Power & Sites · United States

After the midterms, things are looking rocky for Elon Musk and data centers

Credited to TechCrunch · techcrunch.com · 7h ago

Democrats’ historic victory in this week’s midterm elections could also have a dramatic effect on the tech industry.

In dozens of local ballot measures, voters rejected data centers. And even when they weren’t voting on the issue directly, they were electing politicians — like Texas’ new governor-elect Gina Hinojosa — who campaigned on the promise of restricting data centers.

On the latest episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane, and I discussed what the midterms mean for the tech industry. Sean kicked it off by noting that Elon Musk “seems to have basically nothing out of donating half a billion dollars” to Republicans, while his companies are now headquartered “in a state that has, remarkably, turned about as blue as it could possibly turn.”

And Kirsten said that while data centers probably weren’t the main cause of the “blue wave,” they’ve become an “an increasingly grassroots issue, in part because of how hyperscalers and companies have gone about” getting their projects approved. And now, “we’re already seeing companies like OpenAI all of a sudden go, ‘Actually, we can change our policies.’”

Keep reading for a preview of our conversation, edited for length and clarity.

Sean O’Kane: First off, let’s talk about the fact that one of the biggest data center builders was also the largest donor to the Republican Party. Elon Musk seems to have gotten basically nothing out of donating half a billion dollars — maybe even more, by the time we see the final count — and in fact is now sitting there with all of his businesses in a state that has, remarkably, turned about as blue as it could possibly turn for the first time in a very long time, if ever.

That, I think, is the biggest thing hanging above a lot of this discussion. But, there were also a bunch of ballot measures up around the country that would have paved the way for data centers to get built faster. Almost all of them got shot down, or voted against. [Actually, many of the ballot measures would have imposed restrictions or moratoriums on data centers, and almost all of those measures passed.]

With [Democrats] in power, there is a consensus view, at least in the tech world, that this is going to mean we have a lot of roadblocks ahead for data centers, especially in places like Texas, where [you have] folks like the governor-elect [Gina] Hinojosa, who has spoken pretty openly about this being a campaign promise and something that she wants to focus on once she takes power, now that she’s beaten Greg Abbott.

It’s the thing that I think the tech world is maybe a little too focused on. I’m curious what you guys think about that.

Anthony Ha: I don’t necessarily think that they’re too focused on it, but I understand why it would feel a little bit disproportionate — the data center ballot measures, certainly there were a number of them, but it wasn’t something that was on the ballot everywhere.

And in different races, the dynamic might have been a bit different, but there was this undercurrent and sense that it seems to be an issue that reaches across the country, that is bipartisan in a lot of ways, but that the Democrats seem to have been more effective at harnessing that energy. And of course, there’s all kinds of reasons why the Democrats did so well on Tuesday, but it does seem like anti-AI and especially anti-data center sentiment was a big part of it. That seems like a pretty potent political force.

The next two years, [and] potentially beyond that, are going to be more difficult for tech companies in general, and hyperscalers, data center companies in particular. I also imagine that they have to be a little bit worried about: Is this going to continue to be an issue, not just with the people who got elected this year, but potentially in 2028 and beyond?

Kirsten Korosec: Absolutely. I don’t think that the data center issue is what brought everyone to the polls and led to the quote-unquote “blue wave.” However, I will say that data centers have been an increasingly grassroots issue, in part because of how hyperscalers and companies have gone about getting these data centers [approved] — very secretive, oftentimes requiring NDAs of a elected officials or appointed officials, not sharing information about the scale of a project in very environmentally sensitive areas, including in the Southwest, where there’s very much a water scarcity issue.

So I think that a lot of folks — Republicans, independents, and Democrats — all saw this as wrong. They were motivated by it, but I don’t think it was a singular issue.

Now, here’s the interesting thing. There was a lot of waving of hands about how [AI companies] can’t possibly operate under any other circumstances. And we’re already seeing companies like OpenAI all of a sudden go, “Actually, we can change our policies.” They just released what they call a compute campus policy blueprint. And guess what? They’re not going to require NDAs anymore. They’re going to share their plans and supposedly operate in less secrecy.

I think what this shows is that when you put up either a regulatory certainty in the marketplace, or at least signals of going in that direction, then corporations will respond. If you don’t do that, they will not necessarily do the thing that we hope that they will do.

Anthony: One thing I want to emphasize is that they’re calling it this [their] “compute campus policy.” And part of what that’s doing, beyond laying out these policy changes, is also an attempt to rebrand data centers, because they have become such a toxic phrase. So they’re not data centers anymore, they are compute campuses, and I’m curious, whether either of you think that’ll take.

Sean: I mean, this is ridiculous. Come on. It’s not going to change anything. It’s going to cause them more effort. For a company that likes to say that it’s no longer focused on side quests, OpenAI still loves to go in different directions a lot. And this is just the latest kind of thing where it’s just like: Why are you spending time on this at all? It doesn’t really seem like it’s going to move the needle.

Kirsten: I have a great idea for OpenAI. Because in the spirit of making threatening things seem cute, they should 100% create a compute campuses avatar, [a] cutesy thing, and then just present that instead of a power-, energy-sucking, water-sucking data center.

Anthony: And if these are just lovely compute campuses, they should just build their own offices there or work next door, see how that works out for them.

Something else that I’m wondering about is, to what extent the election is maybe the second part of a one-two punch. [We’ve just seen] a big shift in how Wall Street is reacting to a lot of these hyperscalers and AI companies and this sense that [investors] are not excited about the idea that they should be spending all this money building new data centers, spending all this money on compute. And so there’s a financial incentive not to build all these data centers.

I’m very curious how that’s going to play out. [From a regulatory standpoint,] it’s probably going to be harder to build data centers. Wall Street is probably not going to reward you for building data centers. But at the same time, to get to the scale that they want to get to, they are probably going to need to build data centers somewhere.

Power & SitesUnited States

SpaceX linked to a 6 GW data-center proposal in Arizona

Credited to Rackline · Priya Nair · cochise.az.gov14h ago

Useful

A developer seeking county approval for a 6-gigawatt AI data-center campus in Cochise County, Arizona, said in a Nov. 4 statement that SpaceX would host the project's community town hall. It is the only mention of SpaceX in the county's case file.

Tombstone Resources L.L.C., which lists an Atlanta address, has applied to the county for a special use permit in case SU26-22. It wants to build up to nine computing buildings on about 747 acres along U.S. Highway 191 near Cochise, next to the Apache Generating Station run by Arizona Electric Power Cooperative, or AEPCO.

The statement, on Tombstone Resources letterhead and posted by the county, set the town hall for that evening at Cochise Elementary School. The 54-page application does not name SpaceX. It says the campus would train and run AI models mainly for the applicant and its affiliates. SpaceX has made no SEC filing that mentions the site, Cochise County or Tombstone Resources.

The application describes four phases reaching about 6,000 megawatts at full build-out, starting with a first phase of about 1,500 MW. Each building would cover about 493,000 square feet. The plan includes 24 gigawatt-hours of battery storage and dry cooling with no cooling towers.

Power would come from the grid. Sulphur Springs Valley Electric Cooperative, or SSVEC, the local distribution co-op, would provide retail service, and AEPCO would supply wholesale power and transmission. There is no on-site power plant, only the batteries and natural-gas standby generators for critical loads.

The applicant says it would pay for about $3.6 billion of transmission and substation work in the county across the four phases, with about $0.5 billion in the first phase. The money would flow through a three-party electric service agreement with the two cooperatives, which would build and own the equipment.

Cochise County campus: first phase and full build-out

Figures from Tombstone Resources' Oct. 30 application in Cochise County case SU26-22.

Table showing the first phase at about 1,500 MW with about $0.5 billion of grid work, growing to about 6,000 MW and $3.6 billion at full build-out.
Stage	Electric demand	Applicant-funded grid work ($bn)	Operations staff	Timing in application
Phase 1	1,500 MW	1	250	Construction power targeted March 2027
Full build-out (4 phases, 9 buildings)	6,000 MW	4	1,000	Not stated

Source: Tombstone Resources L.L.C. Special Use Authorization application, Cochise County SU26-22 (Oct. 30, 2026)All figures approximate as stated by the applicant. SSVEC's Oct. 28 letter gives the applicant's initial-service target as April 2027. Grid figures depend on an agreement not yet filed with the Arizona Corporation Commission.

That agreement still needs the Arizona Corporation Commission. Both co-ops say it will be submitted under a streamlined large-load process the commission approved on Aug. 27 in docket E-01773A-26-0123. Under that process, commission staff aim to issue a recommendation within 90 days, testing whether the deal serves the public interest, whether its rates are reasonable and whether other customers would subsidize the data center. No Tombstone agreement had been filed in the docket as of Nov. 7.

SSVEC's project website says no agreement has been finalized and that all of its figures are estimates. It says the developer would pay for every upgrade needed to serve the campus. The applicant says the deal would cut SSVEC bills by 10% to 40% and send $13 million to $53 million a year to the SSVEC Foundation, figures it ties to commission approval.

AEPCO's Oct. 29 letter says preliminary studies show the first phase can be served with identified network upgrades. Later phases are expected to need more generation and transmission.

The application targets electric service for construction in March 2027, with first-phase computing load following as transmission is finished. SSVEC's Oct. 28 letter gives the applicant's target for initial service as April 2027.

Water use at full build-out would be about 7 to 10 acre-feet a year, mostly for staff, with no new well, according to the application.

The county Planning and Zoning Commission will hear the case on Dec. 9. The county moved the start to 2 p.m. from 4 p.m. because of public interest, and written comments for the meeting packet are due Nov. 27 at noon. The commission's decision is final unless appealed to the Board of Supervisors.

Source · cochise.az.gov

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Power & Sites · United States

OpenAI receives $11 billion in funding, Bloomberg reports

Credited to Rackline · Rachel Okonkwo · theedgemalaysia.com · 14h ago

Sarah Friar at MoneyConf in Dublin on June 12, 2018, when she was Square's chief financial officer.

OpenAI has received roughly $11 billion in the first close of a new financing round that values the company at $1.25 trillion, Bloomberg reported, citing people familiar with the transaction. The money had been wired to the company by Friday, Nov. 6, according to the report.

The round could grow to as much as $20 billion in the coming weeks, Bloomberg reported. That prospective total includes the first close. OpenAI's earlier financing included commitments funded in stages over several months, so the amount announced and the cash received can differ for some time.

OpenAI’s new funding round

The possible total includes the reported first close; it is not additional money already received.

OpenAI's reported roughly $11 billion first close is part of a possible total of up to $20 billion, not additional to it.
Measure	Reported amount and status
Reported first close — Nov. 6	Roughly $11 billion. Bloomberg reports cash wired by Nov. 6; Reuters separately reports the close.
Possible final round total	Up to $20 billion. Bloomberg: prospective total including the first close, not a completed total or committed remainder.

Source: Bloomberg via The Edge (Nov. 7); Reuters via StreetInsider (Nov. 6).Reported figures. The possible total includes the first close; the remaining amount is not established as committed.

Coatue Management and T. Rowe Price put money into the first close, according to Bloomberg. It reported that SoftBank, Sequoia Capital, Founders Fund, Andreessen Horowitz and a group of investors from the United Arab Emirates were also taking part in the wider round. Reuters, citing two investors, named SoftBank and the Abu Dhabi investment company MGX. Neither report gave individual check sizes.

OpenAI first sought $30 billion or more at a $1.4 trillion valuation, then scaled back its plans during a selloff in listed AI stocks, Bloomberg reported. Reuters put the initial valuation goal at $1.5 trillion. Neither report includes an offering document establishing the original terms.

Chief Financial Officer Sarah Friar disputed the suggestion that OpenAI was raising less at a lower valuation when asked in a CNBC interview on Friday. She said the round was still open and that she was confident in it. She did not say how much had been funded.

The new money follows a much larger round. On March 31, OpenAI said it had closed $122 billion in committed capital at an $852 billion post-money valuation. Amazon, Nvidia and SoftBank anchored that round, Microsoft continued to invest, and institutional investors included Coatue, Sequoia and accounts advised by T. Rowe Price Associates.

Some of that capital was funded in installments. SoftBank said on Oct. 1 that it had paid a final $10 billion installment, completing the $30 billion follow-on investment it announced in February. That disclosure covers the March round and says nothing about SoftBank's reported role in the new one.

Amazon's February securities filing also split its commitment in two. It set out a $15 billion initial investment and a further $35 billion that depends on conditions, including specified milestones or a public listing.

OpenAI has sold shares to individuals before. In March the company said bank distribution channels had raised more than $3 billion from individual investors in that round. Bloomberg reported that OpenAI is again working with investment banks to raise money from wealthy individuals and retail investors, without naming the banks or the amounts.

The reports do not disclose allocations between institutions and individuals, so they do not establish whether that mix has changed from March.

OpenAI has tied its fundraising to buying computing capacity. In February it linked its financing to a strategic partnership with Amazon and to additional Nvidia infrastructure, including three gigawatts of inference capacity and two gigawatts for training. Those arrangements predate the new round, and none of the reports ties specific spending to the November money.

The reports describe new money going to OpenAI rather than sales by existing shareholders. None discloses a share purchase agreement, share count, investor protections or any secondary sale. Without those terms, the headline valuation does not show how much of the company the new investors own or what rights they hold.

Sarah Friar at MoneyConf in Dublin on June 12, 2018, when she was Square's chief financial officer. Photo: Stephen McCarthy/MoneyConf via Sportsfile, “SM1_1478”, CC BY 2.0 (https://creativecommons.org/licenses/by/2.0/). Source: https://www.flickr.com/photo.gne?id=27881146027 . Uncropped; no alterations. ©SPORTSFILE.