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AI Giant Bets Billions on Colossus Compute Power
21 May
Summary
- Anthropic secured 300 megawatts of compute power.
- The deal with xAI is valued at $1.25 billion monthly.
- This strategy allows AI firms to offset infrastructure costs.
Earlier this month, Anthropic finalized a substantial agreement to acquire 300 megawatts of compute capacity. This deal involves securing the entire output of the Colossus 1 data center, located near Memphis, Tennessee.
Anthropic will pay xAI $1.25 billion each month until May 2029. Details emerging from a SpaceX SEC filing reveal the total value could exceed $40 billion for xAI, with a discounted rate for the initial two months of operation.
This arrangement enables xAI to "monetize unused compute capacity," according to the filing. Either party can terminate the contract with 90 days' notice.
The agreement introduces a hybrid 'neocloud' model in the AI market. This strategy allows AI companies to offset infrastructure costs by acting as cloud providers when their own demand is lower than available capacity.
SpaceX views this as a dual monetization strategy. However, it suggests xAI may have overbuilt its compute resources and is now seeking to monetize them ahead of a potential public offering, selling capacity to a competitor amidst declining usage of its Grok assistant.
