Could Memphis Have Capped Musk's Colossus 2?

Okay – I know this is long – but stick with me.

The xAI files

Every essay in this series is pinned to a question on the board at rachelandthecity.com/the-xai-files.

Elon Musk says he could more than double the chips in Colossus 2 by the end of the year – so where’s all the power gonna come from, and does Memphis get any say?

Late on September 24th, Musk posted his chip count on X. He said Colossus 2 has 550,000 Nvidia chips – those are the chips that do the actual AI work. Then he said another 220,000 would be “fully operational next week.” He said another 220,000 would come in November – and “if we get lucky,” another 220,000 by late December.

So he wants 660,000 more chips in there by the end of the year. That’d put Colossus 2 at about 1.2 million. And it’s already a monster.

Epoch AI – a research group that tracks AI data centers – ranks Colossus 2 as the biggest one in the world right now, by its estimate of computing power. The second one is Microsoft in Atlanta, and it’s not even close.

Most of the news stories said all of this is in “Memphis.” Musk’s post doesn’t name a city or a state at all. In June, two xAI employees swore in federal court that about 550,000 chips sit at two sites. One’s on Tulane Road in Whitehaven, in Memphis. The other one’s right across the state line, on Stateline Road in Southaven, MS.

There are six questions on my board about xAI. This one gets at two of them – “What did they build, and how did they do it so fast?” and “Who is in charge of what they built, and who oversees it?”

It also takes a run at a third – “What are the current solutions being proposed?” – cause the big one on the table in Memphis right now is the moratorium.

The “so fast” part has always been about power.

SpaceX owns xAI now. It told investors this year that it brought both Colossus campuses online “almost entirely” on power it built itself. That’s because they brought in their own gas turbines. Elon’s companies agreed to buy billions of dollars’ worth of gas turbines this year – and in May, a federal notice named Elon as the buyer of a whole gas turbine company.

SpaceX also told investors how much power this kind of chip takes. Its filing says a round of “at least 220,000 additional GB300 processors” comes with “over 400 additional megawatts.” Musk’s new batches are the same kind of chip, 220,000 at a time – and he wants three of them in by the end of the year, the third one “if we get lucky.”

So by SpaceX’s own numbers, if all three come, the new chips would need more than 1.2 gigawatts. A gigawatt is 1,000 megawatts. MLGW’s president told the City Council on October 6th that MLGW’s peak last year was 3,436 megawatts. That’s the most power all its customers pulled at one time all year. So the new chips alone would need more than a third of that.

However – MLGW’s president also said all of MLGW’s substations together have “more than 6,000 megawatts of capacity” – almost double last year’s peak. But he was clear that’s the lines, not the power plants: “We’re not generating energy.” So – the room on MLGW’s system is there – I am not saying it’s not.

But let’s look at what’s supposed to power all of it.

In June, xAI swore that the temporary gas turbines on Stanton Road in Southaven were, right then, “the only available power source” for its Tulane and Stateline sites – I’ve written about those turbines a bunch. Mississippi’s deal with the company gives each one a date to stop running, and the last ones are due to shut off by July 14th, 2027.

What’s supposed to replace them is the permanent plant Mississippi approved in March – 41 turbines, about 1.2 gigawatts. The air chief at Mississippi’s environmental agency, MDEQ, wrote in September that five of its turbines weren’t finished yet – the manufacturer was still testing them and starting them up. In MDEQ’s records through September, those five were the only ones ever certified as built, and all five got withdrawn.

And if all three of Musk’s batches come, the new chips alone would need about as much power as that whole plant is built to make – before you even count the 550,000 chips already running.

SpaceX told investors Colossus 2 is “expected to be primarily powered by a dedicated natural gas power plant,” with more grid power added “over time.” So on SpaceX’s own word, gas isn’t the bridge to the grid – it’s the plan.

xAI does have a plan for powering more chips – its own lawyers said so – you just can’t read it. In the NAACP’s lawsuit over the Southaven turbines, xAI and its company MZX asked the judge to seal their “plans for deploying additional GPUs” at Tulane and Stateline “and meeting the corresponding power demand.”

The judge agreed. The NAACP’s lawyers have the full version. The public version has those parts blacked out.

And that’s where Memphis comes in. You don’t have to count anybody’s chips if you cap the power – and if the Memphis City Council had put a power cap on data centers early last year, xAI couldn’t have kept building out the Memphis side of Colossus 2 the way it has.

Counting chips inside somebody’s building would be a mess – but capping how much power a data center gets to use is something cities and counties are already doing.

Run SpaceX’s own numbers, and a power cap is a chip limit. A 100-megawatt cap works out to about 55,000 of those chips, tops. A 25-megawatt cap is about 14,000. For scale – Epoch figures Colossus 2 is already drawing about 946 megawatts just to run its computers.

Other places are already doing it.

This summer, a planning commission in Lexington, KY recommended a 25-megawatt cap per data center. Last month, Spartanburg County, SC paused new data centers over 65 megawatts for a year. And Nashville’s new rules ban data center campuses over 100 megawatts or 500,000 square feet in Davidson County.

And Memphis council members do know how to write rules around megawatts. Councilman Jeff Warren’s Ordinance 5986 – introduced this September – calls any data center at 20 megawatts or more a “Large Data Center.” It counts adding computing power as an expansion that has to get looked at – so you couldn’t just keep sliding more chips into a building. It also says a new data center can’t run on fossil-fuel generators as its everyday power. Right now – it’s still just a proposal.

The version of the moratorium the City posted for the October 6th meeting goes a step further on how to measure. It counts a site’s power use “before subtracting onsite generation or storage.” In plain English – bringing your own turbines and batteries doesn’t get you out of it.

That part matters, cause xAI swore in June that those turbines across the state line were “the only available power source” for its Tulane site in Memphis – so not MLGW. Memphis can’t touch a turbine in Mississippi. But a rule written like that doesn’t care where the power’s made – it counts everything the building in Memphis uses. Put a cap on that number, and turbines in Mississippi can’t get you around it.

Now look at the timeline.

The goal was out in the open before last year even started. On December 4th, 2024, xAI announced at a Greater Memphis Chamber lunch that Colossus would grow to “a minimum of one million” chips – and Action News 5 reported the plan was to finish by 2026.

In February 2025, xAI’s company bought the Tulane Road land. Seven weeks later – on April 15th, 2025 – a permit to turn the warehouse on that land into a “Data Center” was filed with the City.

Then the build just kept going.

In April 2026, a permit went in for a 312,000-square-foot building at 5414 Tulane Road, right next to Colossus 2 – and the owner on it is xAI’s company, MZX. In July 2026, a permit was filed at that same address for “Ph 6 & 7 – Dry Coolers” – that’s the equipment that keeps chips from overheating. And now Musk says up to 660,000 more chips for Colossus 2 by the end of this year.

Every bit of that came after the million-chip goal was public. A power cap passed early last year would’ve been on the books before the Tulane “Data Center” permit was even filed. Even one passed late last year would’ve been on the books before every new Tulane permit since.

The council’s lawyer, Allan Wade, told the council this month that new rules only work going forward – they can’t touch projects that are already locked in. He said a company can lock in once it asks for a permit and starts spending money, if there’s no review in place before the permit. That’s exactly why last year mattered.

A power cap on the books early in 2025 would’ve applied to every new building and every new batch of chips on Tulane Road since.

Instead, Warren’s ordinance came in September of this year.

The council did take up a bill last year that would’ve put rules on data centers – Ordinance 5947, Councilwoman Yolanda Cooper-Sutton’s environmental rules, with Warren as a co-sponsor. It passed two readings, got held three times, and was withdrawn in September 2025 with no final vote. It didn’t cap power. The one xAI ordinance the council did pass last year, Ordinance 5953, was about where some of xAI’s tax money goes – not rules.

So they worried about the money – but not about limiting the buildout.

The moratorium wasn’t introduced until August 18th of this year – and the final vote’s been pushed to October 20th. On top of that, as written, it leaves out any application that was already legally locked in before it was introduced.

The Mayor’s office is finally moving now too. On October 9th, Mayor Paul Young signed an executive order for a 90-day study of data center rules – zoning, air, water, power, noise and infrastructure – with a report back to him at the end. The order doesn’t pause anything. It adds at least five business days to the City’s engineering review of permits while the study runs.

The order says that extra review is because of “public concern and the unknown overall impact of data centers.” The City’s press release that same day quotes the Mayor: “From day one, we’ve worked to address the impact of data centers on our energy, water, and infrastructure.”

Those concerns aren’t new. Back in March 2025, the Mayor posted that he understood “the concerns that have been raised about air quality, the use of natural gas turbines, and the potential strain this project could place on our water supply.” The City did commission air sampling that June – two days at three sites – and its own release called that “only a snapshot in time.”

A study like the one he just ordered should’ve happened last year too. Even Councilwoman Pearl Eva Walker told the Commercial Appeal, “With respect to guardrails, this is something that we should have done two years ago.”

And we know Memphis could’ve done this – because Nashville did. Nashville council member Rollin Horton filed Nashville’s data center rules on May 26th of this year, and the Metro Council passed them 36 to 0 on July 21st – eight weeks, start to finish. Nashville’s mayor also signed an order for a two-month study on June 15th, while the council’s bill was moving.

Those same rules limit gas and diesel generators to backup, testing and emergencies. And just like Wade said about Memphis, they don’t reach data centers that had already applied before they passed.

Nashville and Davidson County are one government, and Memphis shares its zoning code with Shelby County and has to go through the Land Use Control Board. But Nashville still had to go through its own planning commission, a public hearing and three votes. More steps make it slower here – they don’t make it impossible.

There’s a catch, and it’s a big one.

A Memphis cap couldn’t have stopped xAI from building in Mississippi – and that’s exactly where it’s been growing.

Southaven’s planning director has said data centers are allowed by right there under the city’s industrial zoning. xAI’s company MZX bought the Stateline Road building in Southaven in December 2025. And this September, Southaven OK’d plans for another xAI building – the news called it a data center, and Southaven’s own agenda called it a “storage warehouse.” So a Memphis cap could’ve pushed the chips across the state line.

And the turbines are already there. The study I wrote about in September was a model done for the Southern Environmental Law Center. It found Shelby County – our side of the line – would carry 63.8% of the total exposure to the permanent plant’s pollution.

And that buildout cap would cost the City money. The City’s own tax records show xAI paid $16.2 million this year in taxes on the equipment at the Tulane site. Fewer chips in Memphis would mean less of that. And every chip that goes into a Mississippi building pays Memphis nothing, while we still get the air.

Today Councilman JB Smiley Jr. – he’s the lead sponsor of the moratorium – posted a video asking people to pack the council meeting on October 20th at 4 PM. His caption says, “ALL ROADS STILL LEAD TO THE MEMPHIS CITY COUNCIL!” It also says, “it’s NEVER too late to get on the right side of an issue!”

He’s right – all roads do lead to the Memphis City Council. But it’s the same road that led to the same place last year.

On October 8th, Wade told the council a moratorium now would “pretty much give xAI a monopoly for a while.” A power cap early last year would’ve done the opposite.

It would’ve put a number on how big Colossus 2 could get in Memphis – before Musk ever got to post his.

So, was all this slow walked to give xAI plenty of time to become the biggest data center campus in the world – or was just nobody paying attention?

I guess that’s another question for the board.

If you like facts-first info on all this, consider leaving a tip on Venmo or PayPal – this stuff takes a lot of time to put together. And check out everything I’ve written with citations and receipts at the xAI Files.

Could Memphis Have Capped Musk’s Colossus 2?

The xAI files

Sources

The xAI files

Sources

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