Almost exactly 12 months ago now on the 4th  of December 2024, a $10 billion construction  

project began about a mile outside of Rayville,  Louisiana. A town with a population of about 3 and  

a half thousand people and a town that could  soon be rendered economically obsolete. When  

it's completed sometime in the next 4 years, the  Hyperion Data Center will be the largest complex  

of its kind anywhere in the world. For now, at  least. Covering an area of 4 million square f  

feet, it will be the flagship location for Meta's  AI capabilities. Facilities of this kind tend to  

be hard to wrap our heads around. So, despite what  you may have heard in the news, no, this won't be  

the size of Manhattan. But to give you a sense of  scale, the county's regional primary school sits  

on the corner of the 2200 acre site, and it's  absolutely dwarfed by the facility. But instead  

of teaching the children of tomorrow, this closely  guarded center will be training something far more  

valuable. It will be home to over 4 million GPUs  for an estimated 5 GW of compute capacity based on  

current estimates. Although the exact figures  nobody truly knows, including meta engineers  

themselves. The chips powering these facilities  are advancing so rapidly that centers like  

Hyperion are built to facilitate hardware that  doesn't even exist yet. And of course, this is  

just one of hundreds of similar facilities popping  up all over the world at the moment. The massive  

capital expenditure being made by these companies  is not exactly breaking news anymore. But what is  

worth discussing is why they picked here to make  that investment. This rural Louisiana location,  

surrounded by cornfields and hog farms despite  being thousands of miles away from Silicon Valley  

and not close to any major talent hubs, was not  picked randomly. It was a very careful compromise  

between three major factors. Three major factors  that often come at odds with the comparatively  

tiny local economies surrounding them. The first  item on the shopping list for these mega projects  

is accommodating government regulations. This  massive center and others like it have brought  

billions of dollars in investment into small and  otherwise overlooked regional communities. This  

opportunity alone has made politicians at all  levels from local city councils all the way up  

to heads of state extremely excited. To make their  cornfield more attractive than that cornfield once  

they over, governments at all levels have offered  generous concessions to tech companies, exempting  

them from things like development applications,  impact studies, community consultation, and even  

property taxes. State and local governments  across the world have also been quick to offer  

infrastructure and utility support to power and  service these massive centers out of their own  

budgets rather than shifting the upfront costs  onto data centers themselves. When cutting red  

tape and tax incentives don't work, there's always  just direct subsidies as well. Now, obviously,  

all this costs a lot of money, but exactly how  much is actually a really good question. Within  

the USA alone, the exact spending is not public  information. A report by the policy institute Good  

Jobs First has tracked these incentives since the  very beginning of the data center boom and found  

some concerning holes in what the public is being  told. At least 36 states have individually handed  

out economic development subsidies for data  center projects, but only 11 of those states  

have disclosed which individual companies were  receiving those public benefits. Of those 11  

states, only five have actually reported how much  they're estimating to spend on these subsidies.  

And the numbers get worse the more specific  you get, but more on that soon. This is also  

just within the USA, which by comparison makes a  lot of other development centers look positively  

transparent. When we started researching this  video about 2 months ago, Open AAI announced a  

massive data center project in Argentina, the  only number that made the headlines was the  

$25 billion investment into the struggling  country. The details that were uh glossed  

over was the fact that Argentina already struggles  with regular power outages and increasingly severe  

droughts before adding the demands of an energy  and water hungry data center. It also wasn't a  

great sign that the energy company that co-signed  this record-breaking deal, Sir Energy, effectively  

had no public profile before this announcement.  And according to the Argentinian Business Register  

is operated out of this small apartment building  in Buenos Aires. The channel Slidebean did a great  

on the ground investigation into this particular  thread just last week. So I'll leave a link to  

their video below as well. Either way, all  of this is painting a pretty clear picture.  

There's a genuine public concern that if the AI  bubble pops, it'll be taxpayers on the hook to  

bail out these massive projects that have become  too big to fail. The reality is we already are.  

The most conservative low-end estimate of just the  direct subsidies that we actually know about puts  

total government support for these projects into  the $10 billion range in 2025 alone now. I know  

what you might be thinking. Government bending  the rules and cutting some red tape in the name of  

business development isn't exactly anything that  new or shocking anymore. Right? And in this case,  

maybe it is all going to be worth it when projects  like Hyperion are bringing in billions of dollars  

in investment to small remote economies that have  otherwise been left behind in recent decades.  

But unfortunately, what these communities might  actually be subsidizing is their own destruction,  

which raises the obvious question, why are they  still doing it? Well, to find out, all you need  

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save by running your entire business with Odoo.  For all the concessions that local, state, and  

national governments are making to attract these  data centers, the long-term economic benefits they  

will actually provide are questionable at best. To  build these centers does indeed take billions of  

dollars in direct investment. But only a tiny tiny  fraction of that money will actually land in the  

local economy. And even that small slice isn't  as beneficial as it might seem. Realistically,  

the second major consideration is just having the  land available in the first place. And somewhere  

that land is already very cheap makes everything  else far easier because everything else can be  

built around it. According to a submission by the  state's economic development board, at its peak,  

the Hyperion site is going to directly employ  around 5,000 construction workers. Now,  

that's a lot of employment opportunity coming  to an area with a 12% unemployment rate where a  

quarter of all residents live below the poverty  line, but it does present an obvious challenge.  

With a local population of only 2,200 residents,  every man, woman, and child could be put to work  

on constructing this data center, and they would  still be 2,800 workers short. So, of course,  

those workers will be brought in from outside the  county, but the direct level of local employment  

has been intentionally left vague. Building out  these facilities requires highly specialized  

skills beyond just regular construction, which  means the vast majority of these workers will  

be coming from outside the area, if not out of  state entirely. Now, even still, for the few  

years that those personnel are on site to do all  this work, they'll be renting homes in the area,  

spending money at local businesses, and even  paying local taxes, which sounds good. But once  

the construction is done, these towns are back to  square one if they're lucky. These projects are  

effectively just creating boom towns like those  that are seen in remote mining communities. People  

flood in while there are jobs on offer, but what's  left behind after they move out is worse than when  

they started because now the local economy has  extra capacity for people who no longer live  

there. Even while construction is taking place,  the news isn't all good either. significantly  

increased commercial traffic in communities  not built for this many people have increased  

things like traffic accidents by 600% according to  incident records. Now, these facilities will have  

some ongoing jobs to keep them operational, but  they will be extremely minimal. Meta has announced  

that the Hyperion facility, one of the largest in  existence, will maintain 500 full-time employees.  

That's not nothing, especially in such a small  town. But the state is going to pay dearly for  

these jobs. In Illinois, government subsidies  for similar programs worked out to cost around  

$1.4 million for every job created. In Nevada,  it was $2.1 million. In terms of a decent return  

on investment, this is just not an efficient  use of taxpayer money. This is also only the  

data coming from the states that have reported  reliable accounts of these programs. Louisiana,  

for example, where Hyperion is being built, has  not reliably produced data on its data center  

incentive programs. It sounds bad already,  but it gets worse. These are largely going to  

be bad jobs. Most of these roles will be in basic  maintenance, security, and janitorial work rather  

than the well-paid technical jobs the company  would like people to think of. Most of that work  

will be done remotely from their engineers back  in Palo Alto. The people left behind in these  

communities are also going to be the ones footing  the bill for all those financial promises made to  

get these data centers constructed in the first  place. Largecale infrastructure development like  

new energy grids are usually paid off over decades  through increased energy bills. And naturally,  

the demand coming from a 5 gawatt data center  isn't going to help with those prices either.  

You've probably already noticed higher energy  bills yourself, but the effects are a lot more  

concentrated in locations like this where the  average household is not doing financially well  

as it is. This also has knock-on impacts beyond  just stretching already impoverished households.  

A lot of local businesses in rural areas  are energyintensive as well. Machine shops,  

chemical suppliers, mechanics, and even farms  themselves use a lot of energy. For a lot of these  

small businesses, it's one of their largest input  costs above even rent. If their energy prices rise  

relative to other surrounding areas, then they'll  have to live with the tighter margins, move their  

business elsewhere, or just close down. In their  press release, the Louisiana Economic Development  

Board did address this by highlighting that Meta  and the grid operator, Enty, will be contributing  

up to a million dollars a year into the power  to care lowincome rateayer support program.  

Now, that sounds great, but it won't go very far  when covering the estimated $3 billion in energy  

infrastructure upgrades required to serve this  site. The program also doesn't currently cover  

businesses, as it's focused exclusively on helping  households who meet a set list of criteria. These  

generous estimates also rely on everything going  exactly according to plan on the side of the AI  

companies. Nobody truly knows what the future  of the market surrounding AI will look like,  

but it's not unreasonable to point out  the potential that the level of spending  

currently being done by these companies won't go  on like this forever. In such a case, it becomes  

even more unclear who's going to pick up that  tab for infrastructure built out to support a  

facility built on shaky financial realities.  So yeah, state, local, and even national  

governments are falling over themselves to hand  out increasingly generous incentives to projects  

that are only going to undermine the viability  of their economies in the future. The biggest  

and saddest irony of all this is that according  to the companies themselves, they don't even  

care about the tax benefits. They have the money  and the investor demand to build these centers,  

and they're going to do it with or without the  tax incentives, but they won't say no if they're  

offered. So then why do governments still do this?  Well, partially it is lobbying as with everything,  

but it's also the fact that big promises about  big investments and big job creation is like  

catnip to people running for reelection. The  Argentine announcement from OpenAI was made  

just days before the country had a major election.  And at a local level, small-time politicians love  

a ribbon cutting ceremony. For a lot of local  residents, it's also a bittersweet opportunity  

to get out. According to data from Redfin,  compiled by Sherwood, property listing prices  

in the area surrounding the Hyperion Data Center  rose by 172% in a single year. Prices for certain  

properties convenient for further development or  worker lodging increased by as much as 6,900%.

Farming has not been having a great year  as it is. So, a financial lifeline like  

this is almost a blessing in disguise, giving  the companies the last component they need,  

somewhere to do all this that won't cause  too much backlash. Nobody wants to live  

near a data center. But if these facilities  are going to sink the local economy anyway,  

a lot of people are happy to get out  on a golden crusted lifeboat. So far,  

this has glossed over one other vital  utility to run these data centers,  

and that is the data connection. But go and watch  this video next to find out how a similar set of  

circumstances 30 years ago made it so that your  internet was legally required to be terrible.