Matt Biegacki and Mike McDaniel answer questions about data centers and the differences between very large or hyper centers and the digital storage services offered by Lightedge. The company is considering an offer from the Boone County Economic Growth Corporation to purchase land and locate in Boone.
Transcript
Well, on our program today, we're going to hear a little bit more about light edge and light edge. Obviously, it's generated a lot of discussion amongst people in the community and the surrounding vicinity. But actually, from even a couple of weeks ago, I'm going to go a little longer ago than that when I started talking about a project over in Ames. But today, we're joined by Mike McDaniel and Matt Bagacchi, both with light edge. Mike, thanks for coming and stopping by. Thank you for having us. We're excited about the opportunity in Boone. And Matt, Matt, Matt, you're a busy guy. Oh, yeah. You know, it's been great getting up here and working with the community to tell a little bit about the story and talk about light edge who's been proudly serving in Iowa for the last 30 years. I was going to say light edge has multiple locations in multiple states. I mean, it's you got what couple of dozen, I think facilities. Yeah, that's correct. We operate 10 of our own co-location facilities across the U.S. in 14 separate markets. And that's one of the reasons that we look to continue to grow in Iowa is that, hey, this is a growing business. We're growing alongside the companies that we help support. If that's financial institutions, local healthcare operations, any of other type of community businesses, this is all part of the overall growth story that we have here at light edge. I think one of the things that when people hear about it, right away, everybody goes data center. You said co-location. Correct. It does set up a difference again. That's it's semantics, I guess. But some people will say data center and right away, their vision goes to the large, hyper-sized facilities that they're talking about take a lot of resources and do a lot of AI generation, things like that. Light edge is not that. Yeah, that's correct. So when we talk about co-location, we're talking about an IT critical infrastructure facility that's really been in development for the last 30 years. We tell the story all the time where co-location really got its start because a lot of the companies that we help support wanted to get out of the IT infrastructure business. So if you were a retailer or a local grocer or a local hospital chain, and you didn't want all that critical IT equipment living on your floor or in your data center, you would come to a company like light edge so that that would be managed securely. What we've seen in the last five, 10 years is really the just, you know, rocket growth that comes with hyperscale and AI and kind of all the unknowns of where that's, you know, where that technology is taking us. But for us, this is still the game that we've been playing for as long as we've been in business, which is, hey, how do we help those companies that need access to, you know, a spot where they can put their critical IT infrastructure, let them continue to grow in a safe, controlled environment that they have with light edge. I know, Mike, again, the big thing that a lot of people, it does not generate is storage. I call it more data storage than anything. Correct. Correct. That's really the primary focus of our data centers, our co-location. And so we're storing that equipment for our customers. So in many instances, it's their equipment sitting inside our data center so they don't have to stand up their own. Okay. Now, I know that obviously one of the sites that might be available here is here in Boond. I mean, they made an offer, a possibility to purchase some land here, but you do have other locations. I mean, you wouldn't be in the business in doing it successfully if you weren't looking around to find where the best location would be. Yeah, correct. There's no ideal site for a data center. So you look at multiple sites and you do multiple rounds of diligence, eliminating certain sites and then working on a smaller number with the goal of finding one location that ends up being your next expansion space. So I know you've been visiting with different people and stuff like that over the last week or so since information came out that the committee did try to make arrangements or has made an offer, again, for some property for you to acquire here at the Boone County Economic Growth. People, what is it going to take? You know, a big thing people ask about water usage, water usage. Right. And as I understand, Altoona has closed loop been that way 25 years. Correct. And probably spend more on water in the lawn than what you're doing to cool the facility. Yeah, and that's correct. And so what we're looking for when we're looking at a new development, like the one that we're working through right now, or the proposed project in Boone, it's the same cooling system, same cooling technology that we've used in Altoona. And what's great about that is that it allows us to kind of scale however we need using that same system. Once we make that initial investment in that type of cooling, that is the type of cooling that we will look to continue to grow with on that side. So when we look at Altoona, which to your point, you know, has been around for over two decades now, it's the same mentality that we bring down there, which is, hey, we're using far, far less water than any other, you know, typical data center project you're hearing about now, because of the cooling system that's under use. The other reality with it is that, to your point, you call that our water uses looks like regular commercial water usage, irrigation, bathrooms, typical things like that that are happening. It's not to go in and continue to use evaporative cooling and really drain on the water system. So kind of keep it contained. And I guess is probably cost efficient, again, much more cost efficient to do it that way. Yeah, there's always a balance between, hey, whatever we're using in terms of liquid cooling to go in and kind of run through those chillers versus the power that needs to actually then run those chillers, which is why you saw so many folks move to evaporative cooling, because there is this kind of give and take between water and power on that side. We find that this type of cooling for what we're looking to do with the workloads that we're running, the computers, the servers, everything, the storage that you were just talking about, we can get away with that in an air cooled environment much more efficiently than if we were to move that into a liquid cooled environment. I was going to say that some people are looking at, well, if it even is closed loop well, then you must change that water out or I don't know how it operates for you. I'm thinking like most geothermal type setups, it's pretty well contained. Yeah. Mike does a great comparison of this too. You really have to think about it kind of your home air conditioning system. It's the same kind of system that you've got there. You're not going in and you're not regularly going in and adding liquid to that unless there's some leak or some other issue with that. Obviously, the way we work with our mechanical engineering teams, our HVAC teams, we do not foresee any major change in that throughout the year, especially with new projects like this. Yeah, it's a cooling loop and so all the water stays inside a pipe and it never leaves that piping system. So that piping system runs throughout the facility. That water runs outside to gets cooled. It comes back inside the facility to grab more heat and then it runs back outside. And so it's all a contained loop. We don't have what's called blowdown. We don't have evaporation, which are two of your big water users in other types of cooling systems that are used in data centers. And that's the real challenge is a data center is a very, very blunt broad term. And we really need to look at specifically what type of cooling systems are used in different data centers that are going to inform whether you're a large water user or you're not a large water user. So if someone says data center, don't just jump at one thing, there's a lot of variables. Correct. And you're just one of them. Correct. Yeah. And I would offer to say this, sometimes it's hard to kind of compare the two. If we start looking at data in the same way that we look at our other utilities that we use every day, and you kind of start to see the different sizing on there, I would look at your hyperscale data centers that are being built there. Those are your large, large interstate projects, six, six, eight lane highways. Our co location facilities are county roads. You know, there are the two lane projects that are coming up. Just to try to connect, you know, the local communities together. That's really where light edge stands in all of this. And I think that's just one of the ways that we've been able to kind of conceptualize what the community is. Hey, when we're looking to bring this project in, yeah, it's critical infrastructure. It's not to the size and scale that I think a lot of folks think when they hear Google or Meta or Amazon or some of these guys coming in from outside to really look at space, this is really, hey, how do we continue to invest in the local community here? Power. Talk about it because obviously that computers take power. And again, we would be, obviously, it would be something affiliated with the Alliance energy or interstate power and light. And obviously, they are in a position where they're looking for customers because obviously, we've got some residential growth going on here. That helps. But bigger users, obviously, that helps them out. And again, it's one of those things where they've tied in some things with the highway utilities board where they're kind of limited on some of their rate adjustments that are coming up here in the future. So they're looking for people to start to become customers. Correct. And that's our, when we start developing and we start looking for sites, that is the very first conversation we have is to get with the local utility and understand where they have the ability to grow. Where do they have excess capacity? And where can we be a good partner in there? They're required to serve you anywhere, but at a cost, depending on where you are. And so that's our very first conversation is to come in, understand what equipment is available, what expansion plans there are, and then also understanding that we pay our own way. So any upgrades, any, you know, whatever the utility needs to deliver power to our facility, that should be our burden. That shouldn't be a burden on the rate payers. And so that's the conversation that we have with utilities. And then there's always the oversight piece with the utility company in Iowa, making sure that the costs are being appropriately allocated to the data center and not to the other rate payers. I did want to ask also a little bit, because I know you recently met with the different taxing entities. Okay, they didn't have council meetings. They had maybe city representatives that were on hand, maybe had the mayor there, I don't know. But I know the different taxing entities, you wanted to talk to them about, we do pay our property taxes. Right. These are by many measures, large physical facilities. And your county assessor generally assesses on a square foot basis. So the larger the facility is, generally the more tax revenue that is going to be created. And so we wanted to have a conversation with the taxing entities to understand what benefits we can provide them and how they can, you know, have assurance that if we do land in Boone, that this stream of tax payments will come through and what they can do with those potential revenues that will come in from this project. Like many our studios, we do, we do a lot of cloud work. This basically is what we would be looking at that we have been working with. We work with providers that do cloud-based. And obviously they have to have data somewhere, because unless they are having their own building with all the servers in there, that's one of the big differences. You guys provide this, you make that the co-location. You have businesses that come to you and say, do you have space and how do we get in on it? Yeah, that's correct. And so again, you know, as we've looked at kind of the transformation of, you know, IT infrastructure over the last 20, 30 years, one of the big pushes have been exactly to that, which is, you know, we run co-location, we run private cloud. So that has the ability for our customers locally here to get access to the internet, to their other disaster recovery sites. If they're out throughout the United States, it's one of the big pushes in IT is always to make sure you've got redundant backups. When you've got local facilities like, you know, a light-edge co-location facility here in Iowa, you now have the ability to use that to kind of branch out into the rest of the cloud. And that's one of the big opportunities that I think, you know, when you look at, you know, the local business community here, why they like doing that, there is a need to have Iowa data stay in Iowa. It's a big push called data sovereignty. We're always looking to say, hey, how do I keep, you know, patient information? How do I keep trucking and transportation information? How do I keep other payment information local in Iowa? You don't always want that to be going into the big public cloud providers. You don't want that going out east. You don't want that going out west. A lot of times you don't want that leaving the country. So the fact that we're able to go in and operate and offer those solutions to folks in Iowa is always what resonates and why we've got the demand and ask to continue investing here. And the security. And is that security thing that people want to know if I'm putting it somewhere, storing all this data somewhere, it is going to be secure? Yeah, very secured facility. We've been walking some folks through the facility and that's the number one comment we get is how secure the facility is from an outside. First off, they're surprised how unassuming it is. It just looks like any other warehouse. But once you get in the facility, you'll see multiple layers of not only physical security, but all the virtual security that we use as well inside the facility. So it's a very secure environment and, you know, all that comes at a cost to our customers. And so they're very thankful that a company like LightEdge can stand up this type of environment so they can meet all of their data security requirements in their business just by locating their equipment in a LightEdge co-location data center. One of the other things that comes from, obviously, people ask, well, how many jobs, you know, it's not going to be 200. Correct. Well, there will be a lot for construction, I'm guessing. But you got to have regular people in there that know know the data and how to work with it or at least the equipment and how to work with it. And then I'm guessing what somebody wants to locate with LightEdge. They fund the cost of servers or something. I don't know how you work the business. Yeah. So this is always one of the great questions that we get to talk about. Because again, yeah, when you look at a co-location facility, the direct job growth, it's going to be the first number you circle and say, hey, that's not as much as I thought it would be. What I'm always quick to remind folks is that a co-location facility is a dynamic facility. All the security measures Mike just talked about is because we have the local IT professionals from all those companies in and out of that facility. That is their space. Okay. So if you think about it in that way of, hey, yes, we've got our folks there. Yes, we do some remote hands work, meaning that we'll actually move servers, move networking cable, do kind of the work that needs to happen inside that facility. But for the most part, what we've got is the local customers, their IT staffs stay in Iowa, because they've now got the facilities to do their on hands work in there. So yes, you've got to build up again, these facilities, you know, we build them and then we stay committed to the area. So all the mechanical engineering, all the HVAC, all the ongoing maintenance work, local, all the construction work as we go through the phases of construction, local, all the IT folks that are actually still in Iowa working for the end use customers of LightEdge, they're the ones staying and using that facility as they need to go. That's why I'm not saying, tell me who some of your customers, because part of that is security. It very much so is I, you know, coming out of, I started in this industry just after 9-11. And there was no way we were telling anyone where the data center is. And so there was no signage, there was no, you couldn't find our data centers on a map. And so that is how seriously we take data centers as being critical, critical infrastructure really to just, you know, not only the state, but also the country. We're keeping vital information and we're keeping it here in the US and we're keeping it here in the Midwest. And hopefully we'll be, we'll be keeping it here in Boone. We'll see. Again, I do know we're getting close to wrapping up, but I do know that you've got other locations that are looking. So you do kind of, I would imagine have kind of a timeframe because I'm sorry, but continued growth in data storage is happening. It happens every day. It's happening more and more all the time. I need more memory on my phone. You know, those kinds of things all the time. It's got to, it just happens. That's the society we are in right now. So I'm guessing you do have a timeframe. You're looking here within probably the next several weeks to figure out where you can go. We are. We need to diligence multiple sites, but we are growing. We have, you know, we have seen where our business has been pretty successful. So we filled up a good chunk of our existing facilities. And so we need to look for that next phase of facilities. So we'll be going through due diligence here for a good chunk of time here being the next few weeks, seeing where really our goal is to keep, is to keep moving where we can find forward progress. So we can get down that development path to get some certainty of a, of a site that, that we can construct on of a site that the utility can, can deliver power at a certain schedule that we can get, you know, building plans approved. So that's the, as long as we see forward progress, we're going to keep moving, you know, a particular site forward. And then eventually get to a point where you have just a few sites that you've done your diligence on, and then you really need to make a decision on what that, what that final site selection is. You are going to continue to try to keep people aware or let people have an opportunity to learn more. I think that's one of the things that you've been pretty open about. If we get a site plan, if we start moving forward, we are going to have opportunities for the public to come and hear more about it, find out what we're all about. Correct. We will end up assuming Boone makes the cuts. We will have open houses to where folks can come in and meet some of our staff and ask questions about data centers in general, ask questions about light edge. And so we'll be happy to have that discussion, when is appropriate down this path before we do get down to a final selection. I know site-wise and things like that, Boone has an opportunity there, infrastructure-wise, because obviously you need to have connectivity. Are we good in that position or is there opportunities? Will that change? Will that be added on to? Yeah, so I think it was a conversation we were just having yesterday, just in terms of, you know, all the networking available and who are the providers that are up here right now. I don't know if I know exactly in Boone what we've got from a network availability here or what's piping in. Yeah, we're still evaluating. One benefit is, as many of the folks here know, there's been a lot of fiber optic cable laid across the state of Iowa in the last 30 years. And so that presents a lot of opportunities for different carriers and different providers to leverage a lot of that investment that's done in Iowa over the long term. So we're still evaluating that piece and understanding where all the fiber is, where fiber can be expanded, what different carriers can come to our facility. But we do anticipate if the final selection is Boone, it's likely that there will be some additional carriers coming into the area. Yeah, so it draws more because more businesses aren't going to use your facility. Yeah, Altoone is a great use case in doing that, because when we first started that facility, it was a handful of carriers in. And I think when we were there yesterday, I think we said 12 or now 11. Yeah, so it is just something that continues to grow when you kind of have an anchor tenant like light edge in there. Hey, they do rot through there. Right. Well, I know that once again, I do appreciate you taking time to come in and visit and give us a little update on what light edge is all about. Again, when people talk data centers, right away, they start thinking of the big mega thing, the hyper centers, I'm thinking of what most people refer to. But there are others we've got some already existing here in the county that do data storage, light edge would just be another one and a sizable group that again, at least two dozen facilities across the country, I think, correct, something like that. I do appreciate you coming in Mike McDaniel and Matt McGockey. You got it right. Thanks so much for visiting with us. And I know you guys are going to be around in town making visits, different meetings and things like that. So people will see you around and we'll be able to hear and ask you answer. You get questions and you can answer. And the one thing that I would call out, if anybody does have questions, because they don't see Mike, although he's hard to miss when he's walking through the streets. Yeah. If you can't find one of us up here, lightedge.com slash boon. Go ahead submit questions. We'll add those to our FAQs. We'll reach out to you directly. My contact information is on that site so you can reach out to me directly. But again, that's lightedge.com slash boon. Alrighty. Thanks so much for joining us today. Thank you.
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