Elon Musk’s xAI reportedly will spend $18B+ more on Nvidia chips for Colossus 2 data center – News

New details have emerged about the Colossus 2 data center that xAI Holdings Corp. is building near Memphis.

Work on the facility reportedly began this past March. On Sunday, the Wall Street Journal cited a source as saying that xAI will buy 300,000 graphics processing units from Nvidia Corp. to power the data center. The purchase is expected to set back the company at least $18 billion, a sum that doesn’t include related equipment such as servers. 

Musk founded xAI two years ago to compete with OpenAI, which he is currently suing for not open-sourcing its large language models. The former company launched its first data center, Colossus, last year, on the site of a former consumer electronics factory in Memphis.

Colossus hosts 200,000 Nvidia processors, most of which are not based on the chipmaker’s latest Blackwell architecture. The Colossus 2 data center will improve upon its namesake both in chip quality and quantity. It will feature 55,000 Blackwell chips at full capacity.

According to the Journal, xAI is building a power plant in Mississippi to support Colossus 2. It’s being built on a 114-acre site that hosted an existing, defunct power plant before construction began. Construction crews hired by xAI are reportedly in the process of removing the previous facility’s equipment.

According to regulatory filings spotted by the Journal, the company plans to run transmission lines from the power plant to the Colossus 2 campus. That suggests xAI will also build substations as part of the project. A substation is a system that lowers the voltage of the electricity from a transmission line to a level suitable by end-users.

Once operational, xAI’s power plant will generate more than a gigawatt of electricity. That’s enough to power nearly 1 million households. According to the Journal, Colossus and Colossus 2 will together consume more energy than all of the homes in Memphis.

Cooling the chips in the facilities will reportedly require “millions of gallons of water a day.” In February, xAI announced plans to build a wastewater treatment plant as part of an effort reduce its environmental footprint. The $80 million facility will enable the company to reuse about 13 million gallons of wastewater per day.

The artificial intelligence developer may have to raise more capital to finance its infrastructure investments. According to the Journal, xAI recently told creditors that it expects to lose $13 billion this year. In July, rumors emerged that the company is seeking to raise funding at a $170 billion to $200 billion valuation.

Image: Nvidia