Bitcoin miner buys former coal site to develop record northeastern KY data center
Bitcoin mining firm TeraWulf Inc. plans to construct what could become the largest AI data center in Kentucky at more than 1 gigawatt of full-time electrical capacity by 2030 on the site of an abandoned strip mine-turned industrial development site near Ashland.
The Maryland-based company, which is scaling up its high-performance computing and artificial intelligence hosting capacity, is on a nationwide blitz to secure access to large amounts of low-cost power that can be converted to specialized data center sites.
“The defining constraint in this market is no longer computing hardware — it is power, transmission infrastructure, and execution certainty,” said TeraWulf Chairman and CEO Paul Prager in a statement. The acquisition and future data center “directly aligns with that thesis,” he said.
The northeastern Kentucky hyperscale site TeraWulf is calling its Muskie Data Campus could eventually consume as much electricity as a city the size of San Francisco — enough to light up a million homes. The center is projected to come online at half that capacity in 2028, the company said Tuesday.
Electricity usage at those scales is expected to support next-generation AI models and puts the company on par with a growing list of firms betting big on access to power and transmission infrastructure to clear AI bottlenecks. Stocks surged more than 10% Tuesday on news the company had closed on a 285-acre site at the East Park Industrial Park Site B near the Boyd County border with Greenup County.
Construction of the center “will be one of the largest economic development projects Eastern Kentucky has ever seen,” a spokesperson for Gov. Andy Beshear said in a statement to the Herald-Leader Wednesday. The administration believes “this project would be a positive for the community,” Scottie Ellis said in the statement.
Tech firms are rapidly expanding into Central Appalachia in search of cheap land and electricity. In March, Google said it had purchased land for a data center in Putnam County, West Virginia. Wythe County, Virginia, just southeast of the easternmost tip of Kentucky, landed a $1 billion AI computing campus last year.
In a region whose residents are moving away amid a decades-long sagging coal mining economy, the promise of construction jobs and long-term utility customers comes as a big relief for local governments dependent on tax revenue. But data center development that has reached a fever-pitch nationwide and across the commonwealth is earning the scorn of some residents leery of power-hungry computers humming away in their backyards.
Environmental groups are skeptical of data centers in parts of Appalachia scarred by decades of extractive industries. Data centers that serve as physical storage and computation sites to an increasingly digital world are enormously resource-intensive, requiring massive amounts of power and sometimes water and land to store and cool networked computers.
At least two proposed data center projects in Meade and Oldham counties were scrapped last year amid strong local opposition. A 555-acre proposed data center has stirred emotions in Mercer County, where the planning and zoning commission has drafted ordinances to restrict where data centers can be built.
“I know data centers often get a bad rap and face skepticism; however, we’ve been able to watch other projects throughout the country and learn from their mistakes,” said Boyd County Judge-Executive Eric Chaney in a social media post Tuesday afternoon. “We have put together the best deal for not only the taxpayers, but the utility rate payers of our community.”
The project is “in an industrial park, not a neighborhood, not in a town, not in a city,” said Greenup County Judge-Executive Bobby Hall.
State lawmakers expanded sales and tax exemptions for qualified data center projects across the commonwealth last year, but legislation this session that would have protected ratepayers against subsidizing multi-million dollar energy infrastructure upgrades designed to lure and support tech companies died.
Power companies and co-ops like Louisville Gas & Electric and Kentucky Utilities and East Kentucky Power Cooperative are building out their power generation portfolio with new natural gas plants to support data center load growth.
Beshear’s office said it has secured commitments from TeraWulf that it will pay for all of its own power “to ensure no detrimental impacts to rate payers or the environment,” and that the company will pay significant school and local taxes and create short- and long-term jobs in Kentucky.
“Kentuckians in the area can be sure Gov. Beshear will be actively monitoring the project to ensure the commitments are seen through,” Ellis said.
Investor-owned Kentucky Power Co., the primary utility propping up TeraWulf’s project, started the process of requesting the state regulator permission for new energy generation infrastructure earlier this year. The company plans to build a new natural gas-fired unit at its former Big Sandy coal plant in Louisa, 30 miles south of Ashland on the Kentucky-West Virginia border.
“The current plan to build generation at Big Sandy Plant is a separate necessary project and did not take the data center load into consideration,” said Kentucky Power Communications Manager Sarah Nusbaum. “Generation needs for future data centers have not been finalized.”
The measure of success or failure of a hyperscale data center on the people of Eastern Kentucky rests on exactly how much of the total energy infrastructure costs TeraWulf will agree to bear, said Byron Gary, a program attorney with the Kentucky Resources Council, a nonprofit environmental advocacy and public-interest law firm in Frankfort.
“One of the first concerns that I have is that Kentucky Power Co. has been capacity shy for a number of years now,” he said. “They don’t have enough capacity to serve their current customers, let along a new 1 gigawatt data center, so they’re going to end up having to purchase that power from PJM.”
PJM Interconnection is the regional transmission organization that coordinates wholesale electricity movement on the East Coast. Transmission carriers have been strained for several years as data center load growth outpaces energy production in the PJM service territory, leading to record prices at the capacity auction for the past two years in a row.
The Federal Energy Regulatory Commission in April capped PJM auctions until 2028 due to the shock of wholesale rates on retail customers.
“Kentucky Power’s focus is straightforward,” said Nusbaum. “Existing customers should not subsidize a large new customer’s electric service.”
She directed customers to understand safeguards already in place and how data centers can support long-term affordability to a recently published webpage. The website says data centers pay for their costs, including infrastructure, and that other customers benefit from the added business.
But it also says that “rates may still change over time, typically driven by fuel costs, grid upgrades and broader energy market factors.”
The company is constructing a 345 kilovolt substation that will connect to its existing 765 kilovolt transmission network, providing redundant, utility-scale power infrastructure enough to support a gigawatt or more-sized campus.
More than 90% of the transmission upgrade costs are expected to be allocated outside of Kentucky, the Northeast Kentucky Economic Development Authority said in a statement signed by Executive Director Hunter Boyd as well as Chaney and Hall. The Muskie Data Campus is expected to fund half of the remaining 6% of the Kentucky energy infrastructure improvement costs, they said.
It’s still unclear who will pay the last 3%. Construction at the substation has not yet begun and will require approval by the Kentucky Public Service Commission.
The campus will pay Kentucky Power’s Industrial General Service tariff for large loads, “establishing a clear pathway to long-term, large-scale power delivery” they added. The tariff requires industrial customers to sign long-term contracts, minimum billing obligations and financial security provisions “designed to protect existing customers,” said Nusbaum.
None of the FIVCO Area Development District counties — Elliott, Boyd, Carter, Lawrence and Greenup — gave any tax incentives or tax breaks for this project, Hall told the Herald-Leader.
“This project will be funded by TeraWulf,” he said. “TeraWulf will be paying all of the utilities. They will have a contract for the water, they’ll have a contract with Kentucky Power. They have a contract with Columbia Gas. All due diligence was done on this to protect our people and to also provide for our people.”
Local tradesmen and women will have the opportunity to work and live at home under stable construction and build-out employment for 15 years or more, he added.
American Electric Power Inc.-owned Kentucky Power gave One East Kentucky and the Northeast Kentucky Economic Development authority more than $50,000 last year to use for digital project pipeline management software that highlights properties conducive for solar or data center-related developments.
The 200-acre plus site near an Ashland Community and Technical College trade school campus north I-64 is near the site Braidy Industries pledged to build a $1.3 billion aluminum rolling mill in 2017. The company repeatedly failed to meet its investment goals and faced criticism from legislators angry about unkept promises to revitalize the Eastern Kentucky economy.
Beshear was able to recover the $15 million former Gov. Matt Bevin invested in the rebranded aluminum venture in 2022 and return the property to the industrial authority where it has sat undisturbed ever since.
The large field between Industrial and South Commerce drives in rural Northeast Kentucky still bears evidence of an L-shaped imprint left from the footprint of what would have been the aluminum mill—an “eye-sore” for the industrial park, said Tim Wright, FIVCO’s transportation planner.
“This project is a huge step for us,” said Chaney. “We were able to bring a large industrial project to a space that was created for industry and has sat vacant for 28 years. We have been able to work a deal that will benefit our entire community, region and state.”
The Muskie campus would represent the second major investment TeraWulf has made in the Bluegrass State. The company is actively building out what it calls its Justified Data campus in Hancock County at the former site of a Century Aluminum smelter that sold earlier this year for $200 million.
Total investment in that project — half the energy capacity size of the northeastern Kentucky Muskie acquisition — is expected to top $14 billion, among the largest investments ever made in Kentucky.
TeraWulf hasn’t said exactly how much it intends to invest, “but there’s going to be several commas involved when they start writing checks,” Hall said.
“We’re going to build a bigger facility in Eastern Kentucky than they’re building in Western Kentucky” he added. “And I say that with all kinds of love and respect for Western Kentucky, but I hate second place.”
Construction at the Western Kentucky site is expected to get underway later this year, the company claims in an online project overview. The development is expected to use modern data center construction technologies that will emit less noise and remediate environmental impacts left behind by aluminum smelting infrastructure.
The Justified Data Campus will not use Ohio River water to cool its computers, relying instead on a closed-loop cooling system that is independent of natural water sources.
TeraWulf said newly acquired Muskie property is already zoned for its intended use and officials are actively applying for permits and conducting limited site work to support construction. The new center will be environmentally sustainable, the company said, which could mean Kentucky Power’s natural gas investments are unrelated, said Gary.
Owensboro-based Big Rivers Electrical Corp. filings indicate that the company will purchase wind and solar power through its own regional transmission organization to fulfill power needs at the Justified site.
“TeraWulf is fundamentally a power infrastructure company that builds digital infrastructure, not the other way around,” said Prager. “Our ability to identify, secure, and develop sites like Muskie reflects the advantages of our integrated approach and deep experience operating complex energy infrastructure assets.”
