• The Abilene City Council approved a tax abatement for Crusoe's data center campus in Texas.
• Business Insider obtained a copy of the agreement via a public records request.
• Crusoe, the data center developer, could get an 85% property tax break.

The developer of the first Stargate data center in Abilene, Texas, could get an 85% tax break on billions of dollars worth of property, according to a new tax abatement agreement obtained by Business Insider through a public records request.

To qualify for the tax break, AI startup Crusoe will need to spend a minimum of $2.4 billion of a $3.5 billion "targeted investment."

President Donald Trump announced Stargate, a joint venture between OpenAI, Oracle, and SoftBank, at a White House press conference in January. That month, Business Insider reported that Oracle is the tenant of two data center buildings under construction on Crusoe's data center campus in Abilene, which is widely assumed to be Stargate's first site. The estimated cost for those buildings, $1.1 billion, will count toward the targeted investment.

Since then, Crusoe has registered two more data center buildings with a state agency on the site. No tenant is listed for one of those buildings; Oracle is listed as the tenant for the other.

Crusoe has agreed to build six new data centers, each with a minimum square footage of 100,000, on Lancium's land in Abilene. These will join the two it is already constructing for Oracle.

Data centers create jobs—although some say it's not enough

A local news outlet first reported the abatement after the Abilene City Council approved it in February, naming the site's landowner Lancium as the tax break recipient.

The abatement requires Crusoe and Lancium to create 357 new full-time jobs with minimum salaries of $57,600. The does not specify what kind of jobs need to be created, though the hiring timeframe indicates that construction jobs will likely count toward the quota.

Critics of tax abatements for data centers have said that they don't create enough jobs to justify the tax breaks. Proponents like to point out that the sites can employ thousands of skilled laborers during the construction period.

Property tax abatements are common financial incentives used by local governments to encourage companies to operate in their cities and towns. Specific property tax breaks for data centers vary widely depending on locality. Loudoun County, Virginia, home to the world's largest concentration of data centers, does not abate property taxes for data centers. In New Albany, Ohio, a fast-growing data center, data centers have been granted 100% property tax abatements.

Stargate's expansion plans

Oracle executive chairman and CTO Larry Ellison has said the first Stargate data center is in Abilene, though scant details have emerged about the massive AI infrastructure initiative since Trump's announcement.

In February, OpenAI CFO Sarah Friar wrote in a LinkedIn post that the company was evaluating additional locations in Texas, Pennsylvania, Oregon, and Wisconsin for Stargate.

Crusoe announced it is developing a data center campus in Abilene, though it has not publicly confirmed that it is connected to Stargate. Public filings in Texas show that Oracle is Crusoe's tenant, Business Insider reported in January.

To finance the Abilene development, Crusoe entered into a $3.4 billion joint venture with private credit company Blue Owl. JP Morgan has lent $2.3 billion in construction financing to the project.

Lancium declined to comment. Crusoe, Oracle, and the Development Corporation of Abilene did not respond to requests for comment from BI.

Contact Ellen Thomas at ethomas@insider.com or on Signal at 929-524-6964.

• Elon Musk wants to build a "gigafactory of compute" for xAI in Memphis.
• The company has already spent more than $400 million building it, public records show.
• xAI will need significantly more electricity than it currently has access to.

Elon Musk has said his artificial intelligence startup xAI is building the world's largest supercomputer in Memphis, Tennessee, and documents viewed by Business Insider show the company is putting hundreds of millions of dollars toward it.

Fourteen construction permit applications have been filed with a local planning and development agency since June 2024, when the deal was first announced.

Combined, they represent a total of $405.9 million in estimated project costs. The filings also show that xAI won't be able to get enough power from the local grid to run 1 million GPUs in Memphis, as Musk has said the company plans to do — unless it builds its own power generation on-site.

The permit applications were submitted for a range of electrical, mechanical, plumbing, and other work, including a $30 million installation of computer equipment and the construction of a $3.9 million perimeter fence built to withstand car crashes.

The most recent permit application on file, submitted in January, is for the construction of a new electrical substation.

Musk, who raised $12 billion in funding last year for xAI, has said that the site's "gigafactory of compute" comprises 200,000 Nvidia GPUs, half of which were installed in just 122 days, and wants to eventually scale to 1 million GPUs.

Musk and Memphis city officials have touted the billionaire's choice of location for the data center powering xAI's Grok 3 as a "multibillion-dollar investment" that will position Memphis as the "global epicenter of AI."

The projected construction costs are roughly in line with estimates for Stargate's initial facilities in Texas. That project, announced in January, is a joint AI venture between Oracle, OpenAI, and SoftBank.

Darana Hybrid Electro-Mechanical Solutions, a midsize general contractor based in Ohio, submitted the majority of the permits. Darana has previously worked on two other industrial construction projects in the Memphis area.

Darana is owned by Darryl Cuttell, a prolific small donor to President Donald Trump's 2024 reelection campaign. He made 21 contributions in amounts ranging from $100 to $1,000 between July and December last year.

A data center industry veteran who reviewed the permit applications said it's unusual for a smaller company like Darana Hybrid to handle a project of Colossus' scale. They were granted anonymity because they were not authorized by their employer to speak to BI.

Musk and representatives from xAI, Darana, Tennessee Valley Authority, and Memphis Light, Gas and Water did not respond to requests for comment.

Nvidia hardware can cost billions

Hardware costs will likely add up. Musk has said that Colossus is powered by a mix of Nvidia's H100 and H200 chips, including 100,000 H100s and 50,000 H200s.

TRG Datacenters estimated the H100 chips cost between $27,000 and $40,000 per unit, and the H200s cost $32,000 per unit. This means hardware for the Memphis sites could cost upward of $4.3 billion now and $27 billion for 1 million GPUs at the price of the cheaper H100s.

It's unclear if xAI is purchasing the chips or renting computing from a cloud service provider.

xAI spent $700 million on hardware for a separate data center in Georgia that it shares with Musk's social media company X. The site houses about 12,000 GPUs.

What we know about xAI's power capacity

Thus far, xAI has requested 300 megawatts of grid power from Memphis Light, Gas and Water and has been granted approval for 150 megawatts.

In permitting applications for on-site natural gas turbines, the company said getting access to the full 300 MW of grid power will depend on "significant infrastructure upgrades" and transmission improvements in the region. In the meantime, xAI has been supplementing its power supply with gas-powered generators from Caterpillar subsidiary Solar Turbines. These produce a combined 250 MW.

xAI can't serve customer needs "without additional on-site power generation," the company said in a permitting application. TVA, which serves electricity to most of Tennessee and portions of six surrounding states, said in February that it intends to spend $16 billion over the next several years to meet the historic load growth in its territory, driven by power demand from xAI and other data centers and battery manufacturers expanding in the region.

With its on-site capacity, xAI could likely power 200,000 Nvidia H100 GPUs, though adding additional computing would be challenging, said Shaolei Ren, an electrical and computer engineering professor at the University of California Riverside.

"It's still possible, but that means an aggressive oversubscription strategy is used," Ren said, referring to a practice used by data centers to "overbook" customers with the expectation that they won't all need to use the amount of power they've contracted for at the same time.

By Ren's calculations, one million GPUs could require over 1 gigawatt of electricity to power, or quadruple the amount xAI currently has access to in Memphis.

In March, an LLC tied to xAI paid $80 million for 186 acres of land south of its initial site. One of the parcels includes a one-million-square-foot industrial warehouse. xAI has asked TVA to assess the site for access to 260 MW of grid power.

In January, MLGW CEO Doug McGowen said during a Memphis city council meeting that the city's power grid might not be capable of powering a project of that magnitude.

"People can announce many things, and I think that's important for our community — that we get excited about opportunities that are coming. But as you know, there's pragmatic realities about a lot of things," McGowen said.

Do you work for xAI or one of Musk's companies? Reach out to Grace via a nonwork email and device at gkay@businessinsider.com or through the encrypted messaging platform Signal at 248-894-6012. Contact Ellen Thomas at ethomas@insider.com or on Signal at 929-524-6964.

• Data centers contributed 4.7 million jobs to the US economy from 2017 to 2023, a PwC study says.
• Most of those jobs were attributed to "the multiplier effect," a standard and controversial model.
• Data centers require a massive amount of skilled labor during construction, and less after.

When President Donald Trump announced Stargate in January, he said the massive AI infrastructure project—a joint venture formed by OpenAI, Oracle, and SoftBank—would create "over 100,000 American jobs almost immediately."

Little evidence supports the accuracy of Trump's statement, though he wouldn't be the first politician to suggest that data centers are a boon for job creation. The data center industry has grown rapidly in recent years, and state governors have touted the jobs it would create.

A new study from PwC supports these claims, reporting that data centers contributed 4.7 million jobs to national employment in 2023, up 60% from 2017. While the data center market has grown rapidly in recent years and has been fueled by the rise of cloud computing and AI, most of those jobs aren't direct tech jobs. Economic development experts are divided over the accuracy of the study, which was sponsored by data center industry lobbying group Data Center Coalition.

Big Tech companies spent a combined estimated $246 billion in capital expenditures last year, much of which was on data center expansion. Amazon, Microsoft, Google, and Meta are expected to spend another $320 billion in capital expenditures this year.

State and local government officials have touted the number of jobs that would result from all the new development. However, once built, data center facilities don't employ large numbers of permanent employees, and the economic development contracts they sign in exchange for tax incentives often reflect that.

In a press release announcing Amazon's $10 billion data center expansion in Ohio, Gov. Mike DeWine said in December that the investment would support "thousands" of jobs. Documents filed with the Ohio Department of Development showed that Amazon is committed to creating 1,058 new jobs, none of which are required to be full-time, salaried positions.

The data center industry overhypes job creation

Of the 4.7 million jobs attributed to the data center industry in the PwC study, only 603,900 were actual industry jobs, otherwise known as "direct" jobs.

The Data Center Coalition, an industry lobbying group that counts Amazon, Microsoft, Google, and Meta as members, commissioned the PwC study, which grouped jobs into three categories — "direct," "indirect," and "induced."

A "direct" job, the study said, is any job — full-time, part-time, or self-employed — tied to the operation of the data center. An "indirect" job refers to a full-time, part-time, or self-employed job created to produce necessary goods and services in a data center's supply chain. "Induced" jobs are jobs that result from spending that occurs in an area due to the data center's presence there.

Nearly 4.1 million data center jobs — the vast majority of the total number of data center jobs accounted for in PwC's study — were considered indirect and induced. Indirect and induced jobs can comprise a wide range of potential positions, from the construction and maintenance of data centers to jobs in the local service industry near the data centers. The service sector, which includes everything from tourism, hospitality, and retail, to healthcare and financial services, accounted for 60% of the data center industry's induced jobs.

"DCC asked PwC to quantify the economic contributions made by the data center industry nationally as well as in each state and the District of Columbia. The report and analysis were conducted independently by PwC using publicly available government data from the Bureau of Economic Analysis and Bureau of Labor Statistics," a Data Center Coalition spokesperson said.

Some economists say induced and indirect jobs can be difficult to accurately quantify.

Nathan Jensen, a professor at the University of Texas's Department of Government, questioned the study's estimate of the number of jobs created by the data center industry.

"The economic impact of these projects aren't particularly high," Jensen said. "It's head-shaking to me how you could come up with that jobs number."

PwC used IMPLAN, an economic modeling software that is considered an industry standard for economic impact analysis and data. While IMPLAN has been used since the late 1970s to demonstrate potential job creation for a variety of industries, Jensen said the program is vulnerable to misuse.

"There's a lot of controversy around IMPLAN," he said. "It's often used to justify economic development incentives."

IMPLAN's model relies on the North American Industry Classification System, which the federal government uses to classify businesses, to determine the "multiplier effect" of an economic development project to measure the overall impact on the local economy.

PwC determined that the data center industry has a multiplier effect of 7.5, meaning that every direct data center job leads to another 7.5 jobs elsewhere in the US economy.

Jensen said a multiplier effect of one or two is likely more accurate.

The data center boom creates construction jobs

Data centers do offer significant job creation opportunities, said John Boyd Jr., principal at site selection advisory The Boyd Co. — it's just that the jobs are in unexpected places.

Construction jobs are bigger and more important to the data center industry than people realize, he said. Boyd's firm has helped large corporations like AT&T, Dell, and Visa choose locations for major development projects, and it has also advised government agencies on economic development deals.

"The actual amount of on-site labor is enormous, and wages are over double the national average for construction workers," Boyd said of data center projects.

This is because data center construction requires skilled labor across a variety of expertise.

"You're looking at cooling systems, natural gas turbines, specialized server equipment," he said.

Construction workers often travel to data center sites and stay for extended periods of time, which leads to a need for hotels, restaurants, and other services. The data center development boom has led to a surge in occupancy rates at properties owned by Wyndham Hotels and Resorts, CEO Geoff Ballotti said on the company earnings call in February.

Data centers also require routine and specialized maintenance after they are built, leading to a continued need for skilled labor nearby.

The industry tends to cluster together. Once one data center is located in a certain area, others tend to follow. Ballotti said Wyndham's business development experts are focusing on expansion in areas near Jackson, Mississippi, and Columbus, Ohio, because of that.

"These aren't one and done," Boyd said.

• Amazon and GE Vernova are partnering on power solutions for data centers.
• Grid operators in the US struggle to keep pace with surging data center demand.
• Big Tech companies are exploring alternative ways to get power to their sites quicker.

Amazon and GE Vernova have signed a strategic framework agreement to help power the cloud provider's rapid data center expansion, both companies said Tuesday in a press release.

Under the agreement, GE Vernova is set to help Amazon connect its growing international fleet of data centers to the electric grid through major electrical equipment expansion, project management, and construction support. The companies will also partner on renewable energy projects, and Amazon plans to work with GE Vernova's accelerator business to explore new forms of power generation for data centers.

The terms of the deal were not disclosed.

Amazon, along with other Big Tech companies, is spending hundreds of billions of dollars on data center expansion to advance artificial intelligence technology. Amazon plans to allocate over $100 billion in capital expenditures this year, mostly on expanding its cloud and AI infrastructure.

The development boom has caused energy demand in the US to surge for the first time in decades, and grid operators are struggling to keep up with the pace of growth.

As a result, data center operators are partnering with energy companies to explore various alternative options for getting power to their sites quicker. Last year, Amazon signed a deal with Talen Energy to use power from its Susquehanna nuclear power station in Pennsylvania.

GE Vernova builds and implements electrical power systems and equipment for energy sources such as natural gas, hydropower, wind, nuclear, and steam. The company's gas division saw significant growth in orders in 2024 for natural gas turbines, partially due to data center demand, CEO Scott Strazik said on an earnings call in January.

The company's natural gas turbines are providing power at the first Stargate site in Abilene, Texas. Stargate is a $500 billion joint initiative by OpenAI, Oracle, SoftBank, and the White House to build AI infrastructure.

Amazon and GE Vernova did not immediately respond to requests for comment.

Do you have a story to share about data centers and energy? Contact this reporter at ethomas@businessinsider.com.

• Talen Energy is confident in its power deal with Amazon despite a regulatory challenge.
• CEO Mac McFarland sought to reassure wary investors on the company's Q4 earnings call on Thursday.
• AI-driven electricity demand has boosted Talen's stock in the last year.

Despite regulatory challenges, Talen Energy is forging ahead with its deal to provide power to an Amazon data center adjacent to its Susquehanna nuclear power plant in Pennsylvania, CEO Mac McFarland said Thursday on the company's fourth-quarter earnings call.

"We have an existing relationship with a hyperscaler who shows no signs of pulling back on growth and has invested material capital and sweat equity into the Susquehanna agreement to date and on an ongoing basis," McFarland said.

McFarland was referring to its current interconnection service agreement with Amazon Web Services for 300 megawatts of power. The AI boom has led to a surge in electricity demand coming from data centers, and Big Tech companies like Amazon are increasingly signing massive deals with independent power providers like Talen to meet it.

When AWS and Talen first announced their deal last year, the companies said they'd contracted for 960 megawatts of co-located capacity. In November, the Federal Energy Regulatory Commission rejected an interconnection service agreement that would have allowed the companies to expand their power purchase agreement beyond the initial 300 megawatts. Talen appealed the rejection in federal court in January.

"Talen has time to convert the contract to a different commercial arrangement and/or resolve the regulatory questions, and we are confident and focused on executing on one or both of those options over time," said McFarland.

Talen reported a net income of $998 million attributable to stockholders for 2024. However, by Thursday's market close, shares had fallen 7.3%.

Talen is one of many independent power producers that saw share prices of its stock surge in the last year, as Wall Street hyped up companies it saw as well-positioned to benefit from Big Tech's massive AI data center buildout. Even after Thursday's dip, Talen's stock price has more than doubled since this time last year.

Shares of Vistra, another independent power producer that has seen its stock surge amid the AI boom, also fell today after it reported earnings.

While McFarland tried to reassure investors, not all of them were convinced.

"We're clearly getting anxious," Seaport Global analyst Angie Storozynski told Talen executives on the call.

Do you have a story to share about data centers and energy? Contact this reporter at ethomas@businessinsider.com.

• Vistra reported earnings Thursday, and its stock fell 11% that day as of publication time.
• The energy company is in talks with data centers on powering the facilities with its nuclear fleet.
• Investors want to see a deal signed. The CEO said regulatory hurdles are holding up the process.

The AI boom has led to a massive demand for energy to power data centers. At the same time, red tape is slowing dealmaking between data centers and power providers, Vistra CEO and president Jim Burke said on Thursday's fourth-quarter earnings call.

The Texas-based energy company released fourth-quarter results on Thursday that topped expectations. Still, shares of the company's stock had declined over 11% that day by the time of publication, wiping out gains made in the last 24 hours.

Vistra is one of several independent power providers that saw its stock surge in the last year as Wall Street hyped up companies it sees as well-positioned to benefit from the AI boom. The company's drop in share price mirrored that of chip maker Nvidia, which saw its share prices fall despite beating analyst expectations in its earnings Wednesday. This demonstrates how companies like Vistra are intertwined with the fate of AI.

Vistra acquired four nuclear power plants in March 2024 through its $3.4 billion acquisition of retail electricity provider Energy Harbor. Located in Ohio, Pennsylvania, and Texas, the plants have a combined generation capacity of four gigawatts—enough energy to power 3.2 million homes.

The company has not yet announced a deal to power a major data center with one of those nuclear plants, even though Vistra has indicated to investors in the last year that the additional capacity positions the company to take advantage of surging electricity demand from data centers. Vistra has signed power purchase agreements with Amazon and Microsoft for its solar facilities in Illinois and Texas.

"Because it's fairly complicated, it's elevated to discussion in all regulatory and policymaking circles," Burke said in response to an analyst who asked when Vistra would announce a contract had been signed.

Vistra looks to power more data centers

Vistra has two options for contracting with major data center customers: a power-purchase agreement or a co-location arrangement. Both come with significant hurdles. The first, signing a long-term power-purchase agreement, would involve a data center customer agreeing to buy power from one of Vistra's plants for up to 20 years, similar to Microsoft's deal to restart the Three Mile Island nuclear plant.

The other option is co-location, where a data center customer would build or buy an existing data center on-site, as Amazon has agreed to do in its deal to buy power from Talen Energy's Susquehanna nuclear plant in Pennsylvania.

"When you think about that, because it's a new concept, there's a lot of terms and conditions, including the risk sharing that goes into that partnership because you're making a 10, 15, 20-year commitment, said Burke. "And you see, not many deals have been announced that have actually been co-location related."

Burke said Vistra is involved in discussions with "all the major hyperscalers" and data center developers.

"We feel good about the direction of travel on it, but it's still something that we've got to actually get over the finish line before you'd see us announce something," Burke said. "The timing of an announcement will also be dependent at some level on when we get clarity on how these deals can move through the process. "

Vistra reported $2.8 billion in net income in the 2024 fiscal year, including $490 million in the fourth quarter, up from $1.49 billion in net income in the 2023 fiscal year and a loss of $184 million in the fourth quarter of that year.

Energy companies face deal hurdles

Many co-location deals—in particular, Amazon's deal with energy firm Talen—have been mired in significant red tape.

In January, Talen filed a petition appealing a decision made in November by the Federal Energy Regulatory Commission to reject its interconnection service agreement with Amazon. FERC rejected to approve the agreement on the grounds that making Amazon the sole recipient of power generated by the Susquehanna plant, which currently serves power to the local electric grid, could threaten grid reliability and national security.

In Texas, state legislators are discussing a bill that would require energy companies with co-location deals to generate additional power for the local grid.

Do you have a story to share about data centers and energy? Contact this reporter at ethomas@businessinsider.com.

• A TD Cowen analyst said that Microsoft had canceled plans for new data center developments.
• The news suggested that the staggering forecasts for data center growth could be overblown.
• Experts say the industry's growth will still be enormous but is now undergoing a reality check.

Microsoft recently appeared to scale back its data center development pipeline, which would be an extraordinary step back after a period of furious growth by the tech giant. But did it really?

The concerns about whether air was coming out of a data center bubble were raised by a TD Cowen analyst, Michael Elias, in a report dated February 21. Elias wrote that Microsoft, one of the largest data center operators in the country, had recently torn up leases for "multiple +100 megawatt deals in multiple markets that were in early/mid-stages of negotiations."

Elias also said the company had let go of more than a gigawatt of preliminary data center commitments it had made and also five longer-term development deals in prime data center markets. The company's decision-making was "tied to Microsoft potentially being in an oversupply position."

Microsoft's pullback sent a shudder through the data center market, which has seen staggering forecasts for growth in the coming years.

For some, however, the news simply reflected a more modest revision of the sector's extraordinary recent projections for growth.

"I can't think of the big five that haven't done this every 12 or 18 months," said one data center development executive, referring to the industry's largest users: Amazon, Meta, Google, Microsoft, and Oracle. The executive did not want to be identified by name because major customers in the industry prize confidentiality.

"This is not new and definitely not the biggest one we've had in the last three years," the executive said, saying that Meta had canceled major data center commitments it had in recent years in order to reset its strategy, including its data center business's customer and technology focus.

After that reevaluation, Meta rebooted its torrid growth, including the recent announcement of a $10 billion data center campus in Louisiana.

A spokeswoman for Meta declined to comment.

Microsoft still has plans for robust growth

Dan Thompson, an analyst at S&P Global who covers the data center industry, said that the magnitude of the data center boom was bound to modulate because the projections included speculative projects and, potentially, the double counting of tenants who may have expressed interest in multiple projects and/or regions for the same requirement.

"Some of these announcements are not going to get built," Thompson said. "I don't see it as a reflection on the data center industry."

Thompson said that there was a need to differentiate between credible growth and the frothiest forecasts for the industry's expansion. He said that S&P plans to reorganize its data center projections this year into buckets that group projects based on their likelihood of coming to fruition.

"We are modifying our reports this year, for every market, basically draw the line in the sand and say, OK, this is the part where we think: that is real," Thompson said.

What is clear, nonetheless, is that a data center boom is afoot across the nation.

S&P Global projects that the industry will grow from about 35.4 gigawatts of capacity today to almost 82 gigawatts by the end of the decade, an 131% increase. There have been even more ambitious projections that more than 90 gigawatts of data centers could be online by 2029.

The development is being undertaken to commercialize and develop artificial intelligence and also cater to society's yawning digital footprint. Data centers provide the computing and storage that power the internet and a host of increasingly vital functions, such as autonomous vehicles, Zoom meetings, and cloud computing.

A spokeswoman for Microsoft suggested in a statement that the company had pumped the brakes on development, while also highlighting the enormous scale of its data center expansion.

"Thanks to the significant investments we have made up to this point, we are well positioned to meet our current and increasing customer demand," the spokeswoman stated. "Last year alone, we added more capacity than any prior year in history."

Microsoft "will continue to grow strongly in all regions," she said, and that the company's plans to "spend over $80B on infrastructure this FY remains on track as we continue to grow at a record pace to meet customer demand."

Elias's report didn't cite specific examples of Microsoft's retrenchment, except for the recent news of its decision to reevaluate a large data center campus it is building in Mount Pleasant, Wisconsin, outside of Milwaukee.

Reached by phone, Elias declined to comment further.

Sean Ryan, a spokesman for the Village of Mount Pleasant, said that Microsoft had "paused in some of its construction work in order to incorporate new data center designs" and that "Village officials have no reason to believe this will affect the overall scope or nature" of the project.

• The Data Center Coalition's PAC has made $165,500 in campaign contributions to Virginia lawmakers.
• The interest group's funding came from companies like Amazon, Visa, and Stack Infrastructure.
• DCC's first-ever political donations came ahead of a push by VA lawmakers to regulate data centers.

An under-the-radar interest group representing Big Tech and private-equity-backed data center developers is growing the industry's influence on public policy, as data center construction booms across the country and utilities scramble to meet the mounting electricity demand from artificial intelligence.

The group's efforts might already be paying off, as evidenced by a failed slate of bipartisan-backed data center regulations in Virginia, where the annual General Assembly session will adjourn on February 22.

In the three months between Election Day and the start of the legislative session in January, a political action committee tied to the Data Center Coalition made $165,500 in campaign contributions to state lawmakers, Business Insider found in filings with the Virginia Department of Elections.

The DCC counts major data center operators, including Amazon, Microsoft, Meta, Google, and Blackstone-backed QTS, as members. The group has registered as a lobbying organization in Virginia, home to the world's largest data center market, annually since 2019. While it has always represented the data center industry's interests before Virginia lawmakers, these are the first campaign contributions DCC has ever reported making.

DCC made the contributions between November 16 and January 7, the day before the start of Virginia's annual legislative session. During this time, lawmakers typically talk to lobbyists and write bills.

Data center regulation was expected to be a hot topic at this year's legislative session. Several lawmakers—both Republican and Democratic—introduced bills addressing a wide range of public concerns regarding the industry, from noise pollution to the cost of electricity. Of 27 proposed bills that directly addressed the data center industry, only one passed both the House and Senate.

DCC's donations were made by the Virginia Digital Infrastructure PAC, which was registered in September with the Virginia Department of Elections by Kate Smiley, a DCC government affairs official. The PAC has reported raising a total of $490,000 in funds from a small group of DCC members, including Stack Infrastructure, CloudHQ, Vantage Data Centers, Amazon, Visa, and CyrusOne.

The largest amount, $250,000, came from Stack Infrastructure, which last month was acquired by asset manager Blue Owl Capital from a joint venture started by Iron Point Partners and Iconiq Capital, a multi-family office that serves some of Silicon Valley's most elite names. Amazon, which has made political donations in Virginia under its name, gave $25,000.

Amazon also made a separate donation of $25,000 to Virginia Gov. Glenn Youngkin's Spirit of Virginia PAC on January 4. DCC member Google did not contribute money to the group's PAC, though it made four individual donations of $25,000, split evenly between Democratic and Republican PACs, in December.

"DCC is a nonprofit membership association that does not endorse candidates for public office or participate in political campaigns," Michael Robinson, a spokesperson for DCC, said in an e-mailed statement to Business Insider. "Like many trade associations, DCC established a state and local Political Action Committee (PAC) in Virginia. DCC did so as part of its work to engage on behalf of members and help inform Virginians about the many economic and community benefits data centers provide, as conversations continue about this critical industry and opportunities arise for additional investment, jobs, and supply chain development across the Commonwealth."

Stack, CloudHQ, Vantage, Amazon, Visa, and CyrusOne did not immediately respond to requests for comment.

Virginia's data center bills

Northern Virginia is the world's largest data center market, and much of the industry's early growth occurred there. With demand for AI surging, big data center clusters are now under construction in many parts of the country.

In Virginia, public concern over the industry's energy and environmental footprint has led to heightened scrutiny in recent years.

On the agenda for this year's legislative session, which began January 8, was a bipartisan package of bills that would rein in the industry's rapid expansion amid rising concern over its energy consumption and environmental footprint. Energy use in Virginia is expected to more than double by 2040 due to forecast data center demand, according to a joint legislative report, known as the JLARC study, issued in December. Building the infrastructure needed to support that demand would be "very difficult," the report said.

In addition to the data center package, lawmakers this session considered several bills regarding the Virginia Clean Economy Act, which mandates the state's monopoly utility, Dominion Energy, procure 100% of its electricity from renewable energy sources by 2045.

Data center operators like Amazon and Microsoft are some of Dominion's largest customers in Virginia, meaning legislation regarding the utility's compliance with the VCEA could also impact them.

The tech industry's influence

Campaign contributions made by corporate interest groups ahead of legislative sessions can be used to influence policy decisions, said Brendan Glavin, director of insights at OpenSecrets, a nonprofit that tracks campaign finance and lobbying.

Of the $165,500 in donations made by the DCC's PAC, $50,000 went to House Speaker Del. Don Scott's Democratic leadership PAC. The remaining funds were split between 34 lawmakers in amounts ranging from $1,500 to $10,000.

Glavin said it is " important " to note a large donation to a powerful legislator or an associated group, such as the DCC's donation to Scott's leadership PAC because it can influence which bills move forward and which bills don't.

"It's just like in Congress. The speaker's going to control what moves through, what gets considered," said Glavin.

Donations by an interest group to individual lawmakers made during the countdown to a legislative session can indicate the group is looking to sway specific decisions.

"They're going to have a strategy," Glavin said. "It may be that they know one of these people is on the fence on a data center issue, or they may be trying to convince them to move their position."

Virginia Del. Josh Thomas, who represents a data center-heavy district in Prince William County and sponsored three data center regulation bills this session, said it was hard to know exactly whose influence ultimately quashed the data center legislation.

Thomas said that lobbyists representing Big Tech companies turned out in Richmond this session, and other powerful groups—including organized labor, real estate development, and utilities—also have an interest in influencing data center legislation.

He was not surprised to see that DCC chose to start making campaign contributions this year, ahead of the JLARC study on data centers.

"I think they probably believe that their arguments by themselves might be under attack from another viewpoint, and they're no longer the sole viewpoint in the room," said Thomas of the donations. "Some people think it buys an outcome, and some people think it buys you access or time. Regardless of your philosophic view on campaign contributions, at the very least, it's a signal that other voices are in the room."

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• xAI plans to operate a large data center to support X in Atlanta.
• The data center will have about 12,000 GPUs and $700 million worth of equipment.
• xAI set up a massive data center in Memphis last year.

xAI has been quietly setting up a data center in Atlanta, expanding its footprint beyond the massive data center in Memphis.

Elon Musk's AI startup plans to operate a large data center with X. The two companies are combining hardware to total roughly 12,000 graphics processing units, the Nvidia-designed chips used for most AI computation, according to a Business Insider tally of the equipment listed in the companies' agreement with Develop Fulton, one of Atlanta's economic development agencies.

In December, X and xAI signed similar agreements with Develop Fulton. Under the agreements, Develop Fulton orchestrated a municipal bond process to finance the $700 million in chips, cables, and other equipment going into the single facility. Fortune initially reported on the Atlanta data center. The size and scale of the data center have not been previously reported.

Representatives for X and xAI did not respond to a request for comment.

Inside the Fulton County data center

The Atlanta data center has sizable computing power, according to a data center solutions architect, and expert in AI hardware, who asked to remain nameless to comment on the documents. It's comparable to a data center a hyperscaler like Google or Amazon might set up.

X representatives described it as an "exascale" data center capable of computing "trillion-parameter AI." But the Georgia facility pales in comparison to the reported capacity of xAI's Memphis project, nicknamed Colossus, which Musk has called the largest data center in the world.

The Georgia facility will house an estimated 12,448 Nvidia GPUs. The vast majority of these are Hopper generation H100 GPUs, which cost between $277,000 and $500,000 for each rack of eight chips, according to the documents.

Roughly 3% of the chips are Nvidia's less-powerful A100 GPUs, which cost $147,000 for an equivalent configuration of eight chips. X is contributing all of the A100s, along with 11,000 H100s.

Neither of these chip designs requires liquid cooling, which has been a point of tension for Musk's companies in Memphis. When operating at full capacity, Colossus is expected to become among the largest consumers of water in the city.

In addition to H100 chips, xAI is contributing Mellanox switches and optics — high-bandwidth networking equipment that can facilitate chips working together faster, also purchased from Nvidia. Documents submitted to Develop Fulton by X indicate that the facility will be used to "develop and train artificial intelligence products."

Of the $700 million in accelerated computing hardware going into the facility, $442 million is allocated to X, and $258 million is allocated to xAI. The two companies will receive tax abatements that are estimated to be worth about $10 million over the course of ten years, to be split in proportion with their hardware investments, according to a representative at Develop Fulton. Kwanza Hall, chairman of the board at Develop Fulton, said the organization estimates the project will have an overall economic impact of more than $241 million.

The data center architect estimated the Atlanta facility would require 20 megawatts of total power, which it could realistically get from the power grid. xAI has requested 150 megawatts from the Tennessee Valley Authority for the Memphis facility, a representative for Memphis Light, Gas and Water said during a city council meeting in January.

X and xAI's partnership

The Atlanta facility is an example of Musk ostensibly pooling his resources to benefit both X and xAI. According to the records, X contributed 90% of the hardware for the data center, and xAI 10%.

xAI launched its chatbot, Grok, on X's platform in November 2023, but has since spun it off as an additional stand-alone app. On Monday, xAI released the latest version of the chatbot, and Musk said it has "more than 10 times" the compute power of its predecessor.

The equipment will be used to train large language models and semantic search products for the X platform, according to the documents. X has about 16 employees in the area, based on a review of LinkedIn profiles. xAI has one worker stationed at the Georgia facility and two additional employees listed as "X Corp Partner," the company's internal org chart shows. The deal with Develop Fulton states that 24 jobs will be maintained at the facility and none will be added.

Musk is trying to position xAI as a major competitor to Big Tech giants like OpenAI and Google, even drawing some talent from Tesla. The company built its Memphis data center in just 122 days, according to Nvidia — in record time for a data center of its size. xAI has also brought in hundreds of data annotators to train its chatbot over the past year with an eye to hiring thousands in the months to come, BI previously reported.

In February, Musk and a group of investors submitted a $97.4 billion bid to buy the nonprofit that controls OpenAI, but the billionaire later said he would withdraw the bid if OpenAI remains a non-profit entity. In response to Musk's initial offer, OpenAI CEO Sam Altman told reporters that the company is "not for sale."

"He obviously is a competitor," Altman said of the bid. "He's working hard, and he's raised a lot of money for xAI and they're trying to compete with us from a technological perspective, from getting the product into the market, and I wish he would just compete by building a better product."

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• Amazon, Meta, and Microsoft need massive amounts of electricity to power their AI data centers.
• In states like Louisiana and Wisconsin, utilities want to serve them with new natural gas plants.
• Natural gas power is the fastest way to get power to data centers, although it has drawbacks.

From the Midwest to the Southeast, electricity demand from Big Tech's AI data center projects has become so great that in some states, utilities want to build new natural gas-fired power plants to serve them.

Microsoft is building a data center hub outside Milwaukee, where the local grid doesn't have the capacity to serve it. WEC Energy Group's We Energies has told state regulators a $2 billion plan for new natural gas generation is "critical" to powering Microsoft's AI operations while continuing to serve the rest of its customers.

Once construction finishes at Meta's data center campus in Louisiana, the facility's capacity will total more than two gigawatts. That amount of electricity is so great that Entergy's Louisiana subsidiary plans to build new natural gas plants for the first time in 50 years.

Meanwhile, Amazon's data center plans in Mississippi have spurred Entergy's subsidiary in the state to start construction of a 754-megawatt natural gas plant, which the company said could power 385,000 homes.

Those three examples are part of a broader push by US power companies to build new natural gas infrastructure in response to surging power demand from AI. The increased reliance on natural gas is at odds with a transition to renewable energy, which scientists say is needed to reduce the emissions fueling the climate crisis.

Utility plans to build new natural gas plants also conflict with the narrative Big Tech companies have touted publicly — that the renewable and low-carbon energy projects they have invested in will ultimately power their data center operations. Many of those projects are smaller in scale and depend on advancing less widely-used technologies, like Meta's contract with a geothermal energy startup. Others, like Microsoft's deal to restart the Three Mile Island nuclear reactor and Amazon's power purchase agreement with the Susquehanna nuclear plant, face steep regulatory hurdles.

"The only concrete plans I'm seeing are natural gas plants," said Cathy Kunkel, energy consultant at the Institute for Energy Economics and Financial Analysis.

Kunkel's research found that utilities in four other states — Virginia, Georgia, North Carolina, and South Carolina — plan to build a combined 20 GW of new natural gas generation by 2040, primarily due to data center demand.

The current pace of data center development could lead utilities to build more new infrastructure than their Big Tech customers ultimately need, Kunkel said. Investor-owned utilities like Entergy and WEC Energy Group are already incentivized to build because state regulations allow them to profit from billing new infrastructure investments plus interest to their customers. Kunkel said she is concerned that some utilities could be overstating demand from their data center customers to recoup profits down the line — leaving their entire customer base on the hook, regardless of whether the data centers need all the power they say they will.

In 2024, requests from natural gas plants to connect to the grid more than doubled from the year before, according to data from BTU Analytics, a market research firm.

The turn to natural gas reflects the current reality data centers face — they want more power than the electric grid can provide, and they want it ASAP.

"There's a big time scale mismatch between the rates at which data center folks want to develop and the rates at which the electric power grid can develop," said Philip Krein, research professor of electrical and computer engineering at the University of Illinois.

Krein said solar and wind power are actually the fastest sources of new power generation to build, although they aren't the best match for data centers, which need access to a consistent stream of 24/7 power.

"Natural gas is relatively the quickest way to get substantial expansion of grid capacity so a data center can get up and running fast," he said.

Utilities say that building new gas-fired plants is the most cost-efficient way to maintain grid reliability for all customers as the rapid stream of AI data centers comes online. Still, Krein said, building new natural gas infrastructure for data centers could have environmental and financial implications for everyone.

"Everybody wants to move really fast, and they're not willing to wait," he said. "I hope they don't get ahead of themselves."

Here are three of the biggest data center sites where utilities plan to build natural gas plants to power them.

Microsoft in Wisconsin

Microsoft has committed to spending $3.3 billion on an AI data center hub at the former Foxconn development site in Wisconsin's Racine County. The company has also purchased land in nearby Kenosha, signaling further investment in the area.

Microsoft has not publicly disclosed the amount of electricity its Wisconsin data centers will need. Early estimates, now likely outdated, were between 1 and 1.1 GW, Scotiabank analyst Andrew Weisel wrote in an October research note. In its February investor presentation, We Energies owner WEC Energy Group said it faces nearly 2 GW of demand driven by economic development in its service territory.

To meet that demand, We Energies, the local utility serving Microsoft, is seeking approval from Wisconsin's Public Service Commission to spend roughly $2 billion on natural gas infrastructure, including a new plant with more than 1 GW of capacity.

A spokesman for We Energies said the company's proposed natural gas generating facilities in the area comply with the grid operator's rules. The company also plans to bring 4.3 GW of renewable energy online by 2029, the spokesman said.

"Our customers count on us to deliver reliable energy — it's our job to provide it safely 24 hours a day, 365 days a year," the We Energies spokesman said in a statement. "In the coming years, we'll continue to transform our power generation fleet to support reliability and economic growth — by investing in a balanced mix of wind, solar, energy storage, and natural gas."

"The bulk power system needs sufficient generation and transmission to stay reliable and support broad economic growth," a spokesperson for Microsoft said in an email statement. "We are working with utility companies, grid operators, and regulators to achieve our ambitious carbon-free energy goals to bring more energy online and are committed to paying our share as we do so."

The company's strategy, the spokesperson said, "involves substantial investments in renewable energy projects, partnering with utilities on new tariffs for clean energy, power purchase agreements (PPAs), and innovative technologies to enhance energy efficiency and reduce carbon emissions."

In Wisconsin, Microsoft has also signed an agreement to purchase the energy produced by a 250-MW solar farm under development in Portage County.

Meta in Louisiana

In December, Meta announced a $10 billion data center investment in Louisiana. Once complete, the facility is expected to be the company's largest to date.

As part of the deal that brought Meta to the state, Entergy's Louisiana subsidiary promised to deliver the power its data center operations require.

To do that, Entergy asked state regulators to approve a $3.2 billion plan to build new infrastructure, including 2 GW of natural gas generation. In its petition, Entergy said that approval to build the gas plants would be key in sealing Meta's decision to build data centers in Louisiana.

A spokesperson for Meta said the company is committed to matching its non-renewable energy use with "100% clean and renewable energy" through power purchase agreements and renewable energy credits. Meta is also working with Entergy to bring 1.5 GW of renewable energy to Louisiana and is exploring nuclear power, the spokesperson said.

Amazon in Mississippi

In November, Entergy's Mississippi subsidiary broke ground on a $1.2 billion, 754-MW natural gas plant. The plant will support adding Amazon's data centers to Entergy's service territory in Mississippi and will ultimately be paid for by Entergy's entire customer base.

As part of Amazon's incentive package passed by the Mississippi state legislature, state regulators waived the approval process for any new power infrastructure connected with the project.

"It is really concerning for the ratepayers of Mississippi, especially residential ratepayers, that a utility has effectively carte blanche to build whatever they see fit," said Logan Burke, director of the Alliance for Affordable Energy.

Amazon has said it plans to match the non-renewable energy used by its Mississippi data centers with power purchase agreements for energy generated from wind and solar farms in the state. A spokesperson for Amazon said one wind farm and four solar farms are already operational.

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• Saudi Arabia's Neom has signed a $5 billion deal to build an AI data center.
• Neom, which was launched in 2017, is a key part of Vision 2030 to diversify Saudi Arabia's economy.
• Saudi Arabia and UAE have been competing to become the Gulf's AI superpower.

Saudi Arabia's futuristic Neom project has signed a deal to develop a multibillion-dollar artificial intelligence data center, per a Saudi Press Agency report.

Under the agreement with DataVolt, a Saudi-based international developer and operator of data centers, the first phase will receive an investment of $5 billion. The 1.5-gigawatt factory is expected to be online by 2028 and will be built in Neom's Oxagon industrial hub.

The Neom megacity, launched in 2017 by Crown Prince Mohammed bin Salman, is a key step in achieving Vision 2030, which aims to diversify the country's economy away from fossil fuels and transform it into a luxury tourism destination and innovation hub.

Investing in the data center comes as Saudi Arabia and the United Arab Emirates compete to become the Gulf's AI superpower, with both boosting investments in data centers. Last week, the UAE and France said they would commit between $31 billion and $52 billion to build Europe's largest AI data center.

Estimates for Neom's overall cost have reached as high as $1.5 trillion, while official communications put the cost closer to $500 billion.

Its high-tech centerpiece, the Line, is expected to accommodate 9 million people — and even more robots. There are plans to build a year-round ski resort with artificial snow and a number of theme parks.

The project has come under international scrutiny for alleged human rights abuses against local tribespeople. In 2023, the United Nations said it had concerns about the possible executions of members of the Howeitat tribe, whose people live in the area in which Neom is being built.

Neom did not immediately respond to Business Insider's request for comment.

• Amazon Web Services growth hindered by capacity constraints in data centers, says CEO.
• Constraints stem from AI chip shortages, server components, and energy supply issues.
• Amazon plans $105 billion in 2025 capital expenditures, largely led by AI.

Amazon CEO Andy Jassy said on Thursday that the Amazon Web Services cloud business could grow faster if not for "capacity constraints" across its data centers.

He said the shortage has been caused by difficulty procuring AI chips, server components like motherboards, and the energy to power data centers.

"It is true that we could be growing faster, if not for some of the constraints on capacity," Jassy said during Thursday's call with analysts.

On Thursday, AWS reported a 19% increase in sales for the fourth quarter at $28.8 billion, which was slightly below street estimates. Amazon's stock dropped roughly 4% in after-hours as the company gave lower-than-anticipated first-quarter guidance.

Jassy's remarks echo recent statements made by cloud rivals Microsoft and Google. Microsoft's CFO Amy Hood said last week that the company is in "a pretty constrained capacity place" when it comes to meeting demand, while Google's leadership said on Tuesday that it ended 2024 with "more (AI) demand than capacity."

Jassy said on Thursday that he expects the constraints to "relax" in the second half of 2025, adding it is "hard to complain" when AWS's AI business is on pace to generate "multi-billion" dollars in annual sales.

Amazon expects AI demand to continue growing. For 2025, the company forecast roughly $105 billion in capital expenditures, mostly in data centers, after spending a record $26.3 billion during the fourth-quarter.

Jassy said AWS doesn't make that kind of financial commitment unless there are "significant signals of demand."

"When AWS is expanding its capex, particularly what we think is one of these once-in-a-lifetime type of business opportunities like AI represents, I think it's actually quite a good sign, medium to long term for the AWS business," Jassy said.

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• Microsoft CFO Amy Hood urged employees to focus amid recent AI news.
• One bit of recent news is DeepSeek's AI model, which raised questions about infrastructure spending.
• Microsoft stock fell after it reported AI and cloud computing services grew less than expected.

Microsoft chief financial officer Amy Hood had a message for Microsoft employees in an internal memo amid recent AI news: Keep your head down and focus.

Hood sends the emails quarterly when Microsoft reports earnings, and they mostly rehash the public financial reports.

This quarter's email was preceded by AI news, including Chinese AI startup DeepSeek's model that raised questions about infrastructure spending, developments with White House AI policy, and a joint venture from OpenAI, Oracle, and SoftBank called Stargate to spend $500 billion on AI infrastructure, announced by President Donald Trump.

"There has been a lot of AI-related news this week, but our focus is clear: delivering real-world AI solutions while simultaneously globally scaling our cloud and AI infrastructure to support our partners and customers as they adopt, build, and grow as well," Hood wrote, according to a copy of the email viewed by Business Insider. "As a company, we remain steadfast in the priorities which are required to deliver on that product promise — security, quality, and AI innovation. Thank you for your focus as we work together for our customers who rely on us."

Chinese AI startup DeepSeek recently launched a model that competes with OpenAI at a fraction of the cost. The release has caused many in the technology industry to call into question the trillions of dollars being spent on AI infrastructure.

Microsoft is familiar with criticisms of the industry's significant spending on AI infrastructure and whether it will lead to actual returns. The company recently said it plans to invest about $80 billion to build AI-enabled data centers in its 2025 fiscal year alone.

The debate around DeepSeek set the stage for Microsoft's second-quarter earnings release on Wednesday. The company's stock dropped after it reported its AI and cloud computing services grew less than expected.

Read Amy Hood's full memo to Microsoft employees:

"Team,

This afternoon, we announced our second-quarter financial results. We grew revenue by 12% to $69.6 billion, operating income by 17% to $31.7 billion, and earnings per share by 10% to $3.23. Our results exceeded our Q2 outlook given to Wall Street.

Our Microsoft Cloud revenue was $40.9 billion, up 21% year-over-year. Our results reflect strong customer demand as we continue to create cutting-edge capabilities that are driving real value and measurable impact for our customers. This quarter, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year. Highlights from our commercial business, which grew 17%, are below:

Commercial bookings were significantly ahead of expectations and increased 67% and 75% in constant currency. The outperformance was primarily driven by Azure commitments from our partner, OpenAI, and strong execution across our core annuity sales motions.
Azure and other cloud services revenue grew 31%, landing at the lower end of our expectations. This includes 13 points of growth from AI services, which exceeded expectations. Growth in non-AI services came in slightly below our expectations, influenced by some near-term execution challenges.

Microsoft 365 commercial cloud revenue grew 16%, slightly ahead of expectations, driven by our E5 suite and M365 Copilot. M365 Copilot has seen growth in adoption, expansion, and usage.
Dynamics 365 revenue grew 19% driven by growth across all workloads.

We invested $22.6 billion in capital expenditures as we invest against both short- and long-term demand signals for our Microsoft Cloud inclusive of AI workloads.

In our consumer business, revenue grew 2%, which was better than expected. As we work to accelerate growth in our consumer business, we remain focused on delivering consumer experiences that delight and earn user loyalty. Below are key points from our consumer businesses:Search and news advertising ex TAC revenue grew 21%, above expectations, with rate expansion and continued volume growth from Edge and Bing.

Windows OEM and devices revenue grew 4%, ahead of our expectations, driven by commercial PC inventory builds in advance of Windows 10 EOS as well as uncertainty around tariffs.
Gaming revenue decreased 7%, primarily driven by hardware. Xbox Content and services revenue increased 2%, ahead of expectations, driven by better performance in Blizzard and Activision content, including Call of Duty.

LinkedIn revenue grew 9%, reflecting growth across all lines of business. However, ongoing weakness in the hiring market in key verticals negatively impacted growth in the Talent Solutions business.

As a reminder, our stock trades not only on our results, but on our outlook for the next quarter and beyond. Investors listen to our earnings call to gain deeper insights into these indicators, and I would encourage you to listen too, as it offers useful context to help align our efforts in driving toward our priorities and commitments. You can join the call live today at 2:30PM Pacific Time, listen on-demand, or read the transcript on the Investor Relations Website.

There has been a lot of AI-related news this week, but our focus is clear: delivering real-world AI solutions while simultaneously globally scaling our cloud and AI infrastructure to support our partners and customers as they adopt, build, and grow as well. As a company, we remain steadfast in the priorities which are required to deliver on that product promise — security, quality, and AI innovation. Thank you for your focus as we work together for our customers who rely on us.

With appreciation and gratitude,

Amy"

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• Developers filed permits to operate natural gas turbines at Stargate's site in Abilene, Texas.
• The turbines' combined capacity is 360 MW, a fraction of the power Stargate's data centers need.
• That's still a lot of electricity — enough to power 90,000 Texas homes.

The developers of the first Project Stargate data center in Abilene, Texas, plan to build a natural gas plant on the site, according to public filings reviewed by Business Insider.

OpenAI, Oracle, and SoftBank have thus far provided little detail on the potential energy use of Stargate, a joint venture formed to spend $500 billion on AI infrastructure in the US and announced last week by the White House.

The filings said that once operational, the plant could produce up to 360.5 megawatts of power at any given time, up to 24 hours a day, seven days a week, 365 days a year. One MW of electricity can power 250 residential customers during peak hours, the Electric Reliability Council of Texas said. This means 360.5 MW is enough to power 90,000 homes in Texas — roughly double the amount of households in Abilene, according to the US Census Bureau.

These permit applications were filed with the Texas Commission on Environmental Quality by a consulting firm working on behalf of AI cloud startup Crusoe. Crusoe is the owner of Project Ludicrous, the $1.1 billion data center project in Abilene widely thought to be the first Stargate location.

An initial application to permit 10 simple-cycle natural gas turbines under Title V of the Clean Air Act — at a site that shares an address with Project Ludicrous — is under review by the TCEQ.

The application said the facility housing the turbines will be used for "primary and backup power" for "data centers and computing. " Its use will be "onsite only," meaning the power generated by the turbines won't be available to the local grid.

Half of the turbine models come from GE Vernova, and the other half come from Solar Turbines, a subsidiary of Caterpillar Inc. The turbines are designed to be installed and operational quickly, and some GE models can be up and running in as little as two weeks, the company has said in marketing materials.

A permit allowing diesel-fired backup generators to run at the site is already in effect.

Developing the plant is expected to cost half a billion dollars, a city document viewed by BI said.

Andrew Schmitt, a spokesperson for Crusoe, the startup developing Project Ludicrous, declined to comment on the record about the natural gas plant. He directed BI to the company's previous comments about the site's power, which "includes both on-and off-site renewable resources, including surrounding wind developments and a potential future large-scale onsite solar installation."

OpenAI and Oracle did not immediately respond to requests for comment.

Stargate will need lots of power

Morgan Stanley analysts on Friday estimated the entire Stargate project would require about 15 gigawatts.

That amount of power would be spread out across multiple locations, though the number of Stargate sites and how much power each would use is not publicly known. Some reports in the media and from financial analysts have indicated that Stargate sites could have a power demand of 5 GW, an amount drawn from a document said to have been pitched by OpenAI CEO Sam Altman to the Biden administration, first reported by Bloomberg.

If that is the case, then 360.5 MW, the capacity of the natural gas turbines at Project Ludicrous, would make up a tiny fraction — less than 1% — of how much power the site will ultimately need.

Some of that power will come from a substation, allowing Project Ludicrous to draw power from the local electric grid. The data center is located on land owned by energy tech company Lancium, which has built a 200 MW substation on the site, a company spokesperson told Business Insider. The company's website said it plans to increase capacity to five times that amount in 2025.

The race to develop AI infrastructure has caused electricity demand in the US to soar dramatically for the first time in two decades. Data center electricity use could triple in the US by 2028, according to the latest report from the Department of Energy.

The recent launch of DeepSeek has raised questions about AI infrastructure spending in the US, as the Chinese AI model is 20 to 40 times cheaper than OpenAI's and can run more efficiently with fewer chips.

Do you work in or have knowledge of the data center industry and have insight to share? Get in touch with this reporter at ethomas@insider.com or reach out via the encrypted messaging app Signal at +1-929-524-6924.

• President Donald Trump announced the $500 billion AI project, Stargate, earlier this week.
• Stargate's first data center is under construction in Abilene, Texas, said Oracle CTO Larry Ellison.
• Public filings for an Abilene development matching Ellison's description shed some light on costs.

Construction on what appears to be two buildings on Stargate's first data center campus, now underway in Texas, is expected to be complete by the end of the year and cost an estimated $1.1 billion, according to public filings.

President Donald Trump announced the formation of Stargate, a joint venture between Oracle, OpenAI, and SoftBank, at a White House press conference on Tuesday. He pledged to spend $500 billion building AI data centers in the US.

Oracle founder and CTO Larry Ellison, who joined Trump, OpenAI CEO Sam Altman, and SoftBank CEO Masayoshi Son at the briefing, said the first Stargate data centers are currently being built in Abilene, Texas.

"We've been working with OpenAI for a while and Masa for a while. The data centers are actually under construction — the first of them are under construction in Texas," said Ellison. "Each building is a half million square feet. There are 10 buildings currently being built, but that will expand to 20 and other locations beyond the Abilene location, which is our first location."

Little else has been revealed about Stargate. Registration forms filed with the Texas Department of Licensing and Regulation for a data center development in Abilene matching Ellison's description of Stargate give some insight into the cost of building the data centers.

The development is registered with the TDLR under the name "Project Ludicrous," located at an address attached to the Lancium Clean Campus — a 1,000-acre site in Abilene owned by energy tech company Lancium. The owner of Project Ludicrous is listed as Abilene DC 1 LLC, an affiliate of data center development startup Crusoe. According to the Texas state comptroller's records, Oracle is the occupant of the data center owned by Abilene DC 1, LLC, located at the Lancium Clean Campus in Abilene. A Texas-based Oracle employee is also listed as the tenant contact for Project Ludicrous in the TDLR filings.

Between July and December 2024, agents for Project Ludicrous filed four different TDLR filings for two buildings.

Construction on the first building, a 482,000-square-foot one-story "data hall" estimated to cost $292 million, began in June 2024 and is scheduled to be completed by May 30, 2025. The estimate also includes plans for a guard house, fire pump building, and mechanical and electrical enclosures. A second filing for the building, made in September, indicates that tenant improvements costing $140 million began in December and are expected to be completed by September 15, 2025.

A second building registered under Project Ludicrous, a 484,960-square-foot "1-story data center" with a cost estimate of $292 million, went under construction in September and is expected to be completed in one year, the filings said. Tenant improvements, expected to begin in March and be completed by December 24, are estimated at $384 million.

The San Antonio Express-News previously reported on these filings.

Lancium, the landowner, first struck a development deal with the city of Abilene in 2021 for what it calls the Lancium Clean Campus. The site was initially meant to power bitcoin mines with renewable energy generation, although that never came to fruition.

In November, Crusoe announced plans for a $3.4 billion data center development on the Lancium Clean Campus and said it had already fully leased the space to a "Fortune 100 hyperscale tenant," with occupancy expected to begin in the first half of 2025.

The Information first reported Oracle's plans to lease a data center site in Texas from Crusoe, intending to eventually rent servers to OpenAI.

In a post on its website, OpenAI said that the Stargate "buildout is currently underway, starting in Texas, and we are evaluating potential sites across the country for more campuses as we finalize definitive agreements."

"Lancium is excited to be building its Lancium Clean Campus in Abilene, Texas, in partnership with Crusoe and the Development Corporation of Abilene (DCOA) and to be at the forefront of the growth of the AI infrastructure industry in the US," a spokesperson for Lancium wrote in response to a request for comment from Business Insider. The spokesperson said the company could not "provide any new commentary about Abilene or any of our other Clean Campuses."

Oracle, OpenAI, and Crusoe did not immediately respond to requests for comment.

Do you have insight, information, or a tip to share with this reporter? Contact Ellen Thomas via the secure messaging app Signal at +1-929-524-6964.

• President Joe Biden signed an executive order that aims to speed up AI infrastructure projects.
• It directs the DOD and DOE to lease land to the private sector for building AI data centers.
• The executive order requires developers to build clean energy sources to power their data centers.

President Joe Biden has signed an executive order to accelerate the scale-up of AI infrastructure in the US to meet the massive energy and supply needs of the "cutting-edge" technology.

Biden said on Tuesday that the executive order will direct the departments of Defense and Energy to lease federal sites to the private sector for building "frontier AI infrastructure at speed and scale."

According to the White House, private sector access to federal sites for building "gigawatt-scale AI data centers" will be determined by "competitive solicitations" for proposals.

Private companies leasing the land would be required to cover the cost of building and operating the sites, including the build-out of clean energy sources for powering data centers.

Biden, who is serving his final days in office, said the US cannot take its lead in AI for granted. The technology is set to have "profound implications for national security and enormous potential to improve Americans' lives if harnessed responsibly," Biden said.

"That is why today, I am signing an historic Executive Order to accelerate the speed at which we build the next generation of AI infrastructure here in America, in a way that enhances economic competitiveness, national security, AI safety, and clean energy," Biden said.

The move from Biden comes at a critical time for the AI sector.

Industry leaders say progress for leading AI companies — which have invested billions of dollars in the technology — depends on an extraordinary build-out of infrastructure.

Expensive data centers and clean energy supplies are needed to train, host, and run new models sustainably, while chip plants that supply vital computing power are being demanded closer to home after years of reliance on chipmaking facilities overseen in the East by the likes of Taiwan's TSMC.

In September, OpenAI boss Sam Altman wrote in a blog that "if we don't build enough infrastructure, AI will be a very limited resource that wars get fought over, and that becomes mostly a tool for rich people."

Biden addressed the need for the US to become self-sufficient, noting in his statement that "we will not let America be out-built when it comes to the technology that will define our future."

The executive order will likely be a boost for private sector companies that have shown increasing interest in AI infrastructure development over the past few years.

In September, Microsoft and BlackRock announced the creation of a $30 billion megafund designed to drive "significant infrastructure investment" and "enhance American competitiveness in AI." The fund's total investment potential is $100 billion, they said.

SoftBank boss Masayoshi Son, whose company is betting big on AI, also committed in December to investing $100 billion in AI infrastructure in the US over the next four years after meeting President-elect Donald Trump.

• Big Tech is investing in nuclear power to meet AI data center energy demands.
• Nuclear is seen as a clean energy source, but investors are skeptical about scalability and returns.
• While VC interest in nuclear startups is growing, startups face key bottlenecks.

The generative AI boom has made nuclear power a major new obsession for Big Tech. Some industry watchers aren't fully convinced that it should be — or that nuclear startups will be able to capitalize on the hype.

This year, companies at the forefront of AI development have been in a frenzy over nuclear power as they've searched for clean sources of electricity to run the energy-hungry data centers being built to serve their prized AI models.

Microsoft made a stunning move in September as it struck a 20-year power purchase agreement with Constellation Energy to awaken one of two dormant nuclear plants on Three Mile Island — the site of one of the most high-profile nuclear accidents in US history.

In October, Amazon took a stake in X-energy, a developer of small modular reactors (SMRs) that promise greater efficiency than large nuclear reactors. That same month, Google announced a clean energy agreement with Kairos Power, a company developing SMRs.

These deals have emerged at speed for a simple reason. An arms race in the tech sector between companies vying for control of the most powerful AI models is set to drive data center power demand through the roof, with Goldman Sachs estimating a 160% jump by 2030.

However, while Big Tech's ambitions to build the world's most potent AI models have invigorated their interest in nuclear power, investors, energy experts, and analysts are feeling split about whether it will help startups scale at pace and deliver fruitful returns.

Why nuclear might not be a quick-fix solution

One issue that skeptics point to is that nuclear reactors won't come online quickly enough or with the scale needed to meet the demands of energy-hungry data centers.

Jill McArdle, a campaigner at European nonprofit Beyond Fossil Fuels, told Business Insider that nuclear power is "completely off topic" as a current solution for powering data centers, particularly if tech companies are serious about the looming deadlines they've set to meet emissions targets.

Google aims to achieve net-zero emissions across all of its operations by 2030. Microsoft, meanwhile, has committed to being carbon-negative by 2030. "What we are talking about, especially now, is the next five years of how are we going to power this massive boom in data centers," McArdle said.

She added that more compact SMRs adopted by Big Tech also remain largely untested. Google's corporate agreement with Kairos Power, for instance, is expected to see the startup's first SMR come online by 2030, with others being added through to 2035.

One concern around large nuclear solutions is expense, with the likes of Microsoft's Three Mile Island deal unlikely to be replicated elsewhere. As McArdle put it: "Traditional nuclear just isn't going to be coming online at the scale and in the budget that we need to get it done."

Venture capitalists have echoed this concern.

"The length of the investment is not compatible with private equity funds — maybe it's one for evergreen funds," said Guillaume Sarlat, partner at France-headquartered VC firm Axeleo Capital, which has deliberately excluded nuclear from its investment policy. "The other problem is, what are the economic conditions going to be when nuclear startups are ready to sell their product? What is going to be the cost of the electricity that they're going to produce in 20 years?"

He speculated that funds backing nuclear could aim for an internal rate of return of 15%, but the two main parameters that determine this would be productivity gains and the competitiveness of the nuclear solution. These factors could be affected by the price of gas and photovoltaic materials, making it a risky bet, he said.

Startups face key bottlenecks

On the technical side, nuclear startups will have to work hard to differentiate against existing fission technologies and "persuade investors that that marginal improvement is worth waiting another 10 years," said Matthew Blain, principal at climate tech fund Voyager Ventures.

While Blain noted an aligned "excitement" for nuclear fusion technology, he added that these startups would first need to demonstrate a believable pathway down the cost curve. "Your first dollars per megawatt of your first fusion plant will be astronomically expensive, and that will be competing on a 20 to 30-year timeframe with the cost of energy and battery storage," he told BI.

It's part of the reason investment in nuclear energy startups has fluctuated over the past five years. The industry had a banner year in 2021, with startups raking in $3.57 billion in VC funding, per PitchBook data. Figures subsequently dipped in 2022 and 2023, with VCs pouring $2.67 billion and $1.17 billion into startups, respectively.

"Nuclear energy requires a centralized infrastructure that is harder to scale incrementally," said Nicolas Heuzé, cofounder and CEO of osmotic energy startup Sweetch Energy. "And investors and governments often favor proven solutions, even though they are not perfect, over novel ones associated with emerging technology."

The case for being bullish on nuclear

Despite the concerns, certain quarters of the tech sector remain convinced that nuclear is the way forward to support the AI data center boom.

A16z, the venture capital firm led by Marc Andreessen and Ben Horowitz, named "the resurgence of nuclear" as one of its big ideas for driving its "American dynamism" investment theme in 2025.

"A perfect storm of regulatory reform, public enthusiasm, capital infusions, and insatiable energy needs — particularly from AI data centers — will accelerate orders for new reactors for the first time in decades," is how David Ulevitch, a general partner at A16z, put it.

A few things still need to be figured out. Blain notes that VCs will need to see if there is profit to be made on a technology that may offer "more of an infrastructure return" typically made through debt investments than the kind of outsized return a VC typically seeks from a bet on a software business. Nuclear startups may also opt to "take the trajectory of companies like SpaceX by staying private for a long period of time," he said.

That said, it's clear that money is flowing into the industry again, as VCs have deployed $2.62 billion into nuclear startups this year. Notable raises included X Energy's $500 million round and the $151 million raised by Paris-headquartered Newcleo, which is building SMRs using repurposed radioactive waste.

Newcleo's COO, Elisabeth Rizzotti, told BI that a Big Tech-fueled boom in demand for clean energy had made it an "attractive" option for investors. She added that the startup was potentially eyeing an IPO once it met two key milestones: building its first prototype in 2026 and getting pre-authorization to build its first reactor in France by early 2027.

Companies trying to sell the world on nuclear power will have to accept a hard reality, however: the clock's ticking on their opportunity to prove their solutions can meet the extraordinary energy demands of the AI industry. The data centers will keep on coming.

• Amazon will invest another $10 billion in Ohio data centers, Ohio Gov. Mike DeWine said.
• The company will consider locations outside its power-strained hub in Columbus.
• In exchange for tax credits, Amazon committed to more than 1,000 new jobs in its Ohio data centers.

Amazon has committed to spending $10 billion on the expansion of its Ohio data center operations, in addition to the billions of dollars it has already said it plans to spend in the state, Ohio Gov. Mike DeWine said Monday.

The tech giant's new Ohio facilities, which should be completed by the end of 2030, will help power the push into AI by its cloud computing unit, Amazon Web Services.

Just last year, AWS said it would invest $7.8 billion to expand its data center hub in Columbus and the surrounding suburbs. The company started building data centers in the region in 2015 and has at least six different campuses that are either operational or under construction.

Ohio has committed to spending more than $23 billion on data centers in the state between the money it has already spent and its committed investments, a spokesperson for Ohio's Department of Development said.

The investment in Ohio is part of Amazon's aggressive spending plan on data center construction to support AI demand. Amazon CEO Andy Jassy said on the company's third-quarter earnings call in October that it plans to spend $75 billion on capital expenditures in 2024, most of which will go to cloud computing and data centers, and it expects to spend even more next year.

Local politicians have dubbed the Central Ohio "the Silicon Heartland." Gov. DeWine touted the AWS announcement this week as "strengthening the state's role as a major technology hub."

Most of Amazon's data centers are located in Northern Virginia, the largest data center market in the world. That area has become saturated with new facilities waiting to be connected to the electric grid. In the last 18 months, Amazon and its competitors have announced plans to build data centers in states nationwide. Just this year, Amazon announced plans to spend $11 billion on data centers in Indiana and $10 billion in Mississippi.

Job creation in Ohio

Ohio, which offers a generous slate of state and local tax incentives, including an up to 100% sales and use tax exemption for data center equipment, has seen a sharp uptick in development.

For this latest investment, the Ohio Tax Credit Authority approved additional job creation tax credits in AWS's existing economic development agreement with the state. In exchange for annual job creation tax credits, AWS has promised 1,058 "full-time equivalent" jobs with a minimum average annual payroll of $101.37 million, a spokesperson for Ohio's Department of Development told Business Insider.

Ohio law defines "full-time equivalent employees" as the result of a calculation, or "dividing the total number of hours for which employees were compensated for employment in the project by two thousand eighty." The employees must be directly employed by Amazon for the company to receive its tax credits, although there is no requirement for the kinds of jobs Amazon must offer.

When BI contacted AWS and asked what types of jobs would be available in its new Ohio data centers, an AWS spokesperson reiterated the information listed in Gov. DeWine's press release, which referred to the jobs as "new" and "well-paying."

Electricity demand rises

AWS's financial commitment to the state will hinge on whether local utilities can provide the amount of electricity the company eventually says it will need.

AEP Ohio, the Columbus utility that serves Amazon, said earlier this year that it received 30 gigawatts of service requests from data centers alone — an amount that would put the region's demand for electricity close to New York City's.

Much of that demand comes from the wealthy suburban enclave of New Albany, Ohio, where Meta, Microsoft, Google, and QTS are all constructing major data center projects. The site of Intel's future semiconductor chip plant is in neighboring Johnstown, Ohio. The New Albany Company, the real estate company founded by billionaire retail mogul Les Wexner, orchestrated many of the area's major land sales to tech companies, including Intel.

For its newest data centers, AWS will look to sites beyond the Columbus region, though no locations have been finalized, according to a statement from Gov. DeWine's office. If AWS locates a data center outside the Columbus region, it would likely be outside AEP's service territory.

AEP has asked Ohio's public utilities regulator to approve a tariff and a special rate class for data centers that would require the power-hungry facilities to pay for the majority of electricity they anticipate needing — even if they ultimately do not consume all of it.

The data center industry, including Amazon, is working to quash AEP's proposal. In a November testimony filed with the Public Utilities Commission of Ohio, Michael Fradette, who leads Amazon's energy strategy, called the proposal a "discriminatory structure" that "unfairly targets data center customers by targeting customers in specific industries."

The matter has sowed division among corporate interests in Ohio. Those who oppose the tariffs include the Ohio Manufacturers' Association Energy Group, a lobbying offshoot of the state's major manufacturing industry trade group, and the Ohio Energy Leadership Council, which is represented by David Proaño, a lawyer in BakerHostetler's Columbus office who also represents Amazon's data center business before the Public Utilities Commission of Ohio.

Meanwhile, Ohio Energy Group, which counts Cargill, Ford, GE, and Intel as members, has testified in favor of AEP's proposed data center tariffs. Walmart, a large customer of AEP in Ohio, has also come out supporting the tariff.

AEP is planning new transmission infrastructure projects to service data centers in the Columbus area, as well as the Intel chip plant. The future of the chip plant, which is supposed to bring 3,000 advanced manufacturing jobs to central Ohio, is uncertain as the company debates spinning off its struggling foundry business.

Rising energy demand from Columbus area data centers has triggered the need for new transmission infrastructure. Under AEP's existing rate structures, the costs of new transmission lines to data centers could be spread to other ratepayers.

Many of AEP's residential, commercial, and industrial customers saw transmission costs rise by $10 monthly in April, the fourth rate increase approved for the utility in three years. Next year, average bill totals will increase another $1.50 a month to support grid reliability, the utility said.

Do you have insight, information, or a tip to share with this reporter? Contact Ellen Thomas via the secure messaging app Signal at +1-929-524-6964.

• Nscale has raised $155 million in Series A funding for its hyperscaler platform.
• The startup offers everything from access to data centers to GPU infrastructure.
• BI got an exclusive look at the pitch memo the startup used to secure the fresh funds.

Nscale, a London-based startup providing companies with access to data centers and clusters of AI chips, has raised $155 million in fresh funding.

The startup, which came out of stealth in May 2024, bills itself as a fully integrated AI infrastructure platform.

As a hyperscaler, Nscale provides the "full stack" of technologies companies need to train and run AI applications like large language models. That includes data centers, software, and graphics processing units, Nscale's founder and CEO Joshua Payne told Business Insider in an interview.

The startup differentiates itself from AI cloud providers, such as Lambda Labs and Coreweave, which offer only specific components, such as GPUs, in the AI infrastructure layer. By providing everything from its own data centers to virtualized GPU nodes, Payne said that the company could leverage better unit economics than its competitors.

"The problem for the industry is chicken and egg. Take an LLM customer — they may want 10,000 GPUs, but they don't have the expertise for that," he told BI. "Many of our competitors don't own their own data centers, so they have to license them. In our case, we have all of that in-house. Given that we are able to own all those segments in the value chain, we're faster and cheaper."

Payne said that Nscale pivoted to focus on AI infrastructure across the full stack after the public release of ChatGPT-3. "So our thesis was, if this is indeed the fourth industrial revolution as people are claiming, then how would you build a resilient AI cloud that would survive commodity cycles? said Payne. "We found the best way to do that was to vertically integrate it, building both data centers, GPUs, and software."

Since it emerged from stealth, it has rapidly grown its pipeline of greenfield data center capacity across Europe and the US from 300 megawatts to 1.3 gigawatts.

The startup makes its money by building data centers, purchasing GPUs, and deploying AI cloud services, which it then leases on an hourly basis. Clients can sign contracts for any given period of time to use the services.

Sandton Capital Partners led the $155 million round, which also included participation from Kestrel, Bluesky Asset Management, and Florence Capital. The startup previously raised more than $30 million in pre-seed and seed funding, with the size of those early-stage rounds reflecting investors' heightened appetite to back startups operating in the AI infrastructure layer.

With the fresh funding, Nscale plans to invest in large clusters of GPUs and also double down on software development for its public cloud platform, which will be released in January 2025.

BI got an exclusive look at the 9-slide memo the startup used to secure fresh funding.