According to DCD, a growing number of data centers worldwide are being housed in subterranean facilities, taking advantage of decommissioned military and industrial sites that can be acquired relatively cheaply with power already in place. The publication’s new supplement explores the Lefdal Mine Data Center in Norway, which houses a supercomputer in a former olivine mine under a mountain, and a UK facility where Cyberfort has repurposed a decommissioned nuclear bunker in the Kent countryside to boost clients’ digital sovereignty. Anthropologist A.R.E. Taylor contributes analysis on why humans have historically buried sensitive information for thousands of years. This trend represents a fundamental shift in how companies approach both physical and digital security infrastructure.
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The Underground Real Estate Play
The business case for underground data centers extends far beyond security concerns. Companies like Cyberfort are essentially executing a sophisticated real estate arbitrage strategy. Decommissioned military facilities, mines, and industrial sites represent distressed assets that can be acquired at significant discounts to traditional data center real estate. More importantly, these locations often come with pre-existing power infrastructure and robust structural engineering that would cost hundreds of millions to replicate from scratch. The capital expenditure savings alone can make underground facilities financially compelling even before considering operational benefits.
The Hidden Energy Economics
Underground facilities offer substantial operational cost advantages that directly impact profitability. Natural geothermal cooling reduces HVAC expenses by 30-50% compared to traditional data centers, representing millions in annual savings for large-scale operations. The thermal stability of underground environments also extends equipment lifespan and reduces maintenance costs. For facilities like the Lefdal Mine, proximity to renewable energy sources like hydroelectric power creates additional cost advantages while supporting ESG initiatives that are increasingly important to enterprise clients.
The Digital Sovereignty Premium
Underground data centers command premium pricing for clients requiring enhanced digital sovereignty and regulatory compliance. Financial institutions, government agencies, and enterprises handling sensitive intellectual property are willing to pay 20-40% more for facilities that offer both physical security and jurisdictional advantages. The psychological appeal of “buried treasure” that anthropologists identify translates directly into market differentiation and pricing power. This isn’t just about protection from hackers—it’s about creating trusted environments for data that companies consider crown jewels.
Strategic Market Positioning
For operators, underground facilities represent a deliberate move away from commodity data center services toward specialized, high-margin offerings. While traditional providers compete on price and location, underground operators can build moats around physical security, regulatory compliance, and unique environmental advantages. This positioning allows them to avoid competing directly with hyperscale cloud providers while capturing lucrative niche markets. The business model resembles luxury goods more than infrastructure commodities—creating perceived value through scarcity and exclusivity.
The Scaling Conundrum
The primary limitation for underground data center growth isn’t technology but suitable real estate inventory. There are only so many decommissioned military bases, mines, and bunkers with the right characteristics for conversion. This scarcity creates both a constraint and an opportunity—early movers who secure prime underground locations gain significant competitive advantages. The challenge becomes scaling a business model dependent on finding and converting unique properties rather than building standardized facilities on readily available land.
Investment and Expansion Outlook
We’re likely to see increased private equity and infrastructure fund interest in underground data center projects as the financial advantages become more apparent. The combination of real estate arbitrage, operational cost savings, and premium pricing creates attractive returns that traditional data centers struggle to match. However, successful expansion will require developing standardized conversion processes for different types of underground facilities rather than treating each project as a unique engineering challenge. The companies that crack this code will dominate a high-margin segment of the data center market for years to come.
