The world is racing to export digital intelligence produced in ‘AI factories’ . Artificial intelligence (AI) is rapidly developing as a decisive technology platform of the 21st century.

AI is being used significantly in education, health, agriculture, finance, governance, security, innovation and competition between nations . Behind the success of every major AI, ‘compute infrastructure’ remains a crucial resource . 

Compute is the large amount of processing power required to train and operate AI models. Today, this infrastructure has become as strategically important as electricity, roads or internet infrastructure . The world’s large and developed nations are investing billions of dollars in advanced AI compute centers . They understand that whoever controls the compute will shape the digital economy of the future . 

These new generation facilities, known as ‘AI factories’, are completely different from traditional data centers. Traditional data centers mainly store databases, applications and enterprise software. On the other hand, compute infrastructure generates large amounts of ‘intelligence’ by converting electricity, data and GPUs into AI models, AI services and digital intelligence. In many ways, these infrastructures are becoming industrial engines in the emerging AI economy. Nepal must understand this and take decisive steps.

Nepal needs to build AI compute as the basic infrastructure for the next phase of economic development. Such infrastructure will not only support domestic AI research and entrepreneurship, but will also establish Nepal’s technological sovereignty in an AI-driven world.

Most AI systems being used in Nepal today rely on foreign infrastructure, models and cloud providers. While this has facilitated access to AI technology, it has also raised major challenges in terms of data security, privacy, reliability, and national control.

Nepal needs to build AI compute as the foundational infrastructure for the next phase of economic development. As Nepal’s institutions increasingly adopt AI systems, building a ‘sovereign AI stack’ with domestic compute infrastructure, local AI models, secure data environments, and national regulation has become a must, not an option.

This is the only way to maintain control over sensitive data, strengthen technological resilience, and advance AI governance in line with Nepal’s own priorities. The National AI Compute Center will create a foundational platform where Nepali entrepreneurs, startups, researchers, and institutions can innovate. The biggest obstacle facing AI startups around the world today is the high cost of compute resources. Access to GPU and AI cloud infrastructure is still expensive and controlled by a few countries and institutions.

In such a situation, the barriers faced by Nepali innovators by building domestic compute infrastructure will be significantly reduced. Nepali students, startups, universities and companies will be able to build AI products locally, reducing their dependence on foreign cloud providers.

Nepal has a unique strategic advantage here. The largest cost of operating an AI compute/data center is electricity. Nepal has abundant hydroelectric resources that can generate cheap renewable electricity.

In the US, electricity prices typically range from 10 to 30 cents per kilowatt-hour. In Europe, it ranges from 15 to 40 cents. However, in Nepal, compute infrastructure can be operated for as little as 5 to 8 cents per kilowatt-hour. This is one of the lowest rates in the world. This low cost creates a powerful economic opportunity for clean and abundant hydropower-based AI infrastructure in Nepal.

AI compute is becoming a globally traded digital commodity. Countries with abundant cheap energy are emerging as highly attractive destinations for ‘next generation’ AI infrastructure. Nepal has the potential to become a regional and global provider of cheap and clean AI compute powered by renewable hydropower.

It typically takes 16 billion to 30 billion to build an AI compute infrastructure that includes a 10-megawatt cooling system, power infrastructure, and high-speed networking for 2,000 to 4,000 GPUs. Nepal’s low labor costs compared to Western markets, natural cooling facilities due to its high terrain, and direct access to hydropower can significantly reduce costs other than GPUs. Whereas building similar facilities in Western countries is very expensive.

Such infrastructure could generate $5 billion to $12 billion in annual compute revenue. If a GPU infrastructure with 100 megawatts of capacity and 20,000 to 40,000 GPUs is established, the annual compute revenue could reach hundreds of millions of dollars depending on the usage rate, GPU price, and market demand. By making compute capacity available in the market, Nepal will create a situation where it can reap many benefits through the multifaceted use of hydropower. It will be necessary to plan to reduce the environmental impact of expanding hydropower and building large-scale energy-consuming infrastructure.

By processing data locally, Nepal can export digital intelligence as a global commodity through the Internet. It will also bypass the physical limitations of the traditional electricity transmission grid.

For Nepal, this is not just a technical project—it is also a national development strategy. Just as previous generations invested in roads, airports, power grids, and telecommunications networks, this generation must invest in AI infrastructure.

Governments do not build roads to make immediate profits. Roads are the engine of the economy, so they should be built. Now, AI compute infrastructure needs to be seen with the same vision and with even greater priority.

In terms of long-term vision and infrastructure construction, it will be difficult for the private sector alone to build the country's first large-scale AI factory. Nepal initially needs large-scale government investment to establish basic national compute capacity. Then, the private sector will increase investment in AI compute centers and AI factories. Such AI factories will support government digitization, universities, startups, and research institutions. And, by providing compute capacity to the global market, Nepal will benefit greatly from the multifaceted use of hydropower. It will be necessary to plan to reduce the environmental impact of expanding hydropower and building large-scale energy-consuming infrastructure.

In terms of long-term vision and infrastructure, building the country's first large AI factory will be difficult for the private sector alone. In such a situation, the National AI Compute Center, which will be established under the initiative of the government, can create basic infrastructure, attract talent, support startups and research institutions, and stimulate the entire ecosystem by establishing Nepal as a serious destination for AI infrastructure.

Once such a foundation is established, the 'knock-on effect' it generates can attract more private capital, global partnerships, and investment in other compute centers and AI factories across the country.

This is much more than a simple IT project. It will equip Nepal with the necessary economic infrastructure for the AI ​​century. Countries that take timely steps will gain a huge lead in innovation, talent attraction, entrepreneurship, and digital competitiveness.