Mongolia is making a bold play to become Asia's next data centre hub, using the recent UN desertification conference in Ulaanbaatar to sign agreements for 863 megawatts of new capacity. The deals, announced on the sidelines of the COP17 meeting of the UN Convention to Combat Desertification, represent the most concrete economic outcome of the 12-day gathering that drew 197 delegations to the Mongolian capital.
Deputy Prime Minister Togmid Dorjkhand outlined the country's pitch to potential investors: cheap renewable energy, a cold climate that slashes cooling costs, and a legal framework that protects foreign capital. "We have a lot of energy generation potential, above the ground and under the ground," he told Euronews, citing uranium, coal, and other resources. "And yes, we are a very cold country, eight months a year are very cold. Cold weather is important for the data centres because they need a lot of cooling, so the colder the weather the more you save on cooling."
Togmid also stressed Mongolia's democratic credentials as a selling point. "We are a democracy, we are governed by law and not by a person or a party. We have a strong legal environment that protects the investors," he said. Energy costs for data centres would be below 4 cents per kilowatt-hour, compared with 14 to 16 cents in the United States, and grid connections could be delivered within 24 months. He projected returns of around 18%, claiming "we are 40% cheaper than other countries."
A sovereign data strategy
The investment drive was branded "Sovereign by Design – Mongolia's Green AI Data Centre Initiative," opened by Prime Minister Nyam-Osor Uchral. Digital Development Minister Chinbat Nomin presented the country's green data centre opportunities, telling investors: "We offer more than just natural resources, we offer safety and data sovereignty. Once you store data it is secure and the data connection is also sovereign and secure." She added that Mongolia hopes to become a hub "especially for those who wish to serve one of the largest markets, China, but keep the data outside China."
Ten memorandums of understanding were signed at the event, according to Chinbat. The government has drafted a Data Law and a strategic framework built on three pillars: energy sovereignty, network sovereignty, and legal and regulatory sovereignty. Ulaanbaatar is not seeking to build and operate data centres itself, but rather to create conditions for domestic and international investors. Up to $2 billion in financing is available for eligible green and renewable infrastructure projects, and the government says it benchmarked its investment framework against 26 countries.
Private-sector energy producers are developing hybrid power solutions that can supply new data centre projects within 24 months, allowing energy and construction to advance simultaneously. This approach is designed to overcome one of the biggest hurdles for data centre development in remote regions: reliable power supply.
Desertification and opportunity
The data centre push ran alongside the conference's main agenda on land degradation, drought, and desertification—processes that affect more than 3 billion people globally. Mongolia is among the hardest-hit countries, with roughly 77% of its land affected by desertification, a figure that has worsened as temperatures in the country have risen at more than twice the global average. The UN Convention to Combat Desertification, adopted in 1994, has 197 signatory countries.
Mongolia invested heavily in staging the well-organised event. A local newspaper captured the mood with the headline "World comes to Ulaanbaatar. Now what?"—a question that resonates beyond Mongolia. For Ulaanbaatar, the answer is the data centre initiative, which sits at the intersection of environmental commitments and economic development strategy. By marketing its renewable energy potential and cold climate as assets rather than liabilities, Mongolia hopes to convert a diplomatic occasion into lasting investment.
The move comes as Europe itself grapples with the energy demands of data centres, with some voices calling for a halt to AI data centres over energy fears. Mongolia's pitch offers an alternative model, one that leverages natural advantages to attract capital. Whether it succeeds will depend on execution, but the country has clearly signalled its ambition to become a key player in the global data economy.
