Galaxy Digital acquired 500 acres in McGregor, Texas for its second AI-HPC data center campus, with 74 MW first phase paired with privately funded substation and utility financial assurances.
Galaxy Digital's McGregor project reflects a fundamental shift in how utilities and regulators approach massive AI loads. Developers are now expected to fund grid upgrades themselves and demonstrate durable demand before utilities commit billions to transmission infrastructure.
On Tuesday, Galaxy announced it has acquired 500 acres in McGregor, approximately 90 miles north of Austin, for an AI and high-performance computing campus. The first phase will reach 74 MW before expanding to hundreds of megawatts through 2030 as transmission infrastructure comes online. The project, known as "Project Merlin" during McGregor City Council discussions, is Galaxy's second major Texas AI campus following its 1.6 GW Helios development in Dickens County.
What distinguishes this announcement is Galaxy's explicit commitments: privately funding an on-site electrical substation, providing financial assurances for utility upgrades, and funding additional water infrastructure required by its development agreement with McGregor. These commitments largely predate Gov. Greg Abbott's directive last month requiring data center developers to pay for required electric infrastructure while strengthening oversight of water and other impacts.
Galaxy will develop the campus with the McGregor Economic Development Corporation and Heart of Texas Electric Cooperative. The first phase is expected to receive power in 2028, positioning the company to expand above ERCOT's 75 MW large-load threshold in later phases.
Neil Osnato, founder of Persistence Analytics Group, frames this shift concisely: "The emerging model is moving from 'beneficiary pays' to 'beneficiary proves.' Developers are increasingly being asked not only to fund the infrastructure they cause, but to prove that the underlying load is durable enough to justify the grid being planned around it."
Utilities face a genuine challenge: committing billions to transmission and substation upgrades for projects that could be delayed, downsized, or abandoned. Osnato notes that while funding the substation "solves cost causation," it does not solve demand verification. Utilities now require evidence that AI loads are backed by committed customers, financing, site control, permits, and construction milestones before making long-term grid investments.
Galaxy enters McGregor with credibility. Its Helios campus has already delivered roughly 200 MW of gross power, including 133 MW of critical IT load, under a long-term lease with CoreWeave.
The McGregor development agreement commits Galaxy to invest more than $400 million, create at least 30 full-time jobs with average salaries exceeding $60,000, and construct six to eight data center buildings. The campus will cap water consumption at approximately 3,000 gallons per day per powered shell and limit noise to 65 dBA at property boundaries through a multi-layered building design featuring 11-inch precast concrete walls.
The project will add at least $130 million to McGregor's property tax base and generate approximately $7.5 million in land-sale revenue for the city, with operations beginning without property tax abatement.
Galaxy Founder and CEO Mike Novogratz emphasized the company's track record: "We've spent the last several years proving in Dickens County that a privately funded data center can be a real, long-term partner to a rural community. McGregor is the next step in our strategy to build a disciplined, multi-campus data center business."
As AI campuses expand into hundreds of megawatts, developers will compete not only for power but also for the confidence of utilities willing to build transmission infrastructure around them.