WSS: Fake data centres emerging, underscoring the importance of credible operating expertise, experience
A busy year has come to a close and 2025 promises to be as exciting a year as the sector has ever seen. Happy New Year from all of us here at Structure Research.
We have had a bit of an uneven publishing schedule through the end of the year as our team has earned some valuable downtime to spend with family and friends, and to recharge for the new year. Our recent commentary focused on a few major themes. First, the idea of the fake data centre, coined by our contributor Dan Golding of Appleby Strategy Group. The growth of the sector and the long-term upside fuelled by the rise of AI, has captured the imagination of many and there has been a surge of new company formation and market entrants. There will be a few winners here, but the reality is that there will likely be more failures than successes. And the madness has already begun. A new project announced in Canada looks to be the kind of speculative exercise we are going to see plenty of in the coming year. There is room in the market for serious developers and creative partnerships bringing together resources, but one requisite is non-negotiable: building and operating expertise and experience. When it is absent, skepticism is warranted.
Operating expertise and background will come into play in the aftermath of the master-planned data centre park in Frederick, Maryland having changed lead developers. Quantum Loophole came up with the master-planned concept and managed and developed the Frederick project, with customer wins validating its efforts. But there has recently been legal activity and Quantum’s former partner TPG Real Estate has taken over the project and Quantum will no longer be involved. Quantum’s experience and expertise is certainly repeatable and can be applied to another geography and site, and we should look for it to remain active in the evolving pre-development space, which is seeing more participation from energy providers.
Speaking of, another ongoing theme we are tracking is energy. Nuclear continues to be taken seriously and SMR developer Oklo has secured a number of agreements with data centre operators that are planning ahead amid growing grid constraints and the pressing need to hit sustainability targets. Switch is the latest and recently signed a multi-year letter of intent with Oklo. Energy providers, needless to say, are an increasingly integral part of the development process. Lancium is one of these and it is is assembling energized sites for data centre developers, with an initial data centre project in Abilene, Texas. Lancium is reported to have received a $500m equity investment from Blackstone. Crusoe is the developer of the first Lancium site and it just raised a $600m Series D round to help fund the project.
The state of hyperscale public demand for data centre capacity is another important ongoing theme. With self-builds increasingly adding a new wrinkle into the demand profile, the question turns to who is next? Will the exclusive hyperscale public cloud club get any new membership? Webscale providers are not quite knocking on the door, but there are two or three cloud platforms that seem like logical candidates: ByteDance, maybe CoreWeave and NVIDIA. NVIDIA is the big one and we take a closer look at why it is on course to be the next big public cloud hyperscaler in the next decade. It is early, and things are not yet in motion, but the outcome seems inevitable in many ways. We make our case as to why.
The end of the year always sees a wave of strategic activity. There was maybe a bit less M&A than expected, but Vultr closed a funding around with a valuation of $3.5b. Meanwhile, growth and expansion continues to require financial resources. Serverfarm increased its credit facility, TECfusions secured a loan for its maiden project in Clarksville, VA, and Mainova Webhouse secured financing for its ongoing expansion efforts in Frankfurt, Germany.
Finally, as we move into 2025, a quick reminder about our annual executive summit that will be held at the Wynn Las Vegas on October 15-16, 2025. We will be opening registration on February 1, 2025 after PTC is held in Hawaii. Speaking of, if you’d like to catch up with the team in Hawaii, please do not hesitate to reach out. We have a private meeting room and would love to tell you about our upcoming summit and chat about all things cloud, hyperscale and data centre.
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