The Pentagon has launched a 'Land-for-Compute' initiative, leasing idle military bases to private capital for the development of AI data centers. The first projects, led by Carlyle and CyrusOne (in which KKR and Blackstone hold stakes), are underway in Texas and Utah, with each investing approximately $2 billion. The military is exchanging land for computing power. The projects face pressure on energy and water resources, and the military requires developers to achieve net-zero water consumption and operate on independent power supplies.
The U.S. Department of Defense is converting idle military bases into AI infrastructure assets, ushering in a new collaborative model centered on "land for computing power."
According to reports, the U.S. Army has selected The Carlyle Group and CyrusOne as its first partners to develop hyperscale data center projects at Fort Bliss in Texas and Dugway Proving Ground in Utah, respectively, with each project carrying an estimated investment of approximately USD 2 billion. CyrusOne is jointly owned by funds affiliated with KKR and Blackstone.
This marks the Pentagon’s first attempt to leverage federal land resources to attract private capital for building AI computing infrastructure: developers bear no land costs and are responsible for financing, construction, and operations, while the military secures computing capacity through a leasing arrangement to meet future artificial intelligence and military data processing requirements.
However, this model has sparked debates over energy supply, water consumption, supply chain security, and impacts on local communities. As demand for AI computing power continues to surge, U.S. military bases are emerging as key potential sites for the next wave of data center expansion in the United States.
“Land for Computing Power”: USD 2 Billion Data Center Projects Break Ground
At the end of March this year, the U.S. Army conditionally selected two companies to enter exclusive negotiations.
According to the Financial Times, Carlyle secured development rights to approximately 1,384 acres at Fort Bliss, while CyrusOne obtained rights to about 1,201 acres at Dugway Proving Ground, with both projects expected to involve investments of roughly USD 2 billion each.
Under the plan, developers will assume all project costs—including financing, construction, operations, maintenance, and eventual decommissioning—while the Army provides idle land resources to obtain corresponding computing capacity without imposing additional costs on taxpayers.
Army Secretary Dan Driscoll previously stated that the Fort Bliss project will become “the Pentagon’s first-ever hyperscale data center.” These initiatives are being advanced under the Army’s Enhanced Use Lease (EUL) mechanism, which permits the military to lease non-core real estate assets to private enterprises. The U.S. Army Corps of Engineers oversees lease negotiations and environmental reviews.
As planned, the Fort Bliss data center is expected to begin operations in fiscal year 2027, and the Dugway project is slated to become operational in fiscal year 2029. The Army’s long-term vision extends beyond constructing conventional commercial data centers; it aims to create integrated campuses combining commercial computing capacity, secure military data processing, and on-site energy infrastructure.
Expansion of AI Infrastructure Footprint: More Military Lands Added to Candidate List
Following the launch of initial projects, more military bases are seeking to attract data center developers. Federal procurement documents indicate that the U.S. Army is evaluating the feasibility of constructing data centers at Fort Hood in Texas and Fort Bragg in North Carolina.
The U.S. Air Force is also expanding its related footprint. In 2025, the Air Force issued a request for proposals involving Arnold Air Force Base in Tennessee, Edwards Air Force Base in California, Joint Base McGuire-Dix-Lakehurst in New Jersey, Davis-Monthan Air Force Base in Arizona, and Robins Air Force Base in Georgia.
Subsequently, the Air Force further extended its scope to include Joint Base Elmendorf-Richardson and Eielson Air Force Base in Alaska, as well as Clear Space Force Station, in its search for potential development partners.
Development scales vary significantly across bases. Fort Hood offers approximately 207 acres for development, while Fort Bliss provides nearly seven times that area. Currently, most newly added projects remain in the bidding and evaluation phase and have not yet resulted in formal contracts.
If these projects proceed incrementally, U.S. military installations could emerge as a new cluster of data centers within America’s AI infrastructure landscape.
Energy and Water Resource Constraints Pose Major Challenges
As data centers expand rapidly in scale, energy consumption and water demand have become pressing issues across the United States.
According to Data Center Watch, nearly $156 billion worth of data center projects in the U.S. have been delayed or canceled due to local opposition. In Virginia, a state-funded study estimates that residents’ average monthly electricity bills could rise by $14 to $37 by 2040.
Military base projects are not exempt from this challenge. Department of Defense procurement documents show that the El Paso region—home to Fort Bliss—has been assigned an “extremely high” water risk rating. Given that conventional data centers rely heavily on water for server cooling, such projects could further strain local water supplies.
The Army is exploring alternatives. John Oliver, an executive responsible for matters related to the Office of the Under Secretary of the Army, stated that the Army is encouraging Carlyle to study the feasibility of drilling new wells for the El Paso desalination facility to offset the additional water demand from the data center and strive to achieve a 'net positive water contribution.'
Compared with typical commercial data centers, military base projects are subject to stricter environmental requirements, including achieving net-zero water consumption and operating independently of the local power grid by establishing a self-sufficient energy supply system.
Editor/Liam