We've been using almost 200 megawatts for the last three years there. We'll see how this year pans out there, but we get a report at the end of the year that it saved the utilities' customers because they share the revenue back with the customers. So the customers on MDU saved $5.3 million the first year we were there. Massive, like probably the biggest supercomputer in the world, because you have 100 megawatts of critical IT load all interconnected with InfiniBand. But the reason we did the three stories, you run network core through the middle, then you can interconnect all of that on kind of that 30-meter distance limitation on InfiniBand. And so for me to be able to take the cutting edge of technology back to an area that's just like I grew up in is rewarding, but also the big positive as well is it's a huge positive impact on the community in which we locate our data centers.
Wes, thank you for joining the Backaxle podcast.
Thanks for having me, Eric. I appreciate it.
Great. So, before we dig in, I want to learn about you in 60 seconds. I'll ask you a series of quick questions and please answer the first thing that comes to mind. So, do you prefer late nights or early mornings?
What was your first job out, you know, early on outside the industry?
Uh, so first I worked on my parents' farm, the family farm as I grew up. And then my first job off the farm, I was an auto mechanic in college.
That's impressive. I didn't expect that. And I've never considered being a mechanic, but good for you from that perspective. I like that. Skills. Skills learned on the farm.
True. I guess you repair your own farm equipment then.
Uh, let's see. So, fiction or non-fiction?
Superpower I call it is that I don't have an allergic reaction to mosquitoes. So, they bite me, but I don't swell up. It's really, really great.
That is a superpower. Say you're, um, if, uh, I don't know how many mosquitoes are down in Texas, but if you're up in lots...
Okay, good. Um, and then probably in North Dakota, there's probably plenty up there.
Yeah, in the summertime. And they're big.
Yeah. Uh, okay, so getting into work some more questions. Do you prefer email or a meeting?
And then, um, cabinet or rack?
Um, and then, uh, grid or behind-the-meter power?
Grid. Very strongly grid.
Sure. You can say what you want. Um, who would play you in the Netflix series Data Center Wars? So, some actor.
I think, I think, uh, McConaughey.
Okay. All right. Now that we got to know you a little bit with these series of fun questions, um, let's get into it. Applied Digital is building a massive campus or a series of massive campuses in a very rural part of North Dakota. Why do you choose Ellendale, or maybe the other, you know, Ellendale is first, but why are you choosing very remote spots?
Yeah. So, uh, I would say this: it's a mix of we choose, but the site kind of chooses us, too. And I say that by the way we found these sites is where is the power available, and then you need a few more boxes to check, which is, um, it's primarily power, the type of power you get, and then, uh, fiber, what's the fiber access look like. So it's not unlike data center capacity that has traditionally been planned, you know, years and years and years ago, where if you wanted more capacity in the Dallas market or in the Phoenix market, you pulled up the tool that told you where real estate was available with fiber, uh, and, you know, you landed there and then you requested power from the utility. So it's similar, um, but we're looking for large, large-scale power, and so it takes you to different sites where you have the grid infrastructure, the power gen, and the fiber that all comes together, and these happen to be the locations where this all comes together.
I see. Yeah. So, I imagine it's part of like long-haul fiber routes, you know, in Ellendale. And I haven't looked at it before starting the podcast here, but I imagine it's long-haul fiber routes probably going, what's that?
A lot of cross-country routes that go through North Dakota. It's a great state to do business in, and I think it's probably a great state to lay a lot of fiber through. Uh, and a lot of the routes went, if you want to run Seattle to New York, probably goes through North Dakota. And, um, and so we actually in Ellendale, North Dakota, which is 1,100 people, we have four different fiber providers and four diverse routes, both lit service and dark fiber. Uh, so it's a really robust fiber, not just there, but through the state.
Do you know the approximate latency down to Chicago? Because I imagine Chicago is the, um, closest interconnect hub.
Yeah. So, so I, uh, Chicago is like 15 roundtrip milliseconds, but the ones we've really tested to, it actually Chicago's kind of one of them, but, um, but like Des Moines, uh, which is a big Microsoft data center place, is one, and you get, uh, it's right around seven or eight milliseconds latency, uh, roundtrip. And then, uh, Cheyenne, which is a pretty big, uh, market for some of the hyperscalers, Denver, uh, Minneapolis, and, uh, Omaha, which is big, uh, Google, um, data center area, and we have really good latency to all of those. Our Ellendale campus was qualified by three, yeah, three different, uh, hyperscalers as dual-use, mixed-use inference and training. So it hits the kind of the latency targets that they need to go to their nearest peering point, or to peer, you usually actually have to do two peering points.
Although it sounds like, you know, having interconnection to their campuses, say if it's a Microsoft, you know, any hyperscaler, like having a connection and low latency to some of their existing campuses in addition to interconnect points, internet interconnect points.
Yes, that's, but, but just, I'll tell you just from the due diligence we've been through, the onboarding processes we've been through, they focus much more on their own peering points because we've had to do it for different hyperscalers to different locations. Uh, they focus on their own much more than internet connections.
Okay. Interesting. Um, which would be their own campuses, I suppose. Yeah.
Yeah. Yeah. That, that'd be great. Particularly because there's more and more hyperscaler campuses in rural locations.
Well, you've seen the trend even before AI. The trend was moving towards the middle of the country towards power, right? I don't really consider Omaha a population center for the United States. I don't consider Des Moines a population center, Cheyenne a population center. Uh, so you've already seen that moving in. So like, you know, North Dakota is a pretty easy extension of that, and we're really creating that market.
Makes sense to me. Uh, what is the most surprising thing about like this rural location, you know, both positive and negative?
Um, so the negative is just, you know, it takes a little bit more to get the labor force there and a little bit more of our own infrastructure for labor on site, as you could imagine. The real positive is, so, uh, just in my background, I mentioned that I grew up working on the family farm. I grew up in a town of 200 people, and this was, you know, I graduated high school in 1995, and kind of as we were going through, you know, the internet was just starting. And I make a joke, but it's funny because it's true, um, you know, I think my parents stopped using dial-up internet like 2018, uh, and it's, they, it just was an area that was left behind. And so for me to be able to take the cutting edge of technology back to an area that's just like I grew up in, uh, is rewarding, but also the big positive as well is it's a huge positive impact on the community in which we locate our data centers. So, uh, think of these small communities, like I said, 1,100 people in Ellendale. Uh, we work, like, we're very integrated into the community and we work closely with them to make sure we have a positive impact. There are negatives that come with it just in the extra traffic that goes through for the construction phase, but once these are running, you know, you have a few hundred people that go in and out every day. Uh, it creates really high-paying jobs, but it doesn't create so many that you completely change the face of the community and the reason that the residents want to live there in the first place. But you create some jobs. So, a lot of people who grew up, we've had, I think, 10 people so far that grew up in or around Ellendale, North Dakota, left because there wasn't really any job or career for them there. Now have come back because there's a, you know, a high-paying job that they can work. So, that's great. Uh, and then obviously the, you know, the tax revenue, they become almost, you know, not overnight, but over the time span of a couple of years, maybe the wealthiest school district in the state. All of their, the thing that people don't think about in these small communities is, so you have a town of 1,100 people, they're still doing a water system, they have roads, and the only way for them to pay for these, usually if they have any extraordinary expenses, is extra tax levy on all their residents. Uh, and now that kind of goes away so they can pay for their infrastructure. That's the first conversation we have. Like typically when you go to the mayor, the city council, and the only thing they think of is, man, we're going to be able to fix the water system or fix the sewer system or fix this road or that road, and it's all infrastructure. So, it's a really big benefit to these communities. And so it's very rewarding for me because of where I came from. Even if I didn't come from there, I think it'd still be very rewarding. But that's definitely the biggest positive.
I want to get into the community part later, but I almost, we scratched at it a little bit now. Um, it's almost like the, uh, these, like, Ellendale will have the best football stadium, high school football around, right? Because there's a data center there, and I think that's what you're getting to in terms. So there's obviously sales tax, you know, from a tax perspective, because I think that there's a lot of misunderstanding and FUD out there around data centers that are being built and proposed, right? There's in many different communities, it's surprising me, and we are actually starting to track this on Backaxle, community sentiment and, um, and how communities or which data centers are being cancelled because, you know, communities are pushing back. Um, and it's almost, it almost seems like they're, well, it's maybe I shouldn't make a judgment on whose best interest, but it feels like there's a lot of, um, misunderstanding of what data centers are. And so I mean, even from a tax perspective, you know, that, and you touched on it earlier, there's sales tax, but what other types of, you know, what type of other taxes or revenue pieces to the community can data centers bring?
The property tax is the number one, right? I mean, this is going to the community, to the school district. You know, it's state by state or town by town how it works. But, um, the property tax is number one. And so, you know, with the size of campuses that we're building, the community directly benefits by, you know, millions or tens of millions of dollars per year from a tax revenue perspective. Um, and then, you know, sales tax to what's applicable depending on the state, right? That's more of a state revenue generator versus a local revenue generator. But I love the fact that it's mostly property tax that goes directly where we're building, directly for that town, directly for that county. Um, and so it's a really big benefit there. And then the other benefits are just, you know, the ancillary benefits, the ancillary economic benefits, like while we're doing construction, there's a lot of, you know, economic activity that wouldn't exist in those locations that does exist, and because it's in a small area and how we do, you know, deal with the labor force there, the surrounding communities get a big benefit as well.
Right. And what, you know, the biggest concerns from communities, maybe I'm missing some and correct me if I'm wrong, but it's, um, maybe lack of jobs that are creating, um, water, that the data center is going to suck up all our water, that they're going to, if the data center is built here, um, our electrical rates will increase.
