Galaxy Digital's Texas AI Campus Requires Private Grid Funding

Galaxy Digital has acquired 500 acres in McGregor, Texas, for an AI data center campus that illustrates how utilities are fundamentally changing their approach to massive power requests. The project, initially sized at 74 MW with plans to expand into the hundreds of megawatts through 2030, comes with requirements that would have been unusual just two years ago: Galaxy must privately fund an on-site electrical substation, provide financial assurances for utility upgrades, and pay for additional water infrastructure.

The McGregor campus, located roughly 90 miles north of Austin, is Galaxy's second major Texas AI project after its 1.6 GW Helios development in Dickens County. But the commitments attached to this development signal a broader industry shift, according to Data Center Knowledge, which first reported the details.

Why it matters

Utilities nationwide are grappling with billions of dollars in potential grid investments driven by AI data center proposals. Many projects never materialize or scale back significantly, leaving ratepayers to absorb stranded infrastructure costs. The McGregor model—where developers fund substations upfront and prove demand durability—could become standard practice as AI campus proposals continue to strain transmission capacity. This changes the economics of speculative data center development and may slow the pace of announcements that lack committed customers and financing.

The emerging "beneficiary proves" model

Galaxy's commitments align with recent Texas policy changes. Last month, Governor 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 had already been negotiated before Abbott's directive.

"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."

Osnato noted that paying for substations addresses cost causation but doesn't solve demand verification. Utilities now emphasize whether proposed AI loads are backed by committed customers, financing, site control, permits, and construction milestones before making long-term grid investments.

Project details and community commitments

Galaxy expects the first phase to begin receiving power in 2028, with expansion planned above ERCOT's 75 MW large-load threshold as additional transmission infrastructure comes online. The company is developing the campus with the McGregor Economic Development Corporation and Heart of Texas Electric Cooperative.

The project represents more than $400 million in planned investment and will create at least 30 full-time jobs with average annual salaries exceeding $60,000, according to Galaxy's council presentation. The campus will include six to eight data center buildings and cap water consumption at approximately 3,000 gallons per day per powered shell. Noise will be limited to 65 dBA at the property boundary through an 11-inch precast concrete wall design.

Unlike many developers proposing AI campuses, Galaxy enters McGregor with operational credibility. Earlier this month, the company reported that 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.

The development will add at least $130 million to McGregor's property tax base and generate approximately $7.5 million in land-sale revenue for the city, operating without a property tax abatement.

Galaxy founder and CEO Mike Novogratz said in a statement: "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. McGregor is the next step in our strategy to build a disciplined, multi-campus data center business."

These details were first reported by Data Center Knowledge.