HA Viewpoint — “The largest data center project in history has officially fallen through.” So reads a recent Yahoo Finance report, detailing how QTS, the data center arm of Wall Street giant Blackstone, has pulled the plug on a massive, years-in-the-making project and withdrawn all planning documents. The move is being seen as a major red flag for America’s AI infrastructure boom.
The project, planned for Prince William County, Virginia, was set to cover about 850 hectares. If fully built, it would have cost an estimated $100 billion, making it the largest data center campus on the planet.
According to Reuters, QTS’s “Digital Gateway” was supposed to bring “billions of dollars in investment,” “substantial annual local tax revenue,” and “thousands of long-term jobs” to the county. But despite getting the green light from local supervisors, QTS eventually folded after years of community backlash and lawsuits.
Some analysts see this clash over data center construction as a symptom of a bigger problem: the energy crunch behind America’s AI gold rush. Fox News reported on the 6th that Henrico County, Virginia’s county manager, John Vithoulkas, recently asked government employees to cut back on power use to cope with a staggering 25% spike in electricity rates. In a memo, Vithoulkas wrote: “Starting July 1st, local electricity rates will jump 25%, adding about $5 million to our costs next fiscal year. And we expect more hikes down the road.”
Data centers are driving up electricity bills across the U.S. Pictured here: a resident in Mifflinville, Pennsylvania, on the 3rd, holding a sign against a proposed data center in their neighborhood.
While Vithoulkas didn’t directly blame data centers for the rate hike, a 2023 state report pointed the finger at the booming data center industry for drastically increasing energy demand, leaving regular folks and businesses to foot the bill for their massive power consumption.
According to Data Center Map, Virginia is home to 637 data centers, mostly clustered in the “Data Center Alley” in the northern part of the state. This area is recognized as the world’s largest data center market and a key hub for U.S. internet traffic. But this concentration is now raising serious concerns about energy waste.
With extreme heat waves hitting many parts of the U.S., the surge in residential air conditioning use combined with data center energy drain is putting the grid under severe strain. CNN reports that Energy Secretary Rick Wright has ordered data centers in the Mid-Atlantic region to use backup power to relieve pressure on the public grid. His directive specifically targets large power users served by PJM, the nation’s largest grid operator.
A report from PJM’s independent market monitor, cited by Reuters, shows the operator’s total costs have soared nearly 70% this year to over $16 billion, with data centers accounting for a big chunk. An ICF analyst told Reuters that PJM has no spare capacity to meet new demand beyond next year, and a similar crunch is expected to hit New York’s grid soon.
“The scrapping of ‘Digital Gateway’ is more than just a failed project; it signals a structural shift in how capital-intensive AI infrastructure gets deployed in the U.S.,” notes The Wealth Advisor. “While institutional money still loves data centers, issues like property rights, power supply, and local political pushback are becoming major roadblocks. Having land is no longer enough. Grid capacity is now a key risk. Developers are increasingly going to need dedicated power sources or alternative energy plans, not just a hookup to the existing grid.”
