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Silence is Golden: Why Elon Musk Classified the Construction of His Supercomputer
Six months ago in Memphis, before residents and city council members knew Elon Musk was building the “world’s largest supercomputer” in their city, the billionaire’s team gathered representatives from local and national law enforcement, including the sheriff’s office. They met in secret. . . The Memphis Police Department, the U.S. Department of Homeland Security, the FBI.
According to the Greater Memphis Chamber, a nonprofit economic development organization in the city that has been quietly monitoring the deal since March, the meeting involved fast-growing artificial intelligence startup xAI.
“We truly appreciate the time and effort of everyone involved in this project. We are on the cusp of a new chapter in Memphis’s history.” Gwynne Fisher, the Greater Memphis Chamber’s director of economic development, wrote an email to the organization’s staff. She offered to give Musk a tour of his new facility, but with one stipulation. Employees would be required to sign nondisclosure agreements with CTC Property, a shadowy company controlled by Jared Birhall, Musk’s broker and personal banker.
Birhall, a former financial analyst, served as Musk’s right-hand man for a decade. According to Reuters, he became the billionaire’s personal wealth management adviser just a few years after he was fired from Merrill Lynch over inappropriate emails with clients. Since then, he has become the CEO of SpaceX, Neuralink, The Boring Company, and xAI, and has run Musk’s family office and foundation, overseeing the acquisition of Twitter (now a social media site).
Forbes USA first reported that government officials in Memphis had signed a non-disclosure agreement with xAI. The contract was obtained along with other internal documents after a series of requests for access to administrative records. According to Scott Banbury, conservation director for the Tennessee chapter of the Sierra Club, it is “unethical” for government agencies to agree to xAI’s confidentiality terms because they have a responsibility to the people of Memphis.
The FBI and the Shelby County Sheriff’s Office declined to comment on their meetings with xAI, and other law enforcement agencies did not respond to multiple attempts by Forbes USA to contact them. However, documents show that both the police department and the sheriff’s office provided signed non-disclosure agreements to Logan Beach, xAI’s director of corporate security. It is unclear, however, whether these organizations provide security services to AI startups. Musk has previously used unlicensed security guards to block public roads and beaches near the SpaceX launch site in Texas.
In just four months, xAI’s supercomputer, called Colossus, was assembled in the heart of an empty factory on the banks of the Mississippi River. Last June, the Greater Memphis Chamber publicly announced that Memphis would be xAI’s “new home,” boasting about how quickly a “multi-billion dollar deal” had been struck. But council members said they were hearing nothing about the project and asked for more time and information to understand the project, which makes xAI one of the city’s largest consumers of electricity and water. A month later, the data center was officially up and running.
The situation in Memphis is not unexpected. Musk’s companies have a history of using non-disclosure agreements to pressure local officials to keep them from sharing information about upcoming projects in their cities. City lawmakers have accused xAI of hiding its relationships with developers and officials who have been privately discussing the company’s plans for Memphis for months. CTC Property first approached the Greater Memphis Chamber on xAI’s behalf in March and quickly signed a non-disclosure agreement, but the City Council and the public didn’t learn about the project until June. “The NDA required us to strictly adhere to protocols. Only those who needed to know about the project were involved,” Greater Memphis Chamber President Ted Townsend told Forbes USA in July. Chamber officials declined to comment on the meeting the company arranged for xAI and law enforcement. xAI also did not respond to a request for comment.
xAI’s arrival in Memphis has been accompanied by an aggressive consumption of local resources. The data center required enough energy to power 100,000 homes. More than 10,000 gallons of water from the Memphis aquifer are also used daily to cool the servers. The data center is currently awaiting approval from the local Tennessee Valley Authority (TVA) to consume 150 megawatts of power, which would require the construction of an entirely new substation. Musk recently wrote in Semafor that they were able to run all 100,000 Nvidia H100 chips simultaneously during the installation phase.
As AI has grown in popularity in recent years, the number of “hyperscale” data centers has increased. At the same time, concerns have grown that local power grids and other critical life-support resources will not be able to handle the load. But with the help of state privacy laws and non-disclosure agreements, new projects are hiding key details from the public and presenting the information as trade secrets. Google is not immune to this tactic. The company’s water use data in The Dalles, Oregon, was protected by the city until The Oregonian sued to make it public under the Access to Administrative Records Act. Forbes USA asked TVA for information about other data center customers, but the company declined to comment, saying contractual agreements protect all “confidential information” related to the company’s business. TVA did not say whether it had entered into a non-disclosure agreement for its work with xAI. EDGE, Memphis’ economic development agency, also declined Forbes USA’s request for administrative documents related to the xAI project, citing trade secrets. EDGE board members are appointed by cities and counties, while TVA board members, which are federally owned, are appointed by the U.S. president and confirmed by the Senate.
“This is unprecedented. How can you do this if you’re an elected official or an appointed official? It just seems weird. Why is this being kept so secret? “I don’t understand,” said Memphis resident Ward Archer, discussing the non-disclosure agreement. Archer is the president of Protect Our Aquifer, a local environmental nonprofit that pressures local officials to fully disclose xAI’s water consumption.
In Nevada, Tesla signed a nondisclosure agreement to keep local officials from disclosing tax incentives the company received. SpaceX also required several government agencies in Brownsville, Texas, including the Public Utilities Board, to sign another nondisclosure agreement. The agreement was later made public by order of the attorney general. A resident of Bastrop, Texas, where Musk’s other company, The Boring Company, is building a manufacturing plant, said the company asked him to sign a nondisclosure agreement before reviewing planning documents that are technically public records.
Deborah Fisher, executive director of the Tennessee Open Government Coalition, told Forbes USA that while NDAs don’t override the state’s public records law, they are still used to block information. Additionally, as is often the case in economic development deals, some details may be considered confidential under the trade secret exception. Fisher explains in an interview with Forbes USA: “Citizens are upset that large corporations are coming in and getting all the perks that government officials have promised, using local taxpayer money,” he explains. “At the same time, companies expect to be able to do things in a way that keeps their activities secret from everyone.”
After xAI was officially announced in Memphis, the utility company Memphis Light, Gas and Water (MLGW) presented the project at a July city council meeting, revealing for the first time the amount of water and electricity needed to run the supercomputer. The company has since denied all allegations that MLGW needed board approval before approving xAI’s request for power, calling them “misinformation.” In a letter to local Tennessee utilities, they say they “have no right to discriminate, deny, or withhold services that are reasonably necessary and can be provided upon request.”
According to documents obtained from MLGW by Forbes USA, the company’s mayor-appointed president, Doug McGowan, signed a non-disclosure agreement with CTC Property in May, when the project was still a secret. “Companies typically request non-disclosure agreements to protect confidential information when working with government agencies,” a MLGW spokesperson told Forbes USA. He added that the company’s president is the only employee who can sign a non-disclosure agreement. The company said MLGW has never hidden information about the supercomputer’s construction and has always “complied with all [state and federal] laws regarding administrative records,” and that xAI has full knowledge of the project.
But xAI has reportedly refused to engage with the local Memphis community, which has been eager to get involved. Over the past few months, a coalition of environmental advocacy groups has sent letters to the boards of TVA and MLGW, as well as the Greater Memphis Chamber, asking them to involve community leaders in decisions that affect their communities. Because of the area’s proximity to a historic neighborhood with a large African-American population that has already suffered from industrial pollution and poor public services, residents feared the new project could exacerbate the problems. City officials last week approved xAI’s purchase of 500 acres of land next to the data center, which the company will lease rent-free for the first year. No one has said what the land will be used for.
“MLGW is a utility, and we are concerned that their ability to communicate with their board of directors and the public is limited,” said Amanda Garcia, a staff attorney at the nonprofit Southern Environmental Law Center (SELC). The organization also filed a request with MLGW for access to public documents, including CTC Property’s non-disclosure agreement.
Recently, problems with the gas generators xAI uses to power its energy needs have also become problematic. According to SELC, which estimated the generators’ output by identifying their models from photographs, the facility has at least 18 generators with a combined output of 100 megawatts, enough to power 50,000 homes.
Last August, SELC sent a letter to the Shelby County Health Department warning that emissions from generators could worsen existing air pollution and harm residents’ respiratory systems. The department told Forbes USA that xAI does not require a generator operating permit or subsequent oversight unless it is in use for more than 364 days. There is an exception for xAI that some community groups believe is a loophole in the law. A U.S. Environmental Protection Agency spokesperson told Forbes USA in a statement that an investigation has been launched based on the allegations.
Because of the data cover-up and the intense secrecy surrounding the xAI facility, some residents began trying to find out more on their own. One told Forbes USA that he parked near the data center on a public road and attempted to film the facility with a drone, but was soon approached by an unmarked car with two armed guards. They took a photo of his license plate before he drove away, according to the resident, who spoke on condition of anonymity out of fear for his life.