Mongolia is establishing data centers powered by renewable energy as a way to uplift its people and diversify away from the traditional mining revenues that have sustained the country for decades.
Temuren Bayara, who heads the Genghis Khan Foundation, says the country is ready to take off. Bayara told CNBC at the Milken Institute Asia Summit in Singapore that there is a large tract of land with a very favorable climate for activities such as hosting data centers.
A zone is planned that includes the city of Hunu, which is pitched as a new smart and sustainable urban hub.
Mongolia bets big on green power
The fund was established in April 2024 and already has about $1.4 billion in stock and is awaiting government approval on which projects to invest in. The fund was established to use mineral revenues to improve infrastructure and promote new industries.
The race to build computing power has already begun in Asia, with Japan, Singapore and Malaysia all spending billions on data centers. Analysts at Goldman Sachs say electricity use at these facilities could increase by 50% by 2027 and more than double by 2030.
Bayara said the fund's future profits will go towards large-scale renewable projects, as Mongolia has vast plains with potential for solar and wind energy projects. The country aims to become a net energy exporter, supplying energy to neighbors Russia and China, and the relationship between the two countries was recently upgraded to what the government calls a comprehensive strategic partnership.
Mongolia's goal is to produce approximately 30% of its total electricity from renewable energy by 2030 (current share is 18%). Hopes for such a development to achieve the goal now rest on a new fund that is ready to give investors even more confidence in long-term projects.
Bayala acknowledges there are risks. “The fund's funding is very commodity-based,” she says. Coal, copper, and uranium prices fluctuate widely, and Mongolia's finances often fluctuate with them. The Genghis Fund is controlled by the state-owned company Erdenes Mongolia, which owns the majority of the mining interests.
The country hopes to regain public trust
At a time when many citizens are not feeling the benefits of the current mining boom, the country of 3.5 million people feels the fund could be a gateway to improving collective living standards.
That anger took to the streets of Ulaanbaatar earlier this year, when protests against corruption in the mining sector forced Prime Minister Oyun Erdene Rubssan Namurai to resign. Bayara is candid about his moods.
“People used to feel that mining was contributing to wealth and improving their lives while eroding natural resources. But now sovereign wealth funds are in a position to rebuild that trust.”
Bayaraa.
The promise this time is transparency, Bayala said, saying funds will be managed and disbursed in a circular way to support people, educational needs, financing, education, health and housing needs.
Citizens will be able to track inflows and outflows on a mobile app. “This is a very targeted intervention to expand the middle class and increase participation in the labor market,” she added.
To build capacity, Bayara hopes to bring back Mongolian diaspora members with financial expertise. Their experience in banking and asset management could give the fund a much-needed edge, she says.
“For a long time, Mongolia has been attracting investment to Mongolia. For the first time, we are investors contributing to global challenges,” she said.
These developments in Mongolia come as the data center industry is rapidly growing due to the demand for AI systems. According to Fortune Business Insights, the global data center market was valued at $242.7 billion last year and is expected to grow to $269.7 billion this year and $584.8 billion by 2032, as previously reported by Cryptopolitan.
This growth is also forcing stakeholders to innovate and look for alternative energy sources to meet growing demand.
