Data centers rise in Denton

Two-minute impact

Development is underway of Core Scientific and Qumulus AI’s facilities, which house information technology infrastructure.

Core Scientific is transitioning from Bitcoin mining to high-performance computing, and Qumulus AI provides high-performance computing cloud and graphics processing unit services, their websites state.

Tony Puente, general manager of Denton Municipal Electric, the city’s electric utility service, said city staff detailed the possible economic impact of having data centers in Denton in the 2020 economic plan.

The Denton economic impact from the two centers are expected to bring in the following:

Core Scientific after estimated completed expansion in 2027, over 10 years:

• $430 million in total economic impact
• $194 million in property tax revenue to the city of Denton
• 78.85 acres of land

• $20,000 a year to the city for 10 years from land leased
• $4.8 million to the city from franchise fees
• $2.5 million in net income to DME over five years
• 4 acres of land

Core Scientific’s expansion is expected to bring in $1.2 billion in contracted revenue to its Denton plant and a $6.1 billion real property investment, according to news releases from the company.

“By expanding our capacity in Denton, we’re building one of the largest [Graphics Processing Unit] supercomputers in North America,” Core Scientific CEO Adam Sullivan said in a 2025 news release.

Qumulus AI will lease land from the city at a rate of about $20,000 per year for 10 years, according to a lease and power purchase agreement approved at an Aug. 6, 2024, council meeting.

Residents cited concerns on social media about the increase in electric bills and city water usage after the data centers were approved. Denton resident Shaun Treat said the long-term effects of data centers in the community are unknown.

“It’s a risky proposition for Denton,” Treat said. “Data centers incentivize municipalities with promises of jobs and tax revenues, but there’s zero backup plan if our water and energy resources get stretched too thin.”

Qumulus AI Director of Engineering Spencer Smith said at a Dec. 17 planning and zoning meeting that its Denton data center will use a closed-loop cooling system, which is much quieter than traditional cooling methods, and that there will be no water usage. Core Scientific’s systems are also closed looped, according to its website.

Puente said neither facility is expected to have a significant impact on the city’s water utilities, and any wastewater generated will be routed through Denton’s wastewater treatment plant.

Still, residents like Treat are not convinced that there will not be downsides to the data centers. He cited uncontrollable incidents like the grid failure from Winter Storm Uri in 2021 as to why he is skeptical about data centers in Denton.

“Our city leaders are doing the best they can while dealing with harsh budget cuts from federal and state sources, but citizens need to stay engaged now more than ever. Our community’s future is on the line,” Treat said.

The big picture

City officials are not actively recruiting data centers but support existing ones, emphasizing the importance of providing the necessary electricity and infrastructure, said Brittany Sotelo, Denton’s director of economic development.

“The data centers are seeking sites specific to their needs and their right amount of electricity. If we don’t have that site, then they will go somewhere else,” Sotelo said.

The two data centers that will be operating in Denton coincide with an increase in data centers in Dallas-Fort Worth and Texas. The state is the nation’s fastest-growing data center market, with a January report from Bloom Energy projecting that Texas will see a 142% increase in data center industry activity by the end of 2028.

Over 2,000 projects totaling 453,000 megawatts are currently looking to connect to the state grid, ERCOT CEO Pablo Vegas told state legislators

April 1. About 357,000 megawatts of those requests are potential data centers, ERCOT documents show.

“We’re going to be the No. 1 data center state in the union because of our natural gas supply,” said Ross Perot Jr., chair of real estate development company Hillwood. “You’ve got this boom going on in manufacturing that is very strong.”

How it works

Core Scientific originally leased 31 acres of city-owned land and 294 megawatts of power, but City Council agreed to increase the leased land to 78 acres and the company’s access to power to 394 megawatts in November 2024. That’s enough energy to power more than 78,000 homes.

Qumulus AI’s facility will operate at 20 megawatts by the RD Wells electric substation, which is owned by Denton Municipal Electric, according to city documents. Exactly 4,000 homes could be powered with this energy.

DME External Affairs Administrator Stuart Birdseye said that through the approved purchase power agreement with the city, Core Scientific is obligated to pay 100% of its power costs, transmission costs and a base charge that will be transitioned to a publicly available rate.

Qumulus AI is obligated to pay 100% of all costs, including power and transportation, according to its purchase power agreement, Birdseye said.

Looking ahead

On March 30, a company called Arvato announced in a release it would be operating a 270,000-square-foot logistics hub at 3331 FM 1173, with another 150,000 square feet allocated for future expansions. Arvato is a third-party logistics provider for data centers and marks the latest development as data centers grow in Denton.

The $635 million Core Scientific expansion began in November 2024 and will take three years, Birdseye said. Qumulus AI secured $500 million from Permian Labs, a fintech company, to build its Denton plant opening in 2028, its website states.

Hudspeth said the money the city nets from the data centers will be used for different projects and one-time purchases in Denton, like a new fire truck. How the funds are used will be future decisions for council.

“You have to wait until [the revenue is] almost retroactive. You have to make sure the numbers and uses come in," Hudspeth said.

Hannah Norton contributed to this report.

Editor's note: this article has been corrected to state a specific use permit was approved by Denton City Council Jan. 13.