Virginia orders data centers to pay for dedicated new electric infrastructure

Post by Nursie » Fri, Aug 07, 2026, 4:51 PM UTC

AnthonyMouse wrote: post #20

Nursie wrote: post #9

Earlier quoted context omitted.

You're already describing a race to the bottom there IMHO. Cities or even countries underbid each other to get the golden goose, and then realise they've already bargained away any share of the eggs, and it turns out the goose still shits everywhere.

A competitive bidding process isn't a race to the bottom because it doesn't stop at the bottom, it stops when underbidding someone else is no longer worth it. Which happens when the benefit to the one who wins is still a positive number. It's just not a large number, because otherwise it would still be worth it for someone else to make a better offer. Obviously it's also possible to make a poor choice and provide mor…

Your scenario there, bidding too low, is a frequent occurrence from what I see. One often exacerbated by exaggerated promises of revenues or employment from the business which then fail to materialise.

Or they come with undisclosed externalities in the form of noise or competition for energy (see for example various bitcoin mines, IIRC there’s one in Texas that is particularly hated by the locals)

The whole idea of cities bidding for these businesses stinks, IMHO.

Post by AnthonyMouse » Fri, Aug 07, 2026, 9:26 PM UTC

Nursie wrote: post #21

AnthonyMouse wrote: post #20

Earlier quoted context omitted.

A competitive bidding process isn't a race to the bottom because it doesn't stop at the bottom, it stops when underbidding someone else is no longer worth it. Which happens when the benefit to the one who wins is still a positive number. It's just not a large number, because otherwise it would still be worth it for someone else to make a better offer. Obviously it's also possible to make a poor choice and provide mor…

Your scenario there, bidding too low, is a frequent occurrence from what I see. One often exacerbated by exaggerated promises of revenues or employment from the business which then fail to materialise. Or they come with undisclosed externalities in the form of noise or competition for energy (see for example various bitcoin mines, IIRC there’s one in Texas that is particularly hated by the locals) The whole idea of c…

There is a propensity for the city that gets the business to be the one that offered too much, because if anyone is offering too much then they "win" because no one competent is going to underbid them. But this is the efficient market hypothesis. The place offering too much buys themselves a lesson in not doing that, the next time they don't offer as much (as do other cities who saw what happened there), and this time the city that gets the business gets a net positive result. Then other cities see that and want it and if any of them are incompetent then they offer too much and suffer the consequences again. The average converges on a small positive return for the city that wins. Or a negative return if too many cities are incompetently governed, but your problem in that case is the incompetent governance rather than the premise that offering something that does bring a net positive return to the city would be a bad choice.

And what is the alternative supposed to be? Cities A, B and C all have different tax rates, other policies, labor force, geographical proximity, etc. Companies will build wherever it's most advantageous. Some town in rural Illinois is at an intrinsic disadvantage compared to coastal cities unless they can offer some countervailing advantage like lower tax rates. The coastal cities may not like that because they want to keep the business even if they're diverting the tax money to cronies or doing nothing to address high cost of living or otherwise governing like schmucks, which is exactly why the competition is good. It's what causes the people in those cities to ask why tax dollars are going to waste and corruption instead of ignoring that because the money is being extracted from a company which is somehow prevented from moving to a less corrupt city.

It's one of the only things that provides governments an incentive to improve efficiency.

Re: Virginia orders data centers to pay for dedicated new electric infrastructure

Re: Virginia orders data centers to pay for dedicated new electric infrastructure