A New York-based data center developer has big plans for Riesel, a small agricultural town 10 miles east of Waco.
Cipher Digital wants to build a hyperscale data center on a 300-acre site north of downtown Riesel and the Sandy Creek coal-fired power plant. Plans have been in the works for more than two years under the project code name “McLennan.”
The data center could use up to 500 megawatts, the equivalent of power used by 100,000 Texas homes on a peak summer day.
It is about half the estimated power use of the proposed Infrakey data center north of Lacy Lakeview that has ignited local controversy for months. Cipher has applied to use electricity from the state power grid.
Cipher officials said they are not ready to discuss how much water the plant would use or where it would come from, though they ruled out using Riesel’s water. Cipher’s proposal arrives at a time of political backlash against data centers across Texas and the country.
Just 20 miles northwest of Riesel, the proposed Lacy Lakeview-Infrakey data center has not only strained Lacy Lakeview’s relationships with its rural neighbors, but with Waco. Hill County, just north of McLennan County, made national news this month when county commissioners approved a one-year moratorium on data center development.
As in those cases, the sense that a potentially massive development could emerge without warning or invitation is generating confusion, anxiety and opposition among Riesel residents and some local leaders.
Electric, water use
Cipher has acquired about 300 acres off Rattlesnake Road by the Sandy Creek power plant, a 900-megawatt coal-fired plant towering above the city. The tracts were purchased through a series of discreet land deals with local property owners in October, according to McLennan County clerk records.
Cipher’s Riesel properties are located next to a high-capacity transmission line. Cipher applied to be in the first batch of new data centers permitted to connect with Texas’ power grid, managed by the Electric Reliability Council of Texas.
The company’s CEO expects to receive state approval for grid connection in June, according to a May 5 earnings call with investors. The cooling technology and water supply the data center would need have not been determined yet, said Drew Armstong, Cipher’s head of strategic initiatives, in a Tuesday email to The Waco Bridge.
“We have committed to share figures with the community once we have reasonable estimates,” Armstrong said. “We are aware of the water infrastructure concerns in the City of Riesel so we do not plan on using city water to cool the data center.”
He added that the company is exploring ground or surface water options to supply the facility, but not from water controlled by Riesel, which depends on groundwater.
Cipher is looking at using recycled water to cool the data center as well, Armstrong said. A large pipeline for treated wastewater already exists near the project site to service the Sandy Creek power plant. The plant buys that wastewater from Waco’s regional treatment plant upstream on the Brazos River.
Cipher officials declined comment on the possibility of using water from a major source of unused water nearby: Lake Creek Lake. Built as a power plant cooling lake in the 1950s, the reservoir has the capacity to provide 10,000 acre-feet of water per year, or nearly 9 million gallons per day.
The chemical giant BASF bought the lake for its water rights in 2021, and it’s unclear whether any of that water would be for sale.
Cipher estimates its data center will generate an average of $13 million in tax revenue a year over the course of a decade. Cipher did not detail if that figure referred to county, city or school district tax revenue. Armstrong said the company is open to placing a portion of the facility within Riesel city limits so residents “can benefit from the tax revenue.”
Cipher, which began as a cryptocurrency mining company, has expanded its business to hyperscale data centers with a focus on Texas. The company currently operates or is building four data centers in the state.
Riesel’s data center would be larger than any of those, but the company has several other projects of a similar size in the pipeline.
“We just want to be left … alone”
Riesel residents interviewed for this story, as well as McLennan County officials and Waco state Rep. Pat Curry, said they are scrambling to answer basic questions about the project. Some said they just learned about the project, while others began hearing rumors around February when Cipher bought a generational farm in Riesel.
Riesel residents set up a “Stop the Riesel Data Center” Facebook page last week to cobble together information about the project, similar to a page set up by opponents of the Infrakey project.
Josh Havens, 44, lives about 1.5 miles from the proposed data center. He said “the general consensus has been very unfavorable towards these data centers, the one in Riesel and elsewhere.”
Havens moved onto his grandparents’ property in 2021 to pursue his dream of running a regenerative agriculture farm for veterans. After a 12-year career with the U.S. Army as an IT and communications technician, he wanted to trade a life of technology for a life on the land.
To Havens, the data center represents a threat to his dream and the agricultural fabric of Riesel.
“There is this almost lustful interest by these tech companies to come up and tear up perfectly good farmland in rural communities and turn it into data centers,” he said.
Water and ecological impacts to native species are also concerns for Havens.
“We just want to be left to [expletive] alone, live our life, live in our little farms, grow our food, grow our hay, (raise our) horses,” he said.
Officials seek clarity
Riesel’s City Council appears to have been caught off guard, too. A statement provided to The Waco Bridge on behalf of the city government last week signaled concerns about the project’s potential impacts.
“Riesel is a small but thriving community,” the statement said. “Residents choose to live in Riesel, in part, because of its peaceful setting. We want to ensure that any industrial use, including a data center, does not reduce the quality of life for our residents. Moreover, adequate infrastructure and utility resources are a concern for high impact, industrial uses.”
Cipher sent an “introductory letter” to the city on May 8. Armstrong, the Cipher executive, said it was a token of goodwill, and included a commitment to work closely with residents, and city and county leaders to allay anxieties.
The company did not ask the Riesel City Council to sign non-disclosure agreements. On the May earnings call, Cipher CEO Tyler Page called Texas “data center friendly” and broadly dismissed industry opponents as “NIMBYs,” a pejorative that stands for “not in my back yard.”
“We’re managing those very well in Texas at our existing sites,” Page said on the call. “Texas is set up for a favorable outcome on those kinds of issues.”
In addition to reaching out to Riesel’s city government, Cipher representatives said they have met with McLennan County officials. McLennan County Commissioner D.L. Wilson, who represents the Riesel area, said commissioners have held no formal or informal meetings “where I’ve been told anything about (the data center).”
Wilson said he first heard rumors about the project in March at a Riesel gas station. He said the company’s transparency about the project is “not very good right now.”
County government options for restricting data center developments are limited, and Wilson said he doesn’t want to follow the example of the Hill County moratorium.
“We don’t want to get sued and have to waste taxpayers’ money for something that’s not legal,” he said.
Wilson said the best he can do is “fight for the community he lives in and represents” by negotiating a deal with Cipher that best serves Riesel.
Meanwhile, Curry, the Waco Republican, said the key to a successful data center project in Texas is early and robust communication with local residents and officials.
Curry considers himself a supporter of the industry, but has heaped criticism on the Lacy Lakeview data center proposed near Ross because of what he called a lack of “transparency” around that project.
“You can see exactly how not to do (data centers) with what happened here with Infrakey,” Curry said.
