Residents Near xAI’s Polluting Data Centers Fume Over SpaceX IPO

SpaceX, Elon Musk’s aerospace and infrastructure giant, is slated to go public on Friday with a target valuation exceeding $1.75 trillion. The IPO will significantly boost the wealth of Musk, who already holds the title of the world’s richest person. Going public allows SpaceX to raise additional capital to accelerate its artificial intelligence ambitions, particularly the construction of more data centers at a faster pace.

However, as Musk and other SpaceX investors anticipate a massive financial windfall, communities near existing xAI data centers are demanding accountability. Their grievances center on the company’s reliance on polluting gas turbines and a water treatment facility that was paused earlier this year.

“We’re the extracted and exploited colony of what is going to be one of the most highly valued entities in the world,” says Justin Pearson, a Tennessee state representative whose district includes parts of Memphis. “People are going to die because of this pollution.” Pearson points out that xAI is selling $15 billion annually in computing power from its Memphis campuses to Anthropic, another AI firm planning a blockbuster IPO soon. “People don’t matter to SpaceX, or Anthropic, or whoever is building these data centers,” he adds.

President Donald Trump has floated the idea of the US government taking a financial stake in frontier AI companies to “give back” to the American public, though the specifics remain vague and uncertain.

SpaceX did not respond to a request for comment. Anthropic declined to comment, though its head of public policy and Memphis’ mayor have highlighted the company’s community engagement.

xAI’s Colossus 1 campus in Memphis drew national attention in 2024 when residents raised alarms about the company operating natural gas turbines without permits. Regulators noted that a loophole in the Clean Air Act allowed xAI to run as many as 35 turbines without a permit for a year. Local regulators later granted a permit for 15 turbines to operate on the site until 2027.

Natural gas turbines emit PM2.5, fine particulate matter linked to heart attacks, high blood pressure, and premature deaths in vulnerable populations. Experts warn that PM2.5 can be harmful even at levels below regulatory limits.

xAI’s first data center was built in Boxtown, a historically Black neighborhood in Memphis already burdened with some of the highest asthma rates in the country due to legacy industrial pollution. “All of us who have family in South Memphis, we know somebody who has died as a result of a bronchial ailment, or a random cancer that has no place in our family tree,” says Richard Massey, a Memphis community organizer.

In January, the Environmental Protection Agency issued guidance that appeared to close the Clean Air Act loophole xAI had exploited. But by then, the company had already started installing unpermitted turbines in Southaven, Mississippi, to power Colossus 2. As of mid-May, xAI had brought at least 46 unpermitted gas turbines to the Southaven site, according to emails sent to regulators.

A coalition of environmental justice groups, led by the NAACP, filed a lawsuit earlier this year alleging xAI installed gas turbines “without an air permit or regard for the health and safety of people living nearby.” This week, Southaven residents filed a separate class-action lawsuit against xAI and SpaceX, claiming construction on the data center is disrupting the community.