Fermi signs $6.5 billion lease for 'world's largest data center' after months of turmoil

Fermi Inc. announced a significant milestone for its Project Matador, a massive data center and power campus in Carson County, Texas, by signing a $6.5 billion lease with AI cloud provider TensorWave. The 15-year agreement covers a 222-megawatt data center, with options for TensorWave to expand to over 650 megawatts, marking Fermi's first binding customer after facing various financial, leadership, and environmental challenges.

The project, co-founded by former Texas Gov. Rick Perry, aims to develop up to 17 gigawatts of power through diverse sources including natural gas and nuclear energy. However, it has been embroiled in controversy, including a shareholder lawsuit alleging misleading information about tenant demand and funding, and a separate legal dispute involving former CEO Toby Neugebauer's ouster. Financially, Fermi acknowledged insufficient cash for upcoming obligations without additional financing.

Environmental concerns persist, particularly regarding water usage in the drought-prone Texas Panhandle. The Amarillo City Council approved a water sale to Fermi despite a dissenting vote and later considered a two-year moratorium on large-scale data centers, illustrating local political resistance, even though Project Matador lies outside city limits. Furthermore, residents and environmental groups have objected to air permits for the natural gas power complex, while Governor Greg Abbott has ordered state regulators to audit data centers for their impact on the Texas grid and communities.