Nepal has entered a new era of digital transformation. With abundant hydropower potential, comparatively low electricity costs and growing demand for cloud computing and artificial intelligence, our country is starting to become a great potential data-centre hub in South Asia. But is this opportunity worth the risk? As corporate giants welcome this industry with open arms, there remains one question deserving of far more attention than it is given: What resources will we sacrifice to power the digital economy?
Data centres are undeniably the physical infrastructure behind our increasingly digital lives. They store information, run cloud services, support social media and provide the computing power behind artificial intelligence. We cannot deny the crucial role these centers play in maintaining the countless digital platforms our society has begun to rely on. But what about outside the vast virtual world? There is an even more enormous physical footprint. These servers produce heat and must be constantly cooled. The facilities themselves demand large quantities of electricity and depend on water for cooling. Now, according to the International Energy Agency, global data-centre electricity consumption increased by 17% in 2025, while electricity consumption by AI-focused data centres went up by 50%.
Nepal is beginning to position itself within this expansion. In 2025, Ministry of Communication and Information Technology had established a formal framework for the sector by releasing a directive for the operation and management of Data Center and Cloud Service.This year in may, Bichuten Data Vault announced plans for Nepal's first Tier-IV hyperscale data centre, initially operating at 240 kilowatts and eventually expanding to 5 megawatts across planned facilities in Kathmandu and Birgunj. The project involves international technology partners including Google Cloud, AMD and Micron. Meta has also announced plans to establish a Point of Presence in Kathmandu through Data World, a subsidiary of WorldLink, by the end of 2026. It is integral to note that this is not the same as Meta financing or constructing a massive data centre in Nepal. WorldLink has previously denied reports that Meta was investing Rs 5 billion in such a facility. This distinction matters because Nepal must separate genuine investment from technological partnership and hype. But most importantly, we must ask whether our environmental regulations are prepared for this new industry. At present, they are not.
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In April 2026, officials from our Ministry of Forest and Environment had acknowledged existing environmental regulations were not specifically designed for data centres. Issues including their water consumption, electricity consumption and electronic waste had not been properly incorporated into the existing framework. That fact alone should concern us. Nepal may be a “water-rich” country, but not every community has unlimited access to clean water. Seasonal shortages, deteriorating infrastructure and increasingly unpredictable climate conditions already place pressure on local water systems.
Of course, data centres do not necessarily consume enormous quantities of fresh water. Modern technologies, including closed-loop and direct-to-chip cooling, can substantially reduce water use. This is precisely why Nepal should establish standards now. Facilities should be required to demonstrate how much water they will withdraw, how much they will consume, where it will come from and how wastewater will be managed. Freshwater should have never become an invisible subsidy for industrial growth and now it certainly cannot for private technology infrastructure. The same principle applies to electricity. Nepal's hydropower potential is frequently presented as a competitive advantage for data centres. But electricity that appears abundant at the national level can still face transmission constraints and competing domestic demands. If our country dedicates substantial generation capacity to powering foreign digital infrastructure, policymakers must demonstrate that local households and industries will not ultimately bear the cost.
Then there is the question of employment. Sure, data centres can create jobs in construction, engineering, cybersecurity, networking and maintenance. But does a hyperscale facility not automatically translate into thousands of permanent high-skilled jobs? Not if specialised expertise remains concentrated abroad. Nepal risks supplying land and electricity while importing the technology and expertise required to operate the infrastructure. That is where our ambitions should become more demanding. One argues that foreign technology companies should be welcomed, however, partnership should come with measurable commitments to local hiring, technical training, research, apprenticeships and knowledge transfer. If Nepal is providing the physical foundations for the digital economy, it should acquire more than just a building full of servers. Digital colonialism deserves consideration. Colonial economies have historically supplied raw materials while higher-value processing and ownership remained elsewhere. Nepal had to ensure that the digital economy does not reproduce the same imbalance in a new form. Our electricity, land and water supporting global computing while ownership, expertise and profits cannot remain concentrated elsewhere. The answer is not to reject data centres.
What Nepal needs right now is a reliable domestic digital infrastructure. Local data storage can improve resilience and data security, while computing capacity could support local businesses, researchers and future AI development. Data centres can become part of a genuinely independent digital economy. That independence requires regulation before expansion, not after damage has occurred. Our government needs to make it a requirement to have transparent disclosure of water and electricity consumption, site-specific environmental assessments, strict water-use limits, responsible wastewater management and meaningful local employment commitments. Large facilities should be assessed with regards to the capacity of the surrounding water and electricity systems, not just merely their own technical requirements. The digital economy may be virtual, but its resources are not.
Nepal has to decide what its data-centre industry will look like before it reaches its full scale. We should seize that technological opportunity, but not at the cost of the resources that make Nepal worth developing in the first place. Our future should be digitally ambitious, but environmentally responsible. Nepal should not merely host the world's servers. It should ensure, above all else, that the digital economy works for the people, resources and future of Nepal itself.
