Galaxy’s 500-Acre Texas AI Campus Reflects New Grid Model

Galaxy Digital has acquired 500 acres in McGregor, Texas, to develop an AI and high-performance computing campus with a 74 MW first phase, representing more than $400 million in planned investment. The project, known as “Project Merlin,” includes privately funded electric infrastructure and water-use caps, reflecting a shift toward requiring developers to prove and fund grid upgrades before utilities build around them. Galaxy expects the first phase to begin receiving power in 2028, with expansion to a multi-hundred-megawatt campus by 2030.

Galaxy’s 500-Acre Texas AI Campus Reflects New Grid Model The McGregor project pairs a 74 MW first phase with a privately funded substation and utility financial assurances, reflecting changing expectations for large AI power users. Galaxy Digital’s latest Texas AI data center project reflects a shift in how utilities and regulators view massive AI loads, as developers are increasingly expected to both fund grid upgrades and prove their demand is real before utilities build around them. The operator said Tuesday that it has acquired 500 acres in McGregor, around 90 miles north of Austin, where it plans to develop an AI and high-performance computing campus. The project, known during McGregor City Council deliberations as “Project Merlin,” is expected to reach 74 MW in its first phase before expanding into a multi-hundred-megawatt campus through 2030 as additional transmission infrastructure comes online. The project is Galaxy’s second major Texas AI campus after its 1.6 GW Helios development /build-design/texas-may-have-accidentally-built-the-perfect-grid-for-ai in Dickens County. But unlike many campus announcements, Galaxy emphasized commitments to privately fund an on-site electrical substation, provide financial assurances for utility upgrades and pay for additional water infrastructure required under its development agreement with the City of McGregor. The project also mirrors changes in Texas policy recently reported by /regulations/texas-pushes-ai-data-centers-to-pay-their-own-grid-costs Data Center Knowledge /regulations/texas-pushes-ai-data-centers-to-pay-their-own-grid-costs . Last month, Gov. Greg Abbott directed the Public Utility Commission of Texas and ERCOT to develop rules requiring data center developers to pay for required electric infrastructure while strengthening oversight of water use and other impacts. According to Galaxy’s presentation to the McGregor City Council, many of the project’s commitments, including privately funded electric infrastructure, closed-loop cooling /cooling/what-is-closed-loop-cooling-and-when-should-data-centers-use-it- , contractual water-use caps and noise limits, had already been negotiated before Abbott issued the directive. Inside Galaxy’s McGregor Campus Galaxy said its latest campus will be developed with the McGregor Economic Development Corporation and Heart of Texas Electric Cooperative. The company expects the first phase to begin receiving power in 2028 before pursuing expansion above ERCOT’s 75 MW large-load threshold. Utilities are increasingly concerned about committing billions of dollars to transmission and substation upgrades for projects that could be delayed, downsized, or never built /energy-power-supply/the-ai-demand-dilemma-utilities-confront-speculative-growth . “The emerging model is moving from ‘beneficiary pays’ to ‘beneficiary proves,’” Neil Osnato, founder of Persistence Analytics Group, told Data Center Knowledge. “Developers are increasingly being asked not only to fund the infrastructure they cause, but to prove that the underlying load is durable enough to justify the grid being planned around it.” “We’ve spent the last several years proving in Dickens County that a privately funded data center can be a real, long-term partner to a rural community,” Galaxy Founder and CEO Mike Novogratz said in a statement. “McGregor is the next step in our strategy to build a disciplined, multi-campus data center business.” According to Galaxy’s presentation to the McGregor City Council, the project represents more than $400 million in planned investment, will create at least 30 full-time jobs with average annual salaries exceeding $60,000, and is expected to include six to eight data center buildings. The presentation says the campus will cap water consumption at approximately 3,000 gallons per day per powered shell, and limit noise to no more than 65 dBA at the property boundary through a multi-layered “box within a box within a box” building design with 11-inch precast concrete walls. Under the development agreement, Galaxy will finance and build its own private substation while providing the financial security required for utility upgrades associated with the project. Company officials also told the council the second phase is intended to position Galaxy as an “anchor tenant” supporting future transmission upgrades that could accommodate additional industrial development in the region. Proving the Load Osnato said those commitments address only part of the challenge facing utilities as AI campuses continue to grow. “Paying for the substation solves cost causation,” he said. “It does not solve demand verification.” The analyst noted that utilities are placing greater emphasis on whether proposed AI loads are backed by committed customers, financing, site control, permits and construction milestones before making long-term grid investments. Unlike many developers proposing AI campuses, Galaxy enters McGregor with a large-scale project already under deployment. Earlier this month, the company said its Helios campus had delivered roughly 200 MW of gross power, including 133 MW of critical IT load, under a long-term lease with CoreWeave. According to Galaxy, the development will add at least $130 million to McGregor’s property tax base, generate approximately $7.5 million in land-sale revenue for the city, create several hundred construction jobs and operate without a property tax abatement. Galaxy’s McGregor campus suggests that as AI developments grow into the hundreds of megawatts, developers will compete not only for power but also for the confidence of utilities willing to build around them.