelectric power, wind, and shale gas, but some operators who are already established are also adding solar.

Then, the social and political climate looks good for data centers in Argentina. According to the source, the populace doesn't hate data centers yet. At least there seems to be no campaign groups or public backlash. It is also reported that President Javier Milei has been making changes to court Big Tech. That’s a positive, and may be a negative. Positive in that the Argentines are now being accommodating to the needs of huge AI data centers. Negative, as there’s a presidential election next year, where things could take a dramatic turn, or not. There are also some regions in Patagonia where data center expansions may be complicated by the wishes and needs of indigenous communities. Businesses offering sizable, long-term investments aren’t keen on uncertainty.

With the pretty good environment for hyperscale buildouts established, it isn’t that surprising to see Reuters say OpenAI has confirmed a $25B and 500MW clean energy data center in the country. Lesser-known (to us) companies like Poland's Green Capital also plan a $3B and 300MW data center in Patagonia. It is also reported that FlexDomes, a U.S.-based green data center company, is planning the first stage of a 120MW facility.

Meanwhile, in neighboring South American countries, there are large developments from the likes of Amazon, Google, and others. Argentina must have these data center whales in its sights, as they are known to be scouting for expansion into new locations.

As well as political / business risk, Argentina has some structural weaknesses that need to be addressed by those developing in the country. It is said to have connectivity and power grid infrastructure deficiencies, for example. In other locations, we have seen these addressed on almost a per-project basis, with some state intervention, but it adds some high costs to setting up.

Data center builds are one of the hotly contested items worldwide. Many states and cities have upheld moratoriums on new buildouts due to power usage, water consumption, and noise concerns. Thailand is the latest nation to pump the proverbial brakes, with the government requesting that existing buildouts hit the pause button while coming up with a more precise regulatory framework.

Government heads requested that agencies compile information about current and future data centers during this week, in a bid to create unified legislation. The country currently has few laws specific to data centers, leading to legal voids like zoning a data center as a "warehouse" right next to a hospital. Much like everywhere else, the country has seen growing complaints about data centers' water and power usage.

After the week is out on September 11, the government expects to take about a month to come up with a regulatory draft, making the pause technically an indeterminate timeframe — though further delays wouldn't benefit either party, as Thailand considers the industry critical to the country’s competitiveness. The catch is that pausing construction isn't enforceable, so companies can elect to plow ahead regardless while the legislation is discussed.

NESDC (National Economic and Social Development Council) secretary-general Danucha Pichayanan is very specific: "we don't have the power to suspend the construction of the 49 data centers" currently under construction. However, when the legislation arrives, it will apply retroactively to ongoing projects, though with an adjustment period for in-progress builds. New builds will naturally need to comply with the legislation from the get-go.

Some companies may elect to soldier on with the belief their buildouts will be in compliance with the reasonably predictable content of the new laws, or betting that they could win future legal challenges — a dynamic that's already in play elsewhere with Project Jupiter. The incoming legislation is expected to cover power consumption (and possibly generation), closed-loop cooling, and water-surplus guarantees, meaning builders already have a fairly good idea of what they'll need to do.

Not complying with the request for a pause might be a game of political chicken, though, as the government may retaliate with regulatory delays and additional costs to power connections. Just last Thursday, Thailand's energy ministry raised concerns over a Bangkok data center that may be planning to hold diesel stockpiles far in excess of the 200,000 liters it has permission to.

On that topic, Thailand revised laws on industrial power delivery last July, and among other requirements, demands a bank guarantee of ฿4.5 million ($134,000) per megawatt. Half the money will be refunded when the actual usage reaches 50% of proposed utilization, and the rest when usage hits 70%. This mechanism is meant to stop preemptive allocation of power delivery capacity that might remain unused for months, years, or not at all — once again, mirroring datacenter playbooks elsewhere around the world.

At face value, the amount of $134k per megawatt sounds like a small price to pay for a builder to get ahead of the pack, but its per-megawatt nature means that a hyperscale facility pulling 200 MW or more needs to place around $27 million in escrow.

With the power laws recently revised, water consumption is seemingly the largest concern, as the current legal framework allows companies to make deals directly with utilities without additional safeguards. For example, in Chonburi, an operator signed a decade-long deal with Eastwater Stecon Utilities for 3.3 million cubic meters annually, or about 36,900 residents. It's expected that the new laws will add much stricter requirements to avoid localized deserts.