Northern Nevada’s Data Center Boom Causes Resources Debate

Northern Nevada is emerging as a hotspot for data center development, drawing tech companies eager to expand their digital infrastructure. While many of these facilities have clustered around Reno, developers are increasingly eyeing rural areas, like Lyon County’s Mason Valley, raising concerns over water, power, and long-term community impacts.

Last summer, the Lyon County Planning Commission unanimously approved rezoning more than 500 acres of agricultural land for a proposed 14-building data center complex about 10 miles north of Yerington. If built, the project would require 1,000 megawatts of electricity, enough to power roughly 500,000 homes. The amount of water needed remains uncertain, heightening local concerns.

The growth of data centers, and their substantial energy and water demands, was a major topic at last week’s Nevada Water Resources Association conference. Rapid expansion has led tech companies to pursue large, available parcels of land in rural areas, straining planning agencies.

Nevada has no statewide regulations governing the construction locations for data centers, leaving local governments to manage zoning and policy decisions.

Data centers require massive computational power to run applications like AI, and cooling these energy-intensive facilities demands substantial water. Yet many of Nevada’s groundwater basins, including Mason Valley, are already over-appropriated, threatening farmers and communities with potential water cuts.

Despite these challenges, Nevada offers abundant unoccupied land, low natural disaster risk, proximity to California tech hubs, lower operational costs, and favorable tax structures, including property tax abatements of up to 75% for a decade or more.

The Tahoe Reno Industrial Center, a business park larger than Reno itself, has attracted major data center operators, including Switch, Tract, EdgeCore, Novva, Vantage, and PowerHouse. Estimates suggest that by 2033, data center operations there could require nearly 12,450 acre-feet of water annually for electricity generation and 9,600 acre-feet for cooling.

For rural communities like Mason Valley, data centers offer potential economic benefits. Officials expect the proposed Monarch Data Center to generate $16 million in state sales tax and $8 million in local taxes during construction, with $562,000 in annual property taxes.