xAI GPU utilization is only 11% but it rented out 220,000 GPUs to Anthropic, serving as both monetization and packaging.

According to TrendForce's Beating Monitor, the SpaceX IPO prospectus highlights the speed of constructing xAI data centers: Macrohard, the second data center in Memphis, had its first chip cluster online in 91 days, compared to the industry's typical two years. The cost of the first two clusters was $2.7 million/MW, approximately a quarter of the industry benchmark. Time was saved by repurposing old factories, and costs were cut by using mobile gas turbines, Tesla Megapacks, and over 100 mobile chiller units instead of waiting for a permanent power supply.

However, the cost of the temporary solution has become evident. The uptime of Macrohard falls far short of the internal target of 99.9%, with multiple outages disrupting model training. Michael Nicolls, the Senior Vice President of Starlink who took over xAI, bluntly stated in an internal memo that the MFU (Model Fitness Utilization) of hundreds of thousands of NVIDIA GPUs is only 11%, embarrassingly low, and he requested it to be increased to 50% within a few months. Meanwhile, SpaceX and xAI are expected to have a combined loss of around $5 billion by 2025, with xAI's capital expenditure of nearly $13 billion exceeding SpaceX's own investment in rockets and satellites by 50%.

Against this backdrop, today's transaction of Anthropic leasing Colossus 1 appears quite delicate. SpaceXAI's external statement is that the training has been moved to the larger Colossus 2, so they leased out all over 220,000 GPUs of Colossus 1. However, the 11% MFU indicates that they are not fully utilizing their available chips. Facing the pressure of $13 billion in capital expenditure and $5 billion in losses, leasing out the GPUs becomes a tangible cash flow rather than burning electricity costs. It also adds to the IPO narrative: even competitors are renting our computing power, proving the value of the infrastructure and generating additional revenue.

The operational costs are not just limited to downtime. Several executives responsible for the construction of Macrohard and Colossus have resigned in recent weeks, and an $80 million gray water recycling plant has been indefinitely suspended. Construction safety is also a concern: in January, a worker had a finger amputated, and in September last year, two employees of a partner were electrocuted, with one hospitalized for 53 days.