How xAI is Boosting its Global Data Centre Activity
After securing US$10bn in combined debt and equity funding, Elon Musk’s xAI has purchased a power plant overseas with plans to ship it to the US to power its large data centre.
The move supports xAI’s plans for a data centre that will house one million Nvidia Blackwell GPUs, creating unprecedented power requirements for the AI industry. The facility represents a significant scale-up from the company’s existing Colossus supercomputer, which already consumes 300 megawatts (MW) of power through 200,000 Nvidia Hopper GPUs.
The overseas power plant acquisition comes alongside xAI's completion of a US$5bn debt raise and separate US$5bn strategic equity investment, arranged by Morgan Stanley. The funding round provides resources to expand AI infrastructure through data centres as competition intensifies across the industry.
A need for gigawatt-scale power infrastructure
A move like this speaks to the lengths companies could go to secure energy infrastructure for their data centres.
AI not only depends on the relevant hardware, but also on companies securing energy supplies quickly. Already, AI investment is booming so much that companies are looking for new ways to power their data centres. However, the sustainability dilemma continues, as AI uses large amounts of power and water in order to run.
A million-GPU data centre can reportedly consume between 1,400MW and 1,960MW of total power, depending on the Blackwell accelerator models used and accounting for overhead systems. GPUs have immense power requirements for CPUs, storage, networking equipment, cooling and air conditioning systems.
In large AI clusters, overhead typically adds 30% to 50% on top of AI GPU power draw, expressed as power usage effectiveness (PUE).
Controversy over natural gas turbine permits
xAI has also been granted permits to operate 15 natural gas turbines at its data centre in Tennessee.
The company’s Memphis data centre was launched in July 2024 with a capacity of 150MW and it was later reported that its capacity would double, following the installation of an additional 100,000 Nvidia Hopper GPUs to the cluster.
As a result, xAI has been faced with a lawsuit, with the Southern Environmental Law Center (SELC) threatening to sue for violations of the Clean Air Act saying that Elon Musk’s company has been operating generators without the necessary permits.
Twenty-six natural gas turbines were installed on the site to power its operations and SELC claims these are not being operated legally.
A natural gas turbine is a type of internal combustion engine that uses natural gas as fuel to produce mechanical energy. SELC has raised air quality concerns over xAI’s turbine operation.
The company’s power plant purchase reflects broader trends across the AI industry, where leading companies are concentrating enormous compute clusters and training ever-larger models.
Plenty of AI developers are converging on similar strategies – which include securing massive computing resources, hiring top-tier researchers and building dedicated energy infrastructure.
For xAI to maintain competitiveness, the company is pushing to build more advanced and power-hungry data centres.
The million-GPU target represents a five-fold increase from the current Colossus installation, requiring proportionally larger power generation capacity.
Beyond the current funding, Reuters has reported that xAI has been in talks to raise approximately US$20bn in equity, which would value the company between US$120bn and US$200bn.