The $25B Patagonia datacenter: historic opportunity or digital extractivism?

While OpenAI promises to turn Argentina into an AI hub, families in Querétaro have been without water for months

The announcement that shook Latin America

On October 10, 2025, Javier Milei’s government announced what it called “the largest infrastructure project in Argentine history”: Stargate Argentina, a datacenter worth up to $25 billion in Patagonia, in partnership with OpenAI and Sur Energy.

The numbers are impressive: 500 megawatts of capacity, powered by renewable energy, with a first phase of $7-10 billion. Sam Altman, OpenAI’s CEO, described it as “more than infrastructure — it’s about putting artificial intelligence in the hands of people across Argentina.”

The project falls under RIGI (Large Investment Incentive Regime) and is part of OpenAI’s global Stargate strategy, which plans $500 billion in worldwide AI infrastructure. Argentina would be the largest of all datacenters OpenAI is building, ahead of Germany, Norway, Japan, and Korea.

The other side: Querétaro and the water that won’t come

8,000 kilometers from Patagonia, in the Mexican state of Querétaro, there’s another story to tell about datacenters.

Querétaro has become Mexico’s datacenter epicenter, with cumulative investments of $15 billion since 2015 and more than 15 operational facilities from giants like Amazon Web Services, Microsoft, Google, and Equinix.

The problem: nearly 15% of Querétaro households lack piped water, and outages are frequent in two out of every ten homes in the state.

Sandra García, a Viborillas resident, sums it up: “We’ve gone two months without a single drop of water.” According to her, the person who rents her the apartment receives water once a week, so she must store it for personal hygiene and washing dishes.

The Valle de San Juan del Río aquifer, which supplies the datacenters, recorded a deficit of 56.8 billion liters in July 2025.

The “Kuri Law” and water privatization

In 2022, Governor Mauricio Kuri pushed through new water regulations allowing municipalities and the state agency to grant concessions to private companies — something that was previously CONAGUA’s exclusive jurisdiction.

Critics call it “covert privatization.”

Microsoft, for example, is licensed to extract 25 million liters per year from a well in the Vesta industrial park where it operates its datacenter. Ascenty has similar permits.

Companies argue their new cooling technologies reduce water consumption by 98%, but haven’t presented concrete evidence. Meanwhile, 17 of Querétaro’s 18 municipalities experienced moderate drought conditions during 2024.

The pattern of digital extractivism

What we see in Querétaro isn’t an isolated case. It’s a pattern repeating in Chile, Spain, and other countries where datacenters generate citizen protests over excessive resource consumption.

The difference is that in Mexico — and probably in Argentina — there are no organized groups or demonstrations against data centers, because there’s barely any information about how much water and energy they actually consume.

Residents of communities like Coyotillos, El Tintero, and La Obrera live surrounded by industrial parks without understanding what they are or how they’re affected. When asked what a datacenter is, the typical answer is: “Honestly, I don’t know.”

Argentina: will it repeat the pattern?

The Stargate Argentina project promises to use renewable energy — Patagonian wind and solar — and even contemplates integrating nuclear energy in the future.

But there are unanswered questions:

1. Where exactly will it be built? Five Patagonian locations are being analyzed whose names haven’t been disclosed. Without a specific location, it’s impossible to evaluate the real environmental impact.

2. How much water will it consume? A 500MW datacenter requires massive cooling. Patagonia has water, but also fragile ecosystems.

3. Who really benefits? OpenAI will be the “offtaker” — they’ll purchase all the computational power generated. The question is how much value will remain in Argentina beyond construction and operation jobs.

4. What about data sovereignty? The project includes “OpenAI for Countries,” which will give Argentine government agencies access to OpenAI technology. Where will that data be processed? Under which legal jurisdiction?

The argument in favor

It’s important to be fair to the other side of the debate.

Argentina has real advantages for these projects: abundant renewable energy, available land, low probability of natural disasters, and a government that has simplified the regulatory framework to attract investment.

The project promises:

Creation of thousands of jobs
$3 billion in state and federal taxes
Positioning Argentina as a regional tech hub
Accelerating AI adoption in local education, health, and industry

For a country with decades of disinvestment and capital flight, $25 billion is no small thing.

The question we must ask

The debate isn’t “datacenter yes” or “datacenter no.” It’s about the conditions under which these projects are developed.

Is there transparency about resource consumption?
Are there compensation mechanisms for affected communities?
Is foreign investment being prioritized over citizens’ access to basic resources?
Who bears the environmental costs and who captures the economic benefits?

In Querétaro, the government ceded 50 hectares of land for a thousand pesos. Families receive water every three days. Datacenters operate 24/7.

That’s not development. It’s extractivism by another name.

My perspective

As a data professional, I understand the value of computational infrastructure. Datacenters are necessary for the digital economy.

But I also understand that data has a physical cost. Every ChatGPT query, every trained model, every generated image consumes electricity and, in many cases, water.

The question isn’t whether we should build datacenters. It’s whether we’re willing to be honest about their costs — and about who pays them.

This connects with the nuclear renaissance driven by Big Tech: AI has an energy cost we’ve ignored until now. The datacenters in Querétaro and Patagonia are two sides of the same coin.

Latin America has a long history of exporting natural resources while profits concentrate abroad. Let’s not repeat that pattern with 21st-century resources.

This is part of a $7 trillion bubble in AI investment where the guaranteed winners are NVIDIA and cloud providers — not necessarily the countries that give up their resources.

Sources

Buenos Aires Herald, Infobae, Data Center Dynamics (October 2025) — Stargate Argentina announcement
N+ Focus, El Clip, Zona Docs (September 2025) — Investigation on datacenters and water in Querétaro
CONAGUA — Water deficit data for Valle de San Juan del Río
INEGI — Water access statistics in Querétaro
Mexico Business News (September 2025) — Datacenter boom in Querétaro