Montana can lead the economy of the future, but only if we allow it.
Over the past year, Montana has gone from having almost no major data center footprint to landing big projects in Great Falls, Butte, and now Billings. With these recent developments, several legislative interim committees have already devoted significant time to discussing data centers, focusing on issues like power and water use. In the last month, the Public Service Commission also announced it will take up the topic as well.
Concerns about change, especially technological change are natural, but decisions must rest on facts, not the anti-technology panics that have held back progress in the past. That’s why it’s worth looking closely at the most common misconceptions about data centers and what the evidence actually shows.
Reality: While it’s true that data centers consume a significant amount of electricity, and demand from them is projected to grow, it’s a mistake to automatically assume this means higher rates for everyone else.
History Teaches Us Differently
To understand why, it helps to look back at history. In the late 1800s, electricity was a luxury for most Americans. We had the technology, but it made little economic sense for a company to build expensive generation and transmission infrastructure just to serve a small town of 5,000 people. To recover infrastructure costs, rates would have had to be so high that most residents would have stayed with coal stoves, kerosene lamps, and iceboxes.
Large industrial users changed that math. Smelters, mills, and factories consumed vast amounts of power, creating steady, predictable demand that justified large-scale generation and grid buildout. Once the infrastructure was in place for industry, the incremental cost of connecting homes and small businesses was far lower, making electricity affordable for the general public.
This history is worth remembering: when high-volume industrial customers partner with utilities on capacity expansion, the result is often more energy at lower cost — not less.
What ‘Bring Your Own Power’ Means For You
Modern Data Centers, and the tech companies behind them, are not passive consumers waiting for utilities to scramble to meet their needs. Instead, the industry has shifted toward a proactive model called “Bring Your Own Power” (BYOP). Under this approach, Data Center operators directly fund new energy generation capacity rather than relying solely on the existing grid. For example:
- Amazon announced late last year that they are investing in $500 Million in a company that will provide them with nuclear power from Small Modular Reactors.
- Google has agreed to fund the early-stage development capital to three nuclear projects, each of which will generate at least 600 megawatts.
- Microsoft paid up front to build the $86.5 million Jumpoff Ridge substation and other infrastructure improvements that were needed to serve their Data Center in Washington.
- Meta has agreed to provide the funding necessary to update and keep running a nuclear plant in Illinois that was scheduled to be closed.
- Elon Musk recently confirmed that xAI has purchased an existing power plant and will relocate it to power the company’s Colossus Data Center in Memphis, Tennessee.
These investments are far from outliers, they show an entire industry shifting toward the BYOP model. By paying for the upfront cost of new power generation and grid upgrades, these companies are working to ensure their Data Centers can come online without burdening existing ratepayers. In many cases, the additional capacity they fund has the potential to connect to the broader grid, increasing supply and lowering rates for everyone. Luckily, this trend isn’t our only safeguard.
The Role of the Public Service Commission
The Montana Public Service Commission (PSC) is the state entity in charge of regulating investor-owned monopoly utilities, such as NorthWestern Energy, the company that provides most Montanans with their electricity. The PSC is tasked with ensuring that rates are just and reasonable, balancing consumer protection with financially viable operations for utilities, and ensuring that service remains reliable. Importantly, the PSC also has authority when a regulated utility seeks to bring new energy generation facilities onto the grid, particularly if the utility wants to increase rates to pay for them.
Notably, there is some active debate over whether NorthWestern must obtain PSC approval before serving a new data center customer if providing that service will not adversely impact other customers. However, that debate misses the broader point. If a monopoly utility were to serve a customer in a way that harmed reliability for others, or if it attempted to raise rates to cover the cost of meeting a data center’s power needs, it is widely accepted that the PSC would have jurisdiction to step in and protect Montana consumers. Simply put, the PSC exists for a reason, and it has the authority to address problems related to energy generation for Montana data centers if they were to arise.
With the context of large industrial users historically helping to lower costs and the shift by data centers toward funding their own power generation, it’s clear that the idea they will “use all of our power” is far-fetched. But even if issues did arise, Montana already has an agency equipped and ready to protect consumers.
More Power ≠ Worse Montana
There are generally two views on energy use. One camp, largely composed of radical environmental groups, argues that we should not be increasing power production at all. Instead, they believe society must scale down energy use across the board. At its heart, this view is motivated by the belief that human flourishing and the natural world are fundamentally at odds—that for nature to thrive, people must do less, use less, and expect less. Their perspective is often referred to as the “degrowther movement.”
The flaw in this worldview becomes clear when looking at the environmental Kuznets curve, which shows that as societies grow wealthier and more technologically advanced, they actually gain the capacity to reduce environmental harm. In other words, prosperity and innovation are not enemies of the environment but often the very tools that make environmental improvement possible.
Meanwhile, the other camp recognizes that reliable, abundant, and affordable energy is the backbone of economic growth. Every major wave of innovation in history has been powered by an expansion of energy capacity. From the steam engine to electrification to the digital age, societies that expanded power production lifted more people out of poverty and created more opportunities.
Those who carry that perspective often describe it simply as “energy abundance.” At its core is a simple but powerful observation: there are no high-income, low-energy countries. Prosperity and energy abundance always go hand in hand.
The choice is clear: restrict energy and the technologies that use it, and Montana restricts growth; expand energy and the technologies that use it, and Montana expands prosperity.
Data centers, like your personal computer, create heat when they are being used, just on a much larger scale. To keep things at a proper operating temperature, they use a mix of cooling methods that can generally be thought of as different combinations of water or air cooling.
The reality is that air cooling is often more economically viable. It’s simpler and cheaper to build and maintain, and in cooler climates, outside air can provide much of the needed cooling without the costs and complexities of water-based systems. In fact, only 22% of data centers use direct liquid cooling, and those systems don’t always use water, many rely on special non-conductive liquids that can safely touch electronics. Furthermore, in Montana’s cooler, less humid climate, air cooling is even more viable, making large-scale water use far less likely compared to data centers in hotter regions.
What About Data Centers That Do Use Water?
For the few data centers that are water-cooled operate, they aren’t tapping into the same water that households rely on. Instead, many facilities use non-potable sources such as greywater, reclaimed municipal wastewater, or water from industrial reuse programs. For example, Amazon Web Services recently announced it is expanding the number of locations using treated wastewater for cooling from 20 to 120.
But even then, they aren’t simply wasting that water. Most water-cooled data centers rely on closed-loop systems that recirculate the same water repeatedly, drastically reducing the need for fresh supplies. While the exact savings vary by facility, one study found that closed-loop cooling can cut water consumption by as much as 70%.
So Why All the Fear-Mongering About Water?
Some data centers do use water, but when you look closely at how, and under what conditions, it’s often significantly overstated. Those pushing the narrative that “data centers are bad” are often the same radical environmental groups fighting tooth and nail to shut down American industry and reliable energy.
A routinely cited statistic by the media states that a single data center uses up to 5 Million gallons of water per day. That sure makes for a great click-bait title when a new data center is proposed, but when you dive into the numbers, it is utter nonsense.
In order to get this number the environmental group behind it lumped together three categories of water use:
- Water use by the data center for cooling — the part people actually care about.
- Water use by power plant facilities that supply power to data centers — something that applies to all power users.
- Water consumption during the manufacturing process of computer chips — something that is baked into the entire global supply chain and occurs regardless of whether a data center is built in Montana.
It’s like claiming your morning cup of coffee “uses” 1,000 gallons of water—because they’re counting not just the water in the cup, but the rain on the coffee fields, water used in the cleaning of the coffee beans, and even the water that washed the delivery truck.
Montanans would be wise to be skeptical of doomsday claims about data centers, especially when they come from the same groups working to oppose nearly every form of industry and development in our state. By looking at other states we can see their playbook is the same: inflate numbers, strip away context, and stir fear to block projects that could otherwise bring jobs, investment, and innovation to local communities.
Reality: Data centers can provide Montana with extensive benefits, ranging from robust tax revenue, increased jobs, and helping to bring back the supply chain to Montana.
Tax Revenue
Data centers bring a substantial tax base, something especially impactful for counties and cities in desperate need of revenue to fund basic government functions.
Loudoun County, Virginia, which has been dubbed the “Data Center Capital of the World,” brought in $890 million in annual tax revenue in 2024 from its data center industry. To put that in perspective, the county’s entire operating budget was $940 million. That means data centers covered more than 94% of the county’s budget.
Even more telling is the efficiency: for every $1 spent in services to support data centers, $26 in tax revenue comes back, an efficiency other industries struggle to match. The impact of this revenue is so large that Loudoun County has lowered property tax rates every year since 2016, and has been able to maintain the lowest real property tax rate in Northern Virginia, approximately 25% lower than neighboring counties.
Far from being a drain on resources, data centers are providing local governments the revenue needed to help reduce taxes on everyday citizens.
Jobs
The jobs created by data centers can be broken down into two main categories:
- Construction Phase (First 18–24 months): The initial buildout of a large data center is a massive undertaking. One study found that the typical large facility creates 1,688 construction jobs during this phase.
- Operation Phase: Once construction is complete, a data center continues to provide stable, high-paying local employment. That same study found a typical large data center supports 157 permanent local jobs during ongoing operations.
However, the impact doesn’t stop there. Another analysis found that for each data center job created, an additional seven ancillary jobs are created. While some jobs created are off-site, many are directly tied to the facility itself, including security, engineers, electricians, and maintenance staff.
This underscores a key point, data centers are the backbone of the modern economy. Their presence not only creates immediate employment opportunities for local residents, but also spurs broader economic activity by driving demand for supporting industries. They create pathways for prosperity by encouraging Montanans to develop new skills, opening the door to higher-paying technical, engineering, and professional roles.
Bringing Back the Supply Chain
One of the reasons America’s supply chains—ranging from mining to critical minerals processing, manufacturing, and final product assembly—shifted to Southeast Asia wasn’t just cheaper labor. A major driver was the proximity effect in manufacturing. Once key steps in the supply chain clustered in one region, a feedback loop was created: suppliers wanted to be near buyers, buyers wanted to be near suppliers, and entire industries followed.
Data centers have the potential to kickstart that same effect in Montana. By building foundational digital infrastructure here, we increase the likelihood of attracting industries that want to colocate in order to supply data centers. This has the potential to create ripple effects across multiple sectors:
- Critical Minerals: Montana holds abundant reserves of critical minerals, the essential building blocks for computer chips and other high-tech components. Establishing demand for computing here could strengthen the case for mining those minerals locally rather than sourcing them from abroad.
- Processing & Manufacturing Jobs: Data centers create sustained demand for chips and supporting equipment. When paired with Montana’s raw resources, this demand helps attract other steps of the supply chain to be closer to where they are needed.
- Energy Demand & Development: Data centers bring long-term, stable demand for electricity. That makes it more feasible to invest in new energy projects, which in turn draws in industries that need abundant, affordable and reliable power.
By anchoring digital infrastructure in Montana, data centers could act as a magnet for new industries, creating a self-reinforcing cycle of growth. Just as the proximity effect once drew entire supply chains to Asia, Montana now has the chance to capture that momentum at home, strengthening our economy through critical minerals, advanced manufacturing, and reliable energy development.
As I’ve laid out, there is a lot of misleading or outright false information being pushed about data centers. But concerns about potential externalities are real and deserve to be addressed. The good news is that Montana already has the tools to deal with these issues, fwithout heavy-handed new regulations.
- Leverage Nuisance Law: Montana law already balances property rights by holding people accountable if their actions harm their neighbors. This applies both to direct harms, like property damage, and indirect harms, like excessive noise, vibration, or light. Nuisance law has existed for centuries as a way to protect people’s ability to use their property while ensuring accountability from those who cause harm. It remains one of the most effective, targeted tools for addressing conflicts without sweeping new regulations.
- Use the Right to Compute Framework: There may be instances when regulation is necessary, but leaders must be careful to strike a balance that does not squash the benefits Montana will receive from data centers. The Montana Right to Compute Act provides a clear framework on how to do this by requiring that any new law or regulation:
- Serves a compelling governmental interest in protecting public health, safety, or welfare, and
- Is narrowly tailored to achieve that purpose, and
- Uses the least restrictive means possible to achieve its goal
This ensures that we address real problems when they arise, without undermining innovation or Montanans’ fundamental rights.
What It Looks Like In Practice
Imagine a data center is built and begins generating excessive noise. Individuals who are impacted can turn first to nuisance law for relief. If that doesn’t resolve the issue, then leaders could consider a narrowly tailored noise ordinance aimed directly at the specific harm. The key is to target the actual problem rather than passing broad, heavy-handed policies that restrict how people can use their property.
Conclusion
For Montana, data centers carry the potential to drive tax revenue, create jobs, strengthen supply chains, and attract new industries that want to be near stable digital infrastructure. This is a chance to build on our state’s legacy of powering national growth, this time through digital not just industrial infrastructure.
Of course, concerns about data centers shouldn’t be dismissed outright, but Montanans already have the tools to address real problems if they arise. Nuisance laws and targeted frameworks like the Right to Compute Act provide balanced, proven safeguards. These ensure that when issues come up, they can be resolved without resorting to sweeping restrictions that harm opportunity for everyone.
At its core, the choice facing Montana leaders is simple: we can let fear-driven narratives dictate policy and risk chasing away innovation, or we can holding fast to our principles of property rights and freedom and embrace the economic opportunity that comes from it.
Montana can lead the economy of the future, but only if we allow it.
