Why are hyperscale data centers flooding Kentucky?
By Lane Tongate and Chelsea Boling
There are currently 17 hyperscale data centers across the state of Kentucky in different stages of development. According to The Kentucky Lantern, there are 4 operating, 12 planned and 1 speculated, with the TeraWulf Data Center in Hawesville being one of the largest. Among the Kentucky counties included in this data center boom are Barren, Bell, Boyd, Carroll, Fayette, Greenup, Hancock, Jefferson, Marshall, Mason, Mercer, McCracken, Oldham, Pike, Simpson and Wolfe.
In March 2025, the Kentucky General Assembly approved House Bill 775, expanding sales and use tax exemptions for qualified data center projects across the state. Prior to the passing of this bill, Kentucky law only allowed these tax exemptions for data center projects located in counties with a population of 500,000 or more. The only county in Kentucky meeting this prior population requirement is Jefferson County (Louisville).
House Bill 775 passed with a 61-23 vote in the House and a 32-5 vote in the Senate during the 2025 Regular Session of the Kentucky General Assembly.
The bill was sponsored by Republican House Majority Whip Jason Nemes.
Republican Senator Gary Boswell representing Daviess, Hancock, and McLean counties voted Yes.
Republican Representative Scott Lewis representing Hancock County, Ohio County, and a portion of Daviess County voted Yes.
Through this bill, the Kentucky General Assembly attracted large data center developers to Kentucky. Prior to the passing of this bill, there was a single hyperscale data center in operation in Kentucky located in Marshall County.
Sales & Use Tax Exemption
Qualifying data center projects may be tax exempt if they meet the state’s minimum capital investment requirements based on the population size of the county. Because Hancock County has a population of less than 50,000, TeraWulf or a colocation tenant, such as Anthropic, must make a capital investment of at least $25 million within 5 years of the project’s preliminary approval. The capital investment must be spent on building and equipping a facility located inside the county.
Let’s take a look at the impact this has on our state tax revenue with a hypothetical example.
For simple calculations, let’s say a data center in development in Kentucky will purchase $100 million in equipment. Typically, if that equipment was purchased in the Commonwealth of Kentucky, then it would be taxed at a 6% sales tax, which would total $6 million in tax revenue for the state. Under HB 775, the sales tax would be waived.
Furthermore, if that equipment was purchased in California to be used in Kentucky, California would not charge a sales tax, but the state of Kentucky would charge a 6% use tax totally $6 million on the equipment purchase. Under HB 775, this $6 million is waived.
This hypothetical example represents a drop in the bucket on total expenditure for equipment at any given data center. Additionally, there is no cap on the amount of sales and use tax that an individual company or project can be exempt from under HB 775.
Under HB 775, these tax breaks run from 15-50 years based on the scale of the project. Data centers often need to replace equipment every 3-5 years and would continue to pay 0% in sales and use tax as long as the company meets the state minimum capital investment requirements.
Kentucky followed the path of other states in approving tax exemptions for data center projects. According to The Texas Tribune, the state of Texas will miss out on $3.2 billion in sales tax revenue over the next 2 years directly from tax exemptions for data center projects.
TeraWulf Across Kentucky
Last month, TeraWulf announced plans to develop a hyperscale data center on a 285-acre site at the EastPark industrial park in Boyd and Greenup counties in Eastern Kentucky. This same location was a failed aluminum mill called Braidy Industries. Braidy Industries received a $15 million investment from the state for the project, according to previous media reports. In 2022 the state’s funding was recovered. Plans for the aluminum mill were abandoned when the company failed to raise the necessary funding.
The TeraWulf facility in Boyd and Greenup counties could require up to one gigawatt of electricity at full capacity. During a packed public meeting, residents raised concerns over non-disclosure agreements signed by local elected officials. The three-hour town hall meeting was live-streamed on Facebook.
Eastern Kentuckians have concerns that the data center will have a boom-and-bust effect similar to the coal industry and worries how it will impact the Appalachian area. TeraWulf held a community informational meeting at Boyd County High School in June 2026 with a presentation of the EastPark Project.
TeraWulf signed a 20-year power purchase agreement with Kentucky Power. The agreement will be subject to oversight by the Kentucky Public Service Commission.
TeraWulf said the Hawesville Campus is several months ahead of the EastPark project.
Linked below is an interactive map showing where data centers are being built across Kentucky. Hover over any county to see its stage of development and find links to related coverage for that area.
