Located in the middle of Mexico, Querétaro is a charming and colourful colonial-style city known for its dazzling stone aqueduct.

But the city, and state of the same name, is also recognised for a very different reason – as Mexico’s data centre capital.

Across the state companies including Microsoft, Amazon Web Services and ODATA own these warehouse-like buildings, full of computer servers.

No one could supply an exact number, but there are scores of them, with more being built.

Ascenty, which claims to be the largest data centre company in Latin America, has two in Querétaro, both around 20,000 sq ft in size, with a third under construction.

It is forecast that more than $10bn (£7.4bn) in data centre-related investment will pour into the state in the next decade.

“The demand for AI is accelerating the construction of data centres at an unprecedented speed,” says Shaolei Ren, associate professor of electrical and computer engineering at the University of California Riverside.

So, what’s the attraction of Querétaro?

“It’s a very strategic region,” explains Arturo Bravo, Mexico country manager at Ascenty.

“Querétaro is right in the middle [of the country], connecting east, west, north and south,” he says.

That means it is relatively close to Mexico City. It is also connected to high-speed data cables, so large amounts of data can be shifted quickly.

Mr Bravo also points out that there is support from the municipality and central government.

“It’s been identified as a technology hub,” he says. “Both provide a lot of good alternatives in terms of permits, regulation and zoning.”

But why are many US companies choosing this state over somewhere closer to home?

“The power grid capacity constraint in the US is pushing tech companies to find available power anywhere they can,” says Shaolei Ren, associate professor of electrical and computer engineering at the University of California Riverside, adding that the cost of land and energy, and business-friendly policies are also attractive.

Data centres host thousands of servers – a specialised type of computer for processing and sending data.

Anyone that’s worked with a computer on their lap will know that they get uncomfortably hot. So to stop data centres melting down, elaborate cooling systems are needed which can use huge amounts of water.

However, not all data centres consume water at the same rate.

Some use water evaporation to dissipate the heat, which works well but is thirsty.

A small data centre using this type of cooling can use around 25.5 million litres of water per year.

Other data centres, like those owned by Ascenty, use a closed-loop system, which circulates water through chillers.

Meanwhile, Microsoft told the BBC it operates three data centres in Querétaro. They use direct outdoor air for cooling approximately 95% of the year, requiring zero water.

It said for the remaining 5% of the year, when ambient temperatures exceed 29.4°C, they use evaporative cooling.

For the fiscal year 2025, its Querétaro sites used 40 million litres of water, it added.

That’s still a lot of water. And if you look at overall consumption at the biggest data centre owners then the numbers are huge.

For example, in its 2025 sustainability report Google stated that its total water consumption increased by 28% to 8.1bn gallons between 2023 to 2024.

The report also said that 72% of the freshwater it used came from sources at “low risk of water depletion or scarcity”.

In addition, data centres also indirectly consume water, as water is needed to produce electricity.

The extra water consumption by data centres is a big problem for some in Querétaro which last year endured the worst drought of a century, impacting crops and water supplies to some communities.

At her home in Querétaro, activist Teresa Roldán tells me residents have asked the authorities for more information and transparency about the data centres and the water they use but says this has not been forthcoming.

“Private industries are being prioritised in these arid zones,” she says. “We hear that there’s going to be 32 data centres but water is what’s needed for the people, not for these industries. They [the municipality] are prioritising giving the water they have to the private industry. Citizens are not receiving the same quality of the water than the water that the industry is receiving.”

Speaking to the BBC in Querétaro, Claudia Romero Herrara, founder of water activist organisation Bajo Tierra Museo del Agua,  wouldn’t comment directly on the data centres due to a lack of information but says she’s concerned about the state’s water issues.

“This is a state that is already facing a crisis that is so complex and doesn’t have enough water for human disposal. The priority should be water for basic means…that’s what we need to guarantee and then maybe think if there are some resources available for any other economic activity. There has been a conflict of interest on public water policy for the last two decades.”

A spokesperson for the government of the state of Querétaro defended their decision saying: “We have always said and reiterated that the water is for citizen consumption, not for the industry. The municipality has zero faculties to water allocation and even less to assign water quality. Nor the state, nor the municipality can water allocate to any industry or the primary sector, that’s a job for the National Water Commission.”

Another concern for those living near data centres is air pollution.

Prof Ren says data centres typically rely on diesel backup generators that release large amounts of harmful pollutants.

“The danger of diesel pollutants from data centres has been well recognised,” he says, pointing to a health assessment of the air quality surrounding local data centres by the Department of Ecology at the state of Washington.

Mr Bravo responded to those concerns by saying: “We operate under the terms and conditions specified by authorities, which, in turn, in my perspective, are the ones taking care of the fact that those conditions are acceptable for the communities around and the health of everybody.”

As for the future, Ascenty is planning more data centres in the region.

“I do see it just kind of progressing and progressing, with a new data centre there every few years,” says Mr Bravo.

“The industry will continue to grow as AI grows. It’s a great future in terms of what is coming.”