Title page 1

Contents 1

Abstract 2

1. Introduction 4

2. Related Literature 5

3. Model of Compute Production and Trade 6

3.1. Production Technology and Cost Structure 6

3.2. Trade Costs 7

3.3. Global Compute Demand 9

3.4. Sourcing and Market Equilibrium 10

4. Equilibrium Properties 11

5. Data 14

6. Calibration and Results 15

6.1. Parameter calibration 15

6.2. Cost Rankings and Trade Patterns 16

7. Robustness, Caveats, and Extensions 20

7.1. Robustness to parameter variation 20

7.2. Caveats and omitted frictions 22

7.3. Extensions 24

8. Conclusion 24

References 27

Appendix A 35

Appendix B: Model Derivation 42

Appendix C: Sensitivity Analysis 44

Appendix D: Data Center Investment Model - Kyrgyzstan 44

Appendix E: Construction Cost Regression 46

Appendix F: Workload Classification 47

Appendix G: Symmetric LRMC Construction 47

Table 1. Country regime taxonomy (Proposition 1) 31

Table 2. Model parameters 32

Table 3. Country rankings under alternative cost and sovereignty specifications 33

Figure 1. Model structure 30

Table A1. Country-specific calibration parameters 35

Table A2. Country rankings under alternative cost and sovereignty specifications (all countries) 39

Table A3. Sensitivity of cost-recovery rankings to parameter variation 44

Table A4. Facility specification 44

Table A5. Year-by-year cash flow ($ millions) 45

Table A6. Sensitivity of investment returns to parameter variation 45

Table A7. Construction cost regression: ln($/W) 46

Table A8. Workload classification and offshorability 47