Elon Musk is raising more funds for his artificial ininformigence startup, which is already burning through cash. This time, he requireds up to $12 billion to build another massive data center.
Musk’s latest venture, xAI, which is best known for its chatbot Grok, has raised at least $20 billion so far in equity, venture capital, corporate debt, and sales of stock and debt. Included in that funding was a $2 billion investment from his own company SpaceX.
Last year, xAI built Colossus, its first giant data center in Memphis, Tennessee. It currently houtilizes 200,000 graphics processing units, or GPUs, creating it one of the world’s largest clusters of AI chips.
Now Musk is turning to private-equity investors like Valor Equity Partners to raise $12 billion for its second data center, Colossus 2, the Wall Street Journal reported. Valor has a history investing in Musk-owned companies like SpaceX, Tesla, and the Boring Company.
Musk hasn’t had trouble raising funds from huge hitters in the past. Some of xAI’s high profile investors include Andreessen Horowitz, Sequoia Capital, and Nvidia.
While xAI last fundraised at a $75 billion valuation, per Bloomberg, it is far from profitable and generates little revenue. The startup was projected to burn through about $13 billion in cash in 2025, according to projections shared with potential creditors, the Journal reported.
Much like his AI chatbot, Musk’s data center has been shrouded in controversy. In April, a coalition of environmental groups released a report claiming that xAI was running more than double the number of gas turbines than it had applied for, WREG Memphis reported. Memphis Mayor Paul Young notified the news organization that the additional turbines were not being utilized, per his conversations with xAI leadership.
Earlier this month, the environmental groups joined forces with civil rights group NAACP and filed a permit appeal to stop xAI from applying gas-burning turbines to power its data center, NBC reported.
Leave a Reply