OpenAI in Talks to Lease 10 Gigawatt Super Data Center in Ohio, NVIDIA to Provide Financial Guarantee and Credit Endorsement

According to Dynasty Beating monitoring, OpenAI is in negotiations with SB Energy, a SoftBank subsidiary, to lease long-term a proposed 10-gigawatt (GW) AI data center campus on federal land in Pike County, southern Ohio. The total investment in the campus, if fully developed, will reach at least $500 billion. A key part of the deal is that Nvidia is discussing using its sizable balance sheet to provide credit support (backstop) for OpenAI's lease agreement and SB Energy's future project financing. If an agreement is reached, this would be OpenAI's largest infrastructure commitment to date and Nvidia's first role as a de facto infrastructure financial guarantor in such a large-scale project.

The site of the project was initially a former uranium enrichment nuclear weapons material manufacturing base under the U.S. Department of Energy (DOE). The developer SB Energy was established in 2019, majority-owned by the SoftBank Group, with Ares Management and OpenAI as its shareholders (OpenAI previously invested $1 billion in January of this year and commissioned it to build the 1.2-gigawatt Milam County data center in Texas). In accordance with a new trade policy agreement between the U.S. and Japan announced by the U.S. Department of Commerce in February of this year, SB Energy will invest $33 billion to construct a 9.2-gigawatt natural gas power plant on the site, operated by SB Energy with government ownership and self-funded grid upgrades. In March of this year, SoftBank founder Masayoshi Son, U.S. Commerce Secretary Howard Lutnick, and U.S. Energy Secretary Chris Wright attended the groundbreaking ceremony for the project.

The 10-gigawatt project is approximately 4.5 times the power generation capacity of the Hoover Dam. Its first phase of 800 megawatts (MW) is expected to come online in 2028. Over the 20-year lease term, OpenAI will control the facility's equipment, assume rental payment obligations once the project is operational, with total rental payments estimated to amount to billions of dollars. Additionally, as IT equipment such as chips and servers typically represent around 70% of data center costs, OpenAI will also need around $350 billion to purchase Nvidia's AI chips. OpenAI has reportedly been discussing how to raise funds for the chip procurement. Previously, Google had adopted a similar model, providing debt and rent guarantees for Anthropic's use of its TPU data centers.

The background of this transaction is OpenAI's desire for control over computational infrastructure. Earlier this year, its planned $500 billion "Stargate" joint venture with Oracle and SoftBank was abandoned, and OpenAI suspended its plans to build data centers in the short term. The collaboration with SB Energy signifies its incremental advancement of its ambitious infrastructure vision in a piecemeal fashion. Additionally, on Monday of this week (June 8th), OpenAI secretly submitted an IPO prospectus, with its projected $665 billion cloud lease agreements over the next five years with Microsoft, Oracle, and Amazon AWS expected to be a focal point of the listing review. SB Energy also announced in May of this year its plans for a U.S. IPO, with a valuation potentially exceeding $500 billion.