Elon Musk's xAI is powering AI data centers with natural gas instead of solar, betting on space-based solar as the long-term solution

xAI is using dozens of unregulated natural gas turbines to power its data centers and plans to buy $2.8 billion more in natural gas infrastructure, despite Musk's companies' historical focus on clean energy.

SpaceX argues in an SEC filing that space-based solar arrays can generate 'more than five-times the energy' of terrestrial solar thanks to 24/7 illumination, positioning orbital data centers as the future solution to AI's power demands.

The SpaceX filing references 'terawatt-scale annual AI compute growth' as justification for the shift away from Earth-based power sources, with the company arguing that third-party estimates on data center demand 'may be far greater than what research estimates suggest.'

xAI has spent $697 million in the last two years on Tesla Megapacks (grid-scale battery storage systems) but has not bought a materially significant number of solar panels from Tesla.