Elon Musk's plan to build some of the world's most powerful supercomputers in Memphis, Tennessee, has run into vocal opposition from community and environmental groups for the threat they might pose to air pollution and water quality.
But, so far, opponents have done little to slow what is being called Colossus, the twin initiatives of xAI, the Musk-led company that is building data centers to house artificial intelligence supercomputers. Opponents said the facilities are likely to worsen asthma rates in the nearby communities that already have some of the state's highest rates for the respiratory ailment, and will use too much water.
The first xAI project in Memphis, at a former Electrolux appliance factory in southwest Memphis near the Mississippi state line, started operations in June 2024.
XAI kicked off its second Memphis project in March with its $80 million acquisition of a 1 million-square-foot industrial building at 5420 Tulane Road and its surrounding 108 acres of undeveloped land, according to CoStar. The second project site is also in southwest Memphis and is expected to come on line between December 2025 and March 2026, Musk recently said on CNBC.
XAI powers the chatbot Grok, and the company is one of a handful that is constructing data centers to house supercomputers that can process AI functions, an industry projected to grow exponentially in the coming years and spur more competing businesses that xAI would have to fend off. Consulting firm McKinsey & Co. in October estimated that demand for AI-data center capacity will rise at an average yearly rate of 33% between 2023 and 2030.
Some business leaders and elected officials in Memphis have embraced Musk's arrival and the associated economic development.
The new firm "is setting the stage for Memphis to become the global epicenter of artificial intelligence," the Greater Memphis Chamber of Commerce said in a December statement.
"This isn't a debate between the environment and economics," Memphis Mayor Paul Young wrote, signaling his support in a June 12 column in the Commercial Appeal. "It's about putting people before politics. It's about building something better for communities that have waited far too long for real investment."
Power generation concerns
But AI supercomputers require immense amounts of electric power, and an adequate power supply must be obtained to make the projects work. XAI has reached agreements with the Tennessee Valley Authority and Memphis Light, Gas and Water to source electric power, and the company constructed a substation at its first data center property.
Opponents slam the data centers for the usage of gas turbines to supply electric power, a setup they said will worsen asthma rates. Memphis already has the highest asthma rate among the largest cities in Tennessee, according to the Asthma and Allergy Foundation of America.
"Smog isn't just a South Memphis problem. It's a Shelby County and Memphis Metro problem," Tennessee Rep. Justin Pearson said in a June 5 statement. "Dangerous levels of pollution … threaten our children, seniors, outdoor workers and anyone with breathing issues," Pearson said about the Musk projects.
Groups have also raised alarms about the xAI facilities' water requirements, which the Commercial Appeal reported is about 1.3 million gallons daily. That is the equivalent of a swimming pool as long as a football field, 50 feet wide and 10 feet deep.
Environmental and Memphis community groups have raised concerns through public announcements and legal moves, though none of the actions appear to have slowed Musk's project.
XAI, a privately held company based in San Francisco, did not respond to CoStar News' email requests for comment.
Intent to sue
The Southern Environmental Law Center contacted the U.S. Environmental Protection Agency on June 17 to alert the agency of its intent to sue over xAI's use of unpermitted gas turbines. The turbines produce hazardous chemicals like formaldehyde, which are tied to increases in asthma, respiratory diseases, heart problems and cancer, SELC said.
"XAI's decision to install and operate dozens of polluting gas turbines without any permits or public oversight is a clear violation of the Clean Air Act," Patrick Anderson, senior attorney with the Charlottesville, Virginia-based organization, said in a statement.
For the first phase of Colossus, xAI leased a 785,000-square-foot building at 3231 Paul R. Lowry Road from Phoenix Investors, which acquired the property in 2023 for $35 million, according to CoStar data. That facility had 35 gas turbines in operation in March, according to SELC.
An EPA spokeswoman declined to comment when reached by email.
XAI and its local backers said the company is taking steps to address concerns from the community and environmental groups. The Greater Memphis Chamber noted that xAI is developing an $80 million facility to recycle wastewater used in the cooling process for its data centers.
XAI's backers in Memphis also said the company is good for the local economy and has already attracted additional economic development, with tech companies such as Nvidia, Dell and Super Micro Computer announcing plans to open new facilities in Memphis. XAI is hiring about two dozen positions in Memphis, according to its website.
More AI investment
Another challenge: xAI has rivals that are also racing to develop AI supercomputers.
OpenAI, backed by Microsoft, Oracle and others, is developing a $500 billion data center campus called Stargate, located in Abilene, Texas, and at sites outside the U.S., to house AI supercomputers.
But xAI has major financial partners, too, including BlackRock, Fidelity Investments and the venture capital firms Sequoia Capital and Andreessen Horowitz, according to media reports.
And for its Memphis project, xAI has apparent support from the business community and some elected leaders, despite the warnings about its effects on the environment.
Mayor Young proposed the creation of a fund, using tax revenue generated by the xAI facilities, to reinvest in the southwest Memphis neighborhoods where the data centers are located, according to a local media report.
XAI's investment in Memphis "reinforces Memphis's position as a premier destination for technological innovation," Ted Townsend, CEO of the Greater Memphis Chamber, said in a March statement.