Mongolia is establishing renewable data centers as a way to uplift its citizens and diversifying away from the traditional mining revenues that have powered the country for decades.
Temuulen Bayaraa, who heads the Chinggis Khaan Fund, says the country is ready to take the leap. Bayaraa told CNBC at the Milken Institute Asia Summit in Singapore that there is a huge amount of land with a climate that is very favorable for activities such as hosting data centers.
The zone that includes Hunnu City is being pitched as a new smart and sustainable urban hub.
Mongolia makes a big bet on green power
The fund was established in April 2024 and already holds around $1.4 billion and is awaiting government approval on which projects it will invest in. This fund was created to use mineral revenues to improve infrastructure and power new industries.
Asia is already in the race to build computing power, with Japan, Singapore and Malaysia all spending heavily on data centers. Analysts at Goldman Sachs say electricity use from such sites could reach 50% by 2027 and more than double again by 2030.
Because Mongolia has vast plains, the fund’s future returns will go into mega-scale renewable projects, with the potential for solar and wind energy projects. The country is a net energy exporter feeding Russia and China, its neighbors, and has been upgraded in recent years to what the government calls a comprehensive strategic partnership.
Mongolia’s goal is to have renewable energy produce around 30% of all electricity by 2030, up from the current 18% share. We hope that such developments will meet the target. It’s currently in a new fund. This is poised to give investors more confidence in long-term projects.
Bayaraa admits there are risks. “Fund sources are very commodity dependent,” she said. The prices of coal, copper and uranium swing sharply, and Mongolia’s finances often swing with them. Chinggis Fund is controlled by Erdenes Mongol, a state company that holds most of the mining stocks.
The country hopes to regain public trust
The country of 3.5 million people feels this fund is a gateway to a better collective standard of living, as many citizens do not feel the benefits of the current mining boom.
That anger spilled onto the streets of Ulaanbaatar earlier this year, when protests against corruption in the mining sector prompted Prime Minister Oyun Erden Luvsannamsre to quit. Viara is dull about moods.
“People didn’t feel like they were contributing to improving their wealth, their livelihoods, while eroding natural resources. But now sovereign wealth funds are positioned in a way to rebuild that trust.”
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The promise this time is transparency, says Viala, where money will be ring-fenced and disbursed to support people, their educational needs, funding, education, health care and housing needs.
Citizens can track inflows and outflows on a mobile app. “It is a highly targeted intervention to expand the middle class and promote participation in the labor market,” she added.
To build capacity, Biala wants members of the Mongolian diaspora with financial expertise to return home. Their experience in banking and wealth management can give the fund a much-needed edge, she says.
“For a long time, Mongolia has been attracting investments in Mongolia. On day one, we are becoming an investor contributing to the global agenda,” she said.
Mongolia’s development comes as the data center industry is rapidly growing, spurring 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 seek alternative energy sources to fuel the rise in demand.
