xAI's Memphis Neighbors Push for Facts and Fairness

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Last year, Elon Musk's xAI set up its "Colossus" supercomputer in an old Electrolux manufacturing facility in Memphis, Tennessee. Now, the residents of nearby neighborhoods are pushing for facts and fair treatment as the company looks to expand its footprint amid questions about its environmental impact. I considered the state of play by talking with Dara Kerr, a reporter for The Guardian, and Amber Sherman, a Memphis activist, and reviewing local media reporting over the past year.

What follows is a lightly edited transcript of the discussion.

Local media montage:

Memphis may be the next high-tech hub if billionaire Elon Musk gets his way.

It's being called the world's largest supercomputer.

This is a multi-billion dollar investment, bringing jobs and major money to our beloved city.

Justin Hendrix:

The race to build artificial intelligence systems is driving what McKinsey Consulting estimates is a multi-trillion dollar global round of investment in computing infrastructure. The speed of the investment in the development of data centers and other facilities is driven by the race to build ever more powerful models. But many communities in the US and beyond, the pace of these developments is creating substantial friction as corporations seek to partner with local governments to rapidly install facilities that use substantial electricity and water resources, in some cases create various forms of pollution and other externalities. While there are stories of disputes over data center and other infrastructure development across the United States and around the world, one story stands out.

In June last year, Ted Townsend, Greater Memphis Tennessee Chamber of Commerce president and CEO took to the stage at a press conference to announce what he called a historic event for Memphis, a deal to host a substantial new computing facility in what was once a factory.

Ted Townsend:

I'm pleased to announce that xAI's Gigafactory of Compute, the world's largest supercomputer, is to be located in Memphis, Tennessee.

Justin Hendrix:

Townsend emphasized the speed with which the deal came together.

Ted Townsend:

It would represent the city's largest multi-billion-dollar capital investment by a new-to-market company in Memphis history. xAI is to occupy a former manufacturing facility in less than 90 days, the Greater Memphis Chamber's economic development team moved at lightning speed to ensure Memphis would be in a position to be selected by xAI.

Justin Hendrix:

ABC affiliate WREG Channel 3 newsman Alex Coleman explained the company's rationale for choosing Memphis.

Alex Coleman:

Well, we finally know why the world's largest supercomputer landed in Memphis. xAI founder Elon Musk says is simply because the old Electrolux building was empty, in good shape and large enough to house the operation. The Tech Titan made the remarks Sunday as he announced that Grok, the artificial intelligence developed here, is now the smartest AI program in the world.

Justin Hendrix:

Elon Musk’s claim about Grok is questionable at best, but Electrolux, a company that manufactures household appliances, divested the Memphis facility in 2023. Located along the Mississippi River, the immediate area is industrial, though there are residences in the neighborhood a little over a mile away. According to local historians who called it “the land of broken promises,” Boxtown originated as a settlement formed by newly freed African-Americans following the Emancipation Proclamation in 1863. For nearly a century, it remained on the outskirts of Memphis within Shelby County until the city expanded its limits.

Almost immediately after xAI announced it would move into the Electrolux facility, concerns emerged around transparency and potential environmental and community impact. I spoke to a reporter for The Guardian who covered the launch closely.

Dara Kerr:

My name is Dara Kerr. I am a reporter with The Guardian US.

Justin Hendrix:

Kerr told me that her interest in the story in Memphis stemmed from her reporting on data centers and their impact on the environment.

Dara Kerr:

I used to work at NPR, and I'd done a series of stories looking at the climate effects of data centers just in general and how much emissions they put out. We're just learning right now how detrimental they can be for the environment, how much water they use for cooling, how much electricity they use from the grid. So I'd been doing a few stories about that, and this group, the Southern Environmental Law Center, reached out to me about xAI and what was happening in Memphis. And this was last summer when things were really opaque. No one really knew what was going on, but at that time it was really clear to me that this was a big story for the community. So I flew out to Memphis and spent a few days there, visited the facility. I mean, the outside of it. I've never gotten a response from xAI or anyone affiliated with it, and spent a lot of time in the community just looking at this situation.

Justin Hendrix:

Local activists say the area has struggled with environmental degradation for decades.

Amber Sherman:

My name is Amber Sherman. I'm an organizer here in Memphis, the Tennessee lead organizer for Black Voters Matter, and I am working with one of our partners, Memphis Community Against Pollution and Young, Gifted & Green, also environmental justice projects.

Justin Hendrix:

Data centers are often located in industrial areas where there is a history of pollution. Amber Sherman told me that residents and environmental organizers have fought for years to clean up toxic industrial waste and limited emissions in South Memphis.

Amber Sherman:

But there's already a history of this specific neighborhood in South Memphis being treated like a sacrifice zone. They're already treated like they don't deserve clean air and clean water. And if you're ever in South Memphis near the area where there's multiple neighborhoods, it smells horrible because there's so much toxic waste being put into the air.

Justin Hendrix:

In order to get up and running quickly, the xAI facility needed water and electricity, and with a goal to expand to a million GPUs, it needed a lot of electricity. Just weeks after the announcement, Memphis Light Gas and Water President and CEO Doug McGowen, provided some details about the power needs at the facility to local news station ABC 24.

ABC 24 host:

Doug McGowen says it will initially use water from the existing 20-inch water main and the existing 8 megawatts of electric power currently available. Eventually, a 150 megawatt substation will be needed but expects no impact on the grid, even during peak demand.

Doug McGowen:

Make sure that we protected the rest of our customers to make sure that everybody has the power that they need and to preserve the assets that we all count on, like our clean drinking water. So I think we've done a really good job of setting the stage to make sure that we've minimized any risk to the rest of our customers.

Justin Hendrix:

But to meet its energy needs during peak demand, the xAI facility needed even more power, so it brought in gas turbines. Here's Dara Kerr.

Dara Kerr:

The turbines began to trickle in and show up last summer, and local community activists first noticed them and then this group, the Southern Environmental Law Center, has been really leading the charge and trying to figure out what is going on with these generators. So as of last summer, there were more or less 18 that we're seeing on site and you could see them burning, but it was very hard to count them because they surround the outside of the building. So the Southern Environmental Law Center took aerial images to try and keep tabs on how many they were and if they were burning, and it was like that for a while. They didn't have permits.

I spoke with the Shelby County Health Department. They said that these turbines were allowed to be there as long as they were not there for more than 364 days. So once it gets to 364 days, then they have to have a permit. And they also then directed me to the Environmental Protection Agency. The Environmental Protection Agency said they didn't know about it and kicked me back to the Health Department. There's a lot of passing the responsibility that seems to be happening with the local government.

Justin Hendrix:

When I drove past the xAI facility one afternoon in April, I could indeed see a handful of the turbines operating next to the facility, but the Southern Environmental Law Center wanted to know for sure, so they took photographs and thermal images from the air.

Dara Kerr:

The Southern Environmental Law Center found that there were actually 35 generators on site or more had been moved in. And that got the community very upset, and the mayor came out at that time and said that he talked to xAI and that only 15 of the generators were being used. The rest were just being stored on site as a separate substation, permanent substation is being built, and then there's lots of twists and turns with the story. Then the Southern Environmental Law Center did thermal imaging from above and saw that there were at least 33 generators that were actually being used at the same time of the imaging. So what's happening here is just a lot of opacity with the situation, which then raises alarm with activists with the community, and it's this cyclical situation.

Justin Hendrix:

Amber Sherman told me much the same.

Amber Sherman:

And it was 15, but now we know there's actually 35 that are on the property, not 15, but from video that I've taken and other folks have taken when they went down there, you can see the smog being put in the air, and this is a community that already has extremely high asthma rates. They have the most tardiness for public school education due to asthma-related illnesses because people literally cannot breathe.

Justin Hendrix:

The community and local activists have recently organized to demand more oversight of the xAI facility, including pushing for public hearings on environmental impact.

Amber Sherman:

So as organizers of Black Lives Matter, we have different core tenets, and one of those main ones is environmental justice. And this is a huge environmental justice issue, so that's why we're helping them organize on it because we know that environmental justice and tech are combined because all of the AI data centers popping up, are hard before the environment and they usually put in poor black communities.

Justin Hendrix:

The Guardian's Kerr points to a disconnect between local leaders and residents in the impacted communities who appear to just want more information and for the government and health authorities to pursue their interests vigorously.

Dara Kerr:

Well, the local leaders who've been shepherding in this project seem very excited to be working with the world's richest man and this high-profile figure, and there's a lot of excitement about working with Elon Musk. The community members that have been rallying against the project, they haven't really brought in Musk's personality and his role in the world. They just say they're not scared by someone who's so rich and has so much power. They still need to stand up. I haven't heard a lot of sentiment directed personally towards Musk, and in fact, very few people even mentioned DOGE and his work with the federal government. They just want to be told what's going on. They want an environmental impact statement, so it's all very practical.

Justin Hendrix:

The Greater Memphis Chamber of Commerce is now marketing Memphis as the “Digital Delta, Home of the World's Largest AI Supercomputer, Colossus.” Here's the Chamber's Ted Townsend, from that announcement last summer.

Ted Townsend:

Memphis is the Digital Delta. We are experiencing a dynamic wave of development across various sectors including technology, infrastructure, healthcare, manufacturing, and education. This monumental recruitment investment marks a pivotal point in our city's trajectory, and will drive continued entrepreneurship and ingenuity, propelling Memphis to the forefront of global innovation and competitiveness.

Justin Hendrix:

But Amber Sherman says local residents are skeptical that luring tech investment will work out for people in the community.

Amber Sherman:

I really hate the word Digital Delta. I feel like our Chamber of Commerce is really trying to rebrand the harm that AI and data centers are doing to communities. They're trying to rebrand it into this beautiful economic development project when realistically, we're killing our communities. We're making it even harder for folks to live healthy lives.

Justin Hendrix:

The mayor of Memphis, Paul Young, has engaged with the activist community, including sitting down for a fireside chat with local environmental activist KeShaun Pearson. Here's ABC 24 reporting on that discussion.

ABC 24:

Now, we're going to talk about the fireside chat that KeShaun Pearson with Memphis Community Against Pollution held with Mayor Young. It was well attended, lots of people showed out for it. Here's some video from that meeting. He was pressed on a lot of issues about the city, but the one that really took the cake was xAI. A lot of people feel worried about environmental concerns and just how much the city will get back from allowing Elon Musk to come in here and develop this supercomputer.

Justin Hendrix:

After hearing the community's concerns, Mayor Young issued a statement promising to communicate more clearly about the project. He acknowledged concerns raised about air quality in the project's speed, but also pointed to the opportunity it represents. He announced the development of an ordinance to provide a portion of the tax revenue created by the xAI Project to specifically support investment in the 38109 zip code, which includes Boxtown and other neighborhoods near the xAI facility. I asked Dara Kerr about the position the mayor is in as he tries to satisfy the demands of the community while trying to accommodate xAI.

It seems like the mayor is in a tight spot. I mean, as you say, he wants the development. He wants to be able to crow about the project. He wants to help advance Memphis into the future and into a digital economy. And yet on the other hand, he's got such extraordinary pushback from the community.

Dara Kerr:

Well, the mayor has been one of the people who helped shepherd the project in from what we know. Then when xAI showed up in Memphis, it was a big surprise. It was announced in a press conference, I think it was last June, and through the Chamber of Commerce, the Greater Memphis Chamber. The local city council didn't know. I interviewed the council member who represents that district, and she said she learned about it on the evening news and sat straight in our chair.

So the mayor is in a tight spot because he's gotten a ton of pushback since that time, but he still seems very much on board with the project. He seems to be regularly speaking to representatives of xAI. He was the messenger this past week that said that xAI was only using 15 of the 35 turbines seen on site, which turned out to be probably incorrect information.

Justin Hendrix:

The mayor argues that Memphis is getting a fair deal from xAI, which says it will invest in infrastructure that will benefit the city beyond just its operations. Speaking to NBC affiliate Action News 5, the mayor pointed to a promise by the company to build a wastewater facility that could be utilized by other manufacturers.

Mayor Paul Young:

I definitely think that it is incumbent upon us as elected officials, myself and others, to be able to articulate what's happening. And certainly, we want partnership from the company and they have been partners. We just went to City Council just over the past two or three weeks, and we've been having discussions around one of the things that they're doing to protect our environment. And in fact, it's one of the first things that I talked to them about.

When Doug McGowen and I, president of MLGW, we met with them for the first time, we had concerns and addressed those concerns around preserving the quality of our water and power consumption, and the way that we talked about addressing water quality was building a water treatment facility. And we didn't know that they would pay for all of it. And not only are they paying for all of us, they're paying for the land from us to build it. So they're going to build an $80 million gray water facility where they're going to take water that we would typically pour into the Mississippi River after we have treated it. This is wastewater, and they're going to take that water, treat it and use it to cool not just their computer, but also the facility across the street that TVA has, that they've been using water from the aquifer to cool their machines. It's going to cool those machines as well as the facilities at Nucor Steel. So it's a tremendous win for our community to get a facility of that high quality that's going to be built and utilized to preserve our water and aquifer.

Justin Hendrix:

And he also discussed his plan to set aside tax revenues for the communities and the 38109 zip code.

Mayor Paul Young:

Well, I tell people, "I'm in it to figure out what's good for Memphis. What can we get out of the deal?" That's the only thing I'm concerned about. What can we get out of the deal? And what we're getting out of the deal is an $80 million facility that we've been asking for the past 8, 9 years. We're also going to get significant millions of dollars in annual taxes that are going to be used to help fund the things that we need in our city. And there's going to be more to come on that when we get the final analysis. But I think it's safe to say that with the billions that have been invested there, that's going to be millions in annual return. And we, as public stewards, have to make sure that those dollars are applied to make our community better. And specifically, the area around that facility in 38109.

Justin Hendrix:

Such promises are not enough for activists like Amber Sherman.

Amber Sherman:

I that because the mayor is elected, he's going to make sure to use talking points that benefit him, but I don't think he understands the severity of what the community feels about the issue. I think he got an idea from the fireside chat, but I think that he was thinking, "I explained these benefits and the things that we're going to get out of it and people might be okay with it. But I think that he doesn't understand the community has said they don't want it. If they don't want it, they don't want it. Whether it's a minor polluted, a major polluted, a polluted is a polluted. Pollution is pollution, no matter the amount. They say they don't want it. And I think that's the biggest issue here is that he isn't switching sides to say, "Okay. I agree with you. I'm going to help you get this company out of here."

He's, "We got to look at the economic benefits." And I think that's just what elected officials are going to do. They have to think of the economic benefits of something because realistically, we don't have a lot of tax revenue coming in, and I understand what he's saying, but I also think that we should always be putting the community first. So even though they're going to provide all this tax revenue and there's an ordinance that might pass that would allow them to use that specifically for the 38109 community. If the 38109 community say they don't want it, then they don't want it. And that should have been the end of the discussion for me.

Justin Hendrix:

The Shelby County Health Department is currently reviewing an air pollution permit from xAI. On April 25th, the department hosted a public hearing. A representative for the company who came to make a statement was booed so loudly he couldn't deliver his remarks. WREG, the Memphis CBS affiliate aired audio.

xAI representative:

We're going to continue to help build a better, more sustainable electric grid for Memphis.

WREG host:

xAI representatives drowned out by a huge crowd gathered at Fairleigh High School's auditorium. The debate heated throughout the evening. One person was even escorted out of the meeting, almost all in opposition of xAI's request for an air permit for 15 of its 35 methane gas turbines.

Justin Hendrix:

The Guardian's Kerr followed the hearing and spoke to activists who attended it. I spoke to her the day after.

Dara Kerr:

Yesterday, this was a big success for the local activists because they have been working really hard to get a public hearing with the Shelby County Health Department. This health department is in charge of granting permissions to xAI for some of its emissions. At all of these other events and talks and roundtables, the representatives from xAI have been largely just not there, largely absent. But one of xAI's representatives did show up yesterday, but the crowd, there was a big crowd at the hearing. Organizers are saying around 500 people showed up, but the crowd was so upset with him that they started booing and we really couldn't hear what he said. And then every other subsequent speaker was against the facility. So the main takeaway for me yesterday was people, they're scared, they're angry, and they see that what xAI has done, setting up shop in Southwest Memphis and bringing in all of these unpermitted gas generators is not good for the community and the surrounding, the air quality.

Justin Hendrix:

Just before the hearing, someone distributed anonymous flyers in the neighborhoods around the facility.

Dara Kerr:

They look like those glossy flyers you get before an election, but with those, that always says who it's paid for so you can track back to the source of the flyers. These flyers don't have that. There's lots of rumors flying around about who it could be, but no one's come forward to say, and they have a lot of actual misinformation in these flyers. And the flyers were specifically targeted to the historically black neighborhoods that xAI. They weren't sent to the whole city. So that again, it's like the people that are promoting xAI, a little bit like shot themselves in the foot because it seems to have backfired, this flyer situation.

Justin Hendrix:

The Commercial Appeal’s Neil Strebig reported that the Shelby County Health Department Deputy Director indicated it will take the department several weeks to review public comment and issue a final verdict from the permit for the turbines.

The story in Memphis both fits a pattern around AI infrastructure development across the country, and demonstrates the Elon Musk approach to doing business.

How do you situate this in what you know of the broader push around AI infrastructure in the United States? And I know you're looking at data centers more generally. I follow this stuff reasonably closely, try to pay attention to local and state reporting on data center expansion. It really does seem like on some level, what's happening here in Memphis is happening in many communities across the country. It just happens to be that this is a focal point.

Dara Kerr:

It's happening all over, and we are seeing these heartbreaking stories where people are having trouble getting water connecting to the grid because these data centers are using up so much utilities. But I think the thing that's a little bit different with this project is that it came on the good really fast. It came on secretly, and it doesn't have all the permitting that typically these other companies take the precautions to do. I mean, it definitely has Elon Musk fingerprints, which is his whole thing. He likes to move fast. He likes to get things going very quickly, and that's what happened here. Last summer, he posted on X that he brought the name of this supercomputer, he calls it Colossus, and he touted the fact that he brought it online in 122 days, which is really it's record time. The typical time it takes to get these huge data centers up and going is about two years. So I think that's also playing into the tension of what's happening in Memphis.

Justin Hendrix:

I asked Amber Sherman whether the people she talks to in Memphis harbor concerns about AI more generally.

There's this sort of, I think, general concern that we see in polling data from all over the country about the effects AI might have on labor on society. Are you hearing that from community folks that you're working with? Does that figure into their concern about this particular projects?

Amber Sherman:

Yeah. People are definitely concerned. I think that was one of the main things brought up is that you all are saying this is going to bring jobs here, but it's not. And actually, all it's going to do is deplete the type of jobs that we have. And I think that a lot of times, for certain communities, they don't even understand what AI is. They don't understand the actual tool itself, and most of them aren't using AI. They don't even understand what the point is of them building the data centers.

Justin Hendrix:

Sherman said she's worried about the broader effects of AI on society.

Amber Sherman:

I'm really concerned about the younger generation who are like, "Yeah. My ChatGPT, shug.” They then gave it a name. They tell it to talk to them a certain way….people talking about how they asked their ChatGPT therapist questions because that's a therapist. I was like, "This is really dangerous."

Justin Hendrix:

I hope to bring you an update on this story in the coming weeks with more voices from the local community. Until then, that's it for this episode.