The U.S. Department of Defense is transforming idle military bases into assets for AI infrastructure, launching a new collaboration model centered on a "land-for-compute" exchange.

The U.S. Army has selected Carlyle Group LP and CyrusOne as its first partners to build hyperscale data center projects at Fort Bliss in Texas and Dugway Proving Ground in Utah, with each project valued at around $2 billion. CyrusOne is jointly owned by funds controlled by KKR & Co LP and Blackstone.

This marks the first time the Pentagon has used federal land resources to attract private capital for AI computing facilities. Under this approach, developers assume responsibility for financing, construction, and operations without paying for the land, while the military secures computing capacity through lease agreements to meet future needs in artificial intelligence and military data processing.

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, military bases are emerging as a key frontier for the next wave of data center expansion in the United States.

Land-for-Compute: $2 Billion Data Center Projects Take Shape

In late March, the U.S. Army conditionally selected two companies to enter exclusive negotiations. According to the Financial Times, Carlyle Group LP secured development rights for approximately 1,384 acres at Fort Bliss, while CyrusOne obtained rights to about 1,201 acres at Dugway Proving Ground. Both projects are expected to involve investments of roughly $2 billion each.

Under the plan, developers will bear all project costs, including financing, construction, operations, maintenance, and future decommissioning. In exchange, the Army provides underutilized land, gaining computing power without adding to taxpayer expenses.

Army Secretary Dan Driscoll stated that the Fort Bliss project will become "the Pentagon's first-ever hyperscale data center." These projects are being advanced under the Army's Enhanced Use Lease mechanism, which allows the military to lease non-core assets, such as land, to private companies. The U.S. Army Corps of Engineers handles lease negotiations and environmental reviews.

According to the timeline, the Fort Bliss data center is expected to begin operations in fiscal year 2027, while the Dugway project is slated for fiscal year 2029. The Army's long-term vision extends beyond standard commercial data centers, aiming to create integrated campuses that combine commercial computing power, sensitive military data processing, and on-site energy facilities.

Expanding AI Infrastructure: More Military Lands Under Consideration

Following the initial projects, additional military bases are seeking to attract data center developers. Federal procurement documents show that the Army is evaluating the feasibility of building data centers at Fort Hood in Texas and Fort Bragg in North Carolina.

The U.S. Air Force is also broadening its efforts. In 2025, the Air Force issued a solicitation covering bases such as 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 expanded the scope to include Joint Base Elmendorf-Richardson and Eielson Air Force Base in Alaska, as well as Clear Space Force Station, seeking potential development partners.

The scale of development varies significantly across bases. Fort Hood offers about 207 acres for development, while Fort Bliss is nearly seven times larger. At present, most new projects are still in the solicitation and evaluation phase, with no formal contracts yet in place.

If these projects proceed, military bases could become a new type of data center cluster within the U.S. AI infrastructure landscape.

Energy and Water Pressures Pose Major Hurdles

As data centers expand rapidly, energy consumption and water demand have become common challenges across the United States. According to Data Center Watch, nearly $156 billion in data center projects have been delayed or canceled due to local opposition. In Virginia, a state-funded study indicates that monthly electricity bills for residents could rise by $14 to $37 by 2040.

Military base projects are not immune to these issues. Pentagon procurement documents reveal that the El Paso region, home to Fort Bliss, carries an "extremely high" water risk rating. Traditional data centers rely heavily on water for server cooling, which could exacerbate local water supply strains.

The Army is exploring alternatives. John Oliver, an executive in the Office of the Under Secretary of the Army, stated that the Army is encouraging Carlyle Group LP to study the feasibility of drilling new wells for El Paso's seawater desalination facility to offset the data center's additional water demand, with a goal of achieving a "net positive water contribution."

Compared to standard commercial data centers, military base projects face stricter environmental requirements, including achieving net-zero water consumption and operating independently of the local power grid, necessitating the construction of dedicated energy supply systems.