Kentucky Aluminum Smelter to Become Anthropic AI Data Hub in $14 Billion Project

The Kentucky Public Service Commission (PSC) approved a 15-year retail electric service agreement on August 21, allowing TeraWulf to develop a 482-megawatt AI data center campus on the site of a former aluminum smelter in Hancock County, Kentucky. Anthropic is the anchor tenant, having signed a 20-year lease for 401 MW of capacity in July.

The project repurposes the Hawesville smelter of Century Aluminum, which closed in 2022, eliminating about 600 jobs. TeraWulf purchased the 300-hectare property in February for $302 million, inheriting an existing substation and transmission lines that will serve the data center’s massive power demand.

Key facts

Why the former smelter site was chosen

TeraWulf, a company that previously operated bitcoin mining infrastructure, pivoted to AI data center development. The Hawesville site offers ready-built electrical infrastructure from its industrial past, including a substation and high-capacity transmission lines that would be costly and time-consuming to build from scratch. The PSC determined the agreement provides “adequate protections” for existing ratepayers, with rates deemed “just, equitable and reasonable” in the legal order.

The power delivery chain involves two local utilities: Big Rivers Electric Corp. purchases electricity on the wholesale market, and Kenergy Corp. handles retail delivery to the facility.

Anthropic’s role and the financial scale

Anthropic signed a 20-year lease in July for 401 MW of capacity to power its AI compute clusters. TeraWulf stated that the lease is expected to generate approximately $19 billion in contracted revenue over its term, according to reporting from Business Insider. TeraWulf estimates it will invest $4 billion to $4.5 billion in site development, and expects Anthropic to invest an additional $10 billion in computing equipment, bringing the total project value above $14 billion.

The arrangement reflects the growing demand for dedicated, high-capacity data center space among frontier AI labs. Anthropic competes with OpenAI, Google DeepMind and others for access to clusters of thousands of GPUs and TPUs, which require sustained power at levels that strain local grids.

Regulatory and grid hurdles remain

While the PSC approval is a major milestone, it does not guarantee TeraWulf access to the full 482 MW. The Midcontinent Independent System Operator (MISO), the regional transmission organization, must still approve the interconnection, and additional transmission service agreements are required.

Construction at the site was already underway before the PSC ruling, including demolition, environmental remediation and site grading. TeraWulf told regulators it aims to begin progressive power ramp-up by September 2027. Anthropic’s capacity is expected to come online in phases, starting in late 2027 and reaching full capacity in early 2028.

Local context and precedent

Kentucky has seen local governments impose moratoriums on data center projects due to resident concerns about rising electricity costs and grid strain. The Hawesville project has been viewed as a test case for how much leeway AI companies will have to build large-scale infrastructure despite community opposition. The PSC’s approval, with its emphasis on ratepayer protections, may set a precedent for similar conversions of former industrial sites in the region.

For ReviewArticle readers, this story illustrates the physical infrastructure demands behind the AI models and tools covered on this site. The cost and complexity of building dedicated data centers for AI training and inference will influence which companies can scale, where models are deployed, and how much compute costs factor into AI product pricing.

Source: Xataka IA – https://www.xataka.com/ingenieria-y-megaconstrucciones/enorme-fabrica-aluminio-a-centro-datos-para-ia-kentucky-va-a-convertirse-proximo-gran-nodo-datos-para-anthropic