Elon Musk’s New Data Center Signals ‘Urgency’ for New Facilities

Elon Musk recently made headlines again on the news that his long-awaited xAI data center is now in operation. Although it’s common for Musk-endeavors to generate ink, in this case it's arguable that the Memphis-based plant’s potential power capacity may have garnered more attention than its famous proprietor.

According to media reports, the xAI data center represents a giant leap forward in data center operations thanks to its ability to run “100,000 advanced Nvidia chips at the same time”  — an unprecedented volume that Musk credits to the “most powerful known computer ever built.” which is at the heart of the facility.  

If these claims are accurate, not only does the new data center serve as an important landmark for xAI, a company that’s been in business less than a year, but the new facility may also point to where data centers of tomorrow are headed, says  Ash Aly, Avestix’s Chief Technology Officer. 

“On one level, Musk achieved something in just a few months that normally would take years to complete,” he says. “And that is a really good measure showing the urgency that the data center industry is feeling right now to build new, advanced facilities capable of supporting the intense data demands that AI has created.”  

But Aly says that’s only part of the story.    

“Musk added some very cutting-edge components to this facility's infrastructure. He has made a substantial allocation to a project that was only announced just a few months ago. If you zoom out, you'll see that he installed a substantial chunk of the graphics processing units, or GPUs, which are clusters, or groups of computers, capable of providing accelerated computing power for specific computational tasks, like image and video processing. This is a monumental task— something that normally would take 4 years to do — and xAI completed in a month,” says Aly.  

As Avestix shared last month, the data storage industry is experiencing a growth explosion. Analysts predict the number of U.S. data centers will grow 160 percent by 2030. 

“Big industry players are making big, bold moves because they all want to be heavyweights in the data center game,” says Aly. “We're in a race and we know who the biggest players are, right? The only companies that can even afford to do this are really big companies like Facebook, Google and OpenAI. There are others. But really, the sheer numbers suggest that only those big players can get in, and now Elon Musk is also in that game.” 

So far, much of the “game” has been played in Virginia, a state that lays claim to 70 percent  of all global internet traffic, making it the “world’s undisputed data center capital.” Musk selected Memphis as the location for his data center, suggesting Tennessee too wants to be a data center contender.    

“One of the reasons the sunbelt is popular for data centers is because they have sunshine all year, which can power solar energy," says Aly. 

But it’s not the dependency on sunshine that concerns local activists. Virginia environmentalists have long complained about the alleged damages that data facilities there have done. Similarly, there was an outcry among local community members and environmental groups in and around Memphis concerned about the new plant's environmental impact.  

“It's just a matter of the energy infrastructure catching up to our demands for data,” says Aly. “The biggest environmental impact of data centers is tied to energy use. The good news is there are a lot of these technologies that can be hooked up to clean energy sources, including solar power, wind power, geothermal power and clean-burning fossil fuels.”   

Aly believes the hunger for more data facilities may help expedite a concurrent demand for more sustainable energy sources. 

“If everything is going to be powered by AI, which it is, then data and clean-burning energy are also going to be everything,” he says. “This combination — the demand for data and the energy demand — will probably control the two biggest levers in technology for a long time to come. There are going to be a whole bunch of new investments into these kinds of technologies. They're going to be the infrastructure of a new, smart economy — the infrastructure of the future.”  

Next steps

Want to know more about data center construction and how new technologies can support a more sustainable future? Contact Avestix to determine if the Avestix Real Estate Fund is right for your investment strategy.