Elon Musk is building out some of the computing infrastructure for his AI startup by pairing it with the X social network—sharing facilities, equipment purchases, and a tax break in a recent deal that highlights the blurring lines between two of the billionaire’s tech businesses.
xAI, the two-year-old AI company founded by Musk, signed on to a data center deal in Atlanta that local authorities had been negotiating with X for more than a year. The 10-year agreement, finalized the day after Christmas and obtained by Coins2Day via a Freedom of Information Act request, shows that both X and xAI will, together, get a property tax discount—worth an estimated $10.1 million—on the $700 million in equipment the companies have already purchased to fill the center.
While X, formerly known as Twitter, has operated out of the Atlanta facility for a decade, it had been negotiating a contract with an economic development agency in Fulton County, Ga., for a property tax discount on AI equipment. The addition of xAI to the arrangement was made later in the process. XAI’s negotiation with Fulton County, which has not yet been reported, is the first step the company has taken into the state of Georgia. There is nothing improper about the two companies pairing together for the tax break, but the documents offer a window into how Musk’s collection of privately held companies work together behind the scenes to share resources and gain efficiencies.
In an interview with Coins2Day, Kwanza Hall, chairman of the board at the economic development agency, known as Develop Fulton, confirmed that xAI had joined the negotiation conversations with X last year—“probably nine months ago,” he said. And he noted that representatives from Musk’s companies had expressed interest in further expansions in Fulton County.
“From what I understand, there may be interest in increasing that amount of investment over time, if they could—whether it be at that site or additional facilities,” Hall told Coins2Day. He added: “Our team is ready to go, and we’re excited about the partnership that we struck with xAI, but we look forward to more in the future.”
It’s unclear how exactly X and xAI will be using the facilities. Hall said that, during the discussions, xAI had mentioned the center would be used, at least in part, to train Grok, which is xAI’s large language model, though he said the situation was moving quickly and could change. Documents say that the new equipment will be used for the “next-generation computer infrastructure to develop and train artificial intelligence products for the X platform, including large language models and semantic search.”
X and xAI did not respond to multiple requests for comment.
Both companies have also agreed to roll out internships and help local schools in the Atlanta area develop an AI ethics curriculum—apparently in a bid to garner support for the tax break. Musk’s artificial intelligence company is also hiring for the facility, with a new open job posting for a data center operations technician in Atlanta, according to xAI’s website, and three people say they work for xAI out of Atlanta on LinkedIn.
The deal comes as expectations around AI’s business potential is driving a boom in investment to build the infrastructure necessary to power the technology. Just this week, OpenAI, SoftBank, and Oracle announced Stargate, a plan to spend as much as $500 billion over five years to build a collection of AI data centers in the U.S.
Georgia has become an increasingly popular hotspot for data centers, thanks to its availability of energy and fiber-optic infrastructure, as well as the financial incentives offered by state and local authorities. Microsoft has been developing data centers in the same area as X, while Meta, Google, and AWS have all announced projects in Georgia.
Interconnected X companies
The deal is the latest example of the tight interconnections between X and xAI. Grok initially launched as a premium feature on X (though xAI recently launched a stand-alone Grok website and iPhone app), and the model taps into X user data for training and fine-tuning. The Verge reported earlier this year that xAI staffers are X employees on paper, have access to X’s code base, and have X company laptops.
Even the companies’ investors have overlap: In November, the Financial Times reported that Musk gave 25% of xAI’s shares to the investors of X, the social media company that Musk acquired for $44 billion in 2022.
X has been leasing space from Quality Technology Services on its 95-acre Atlanta-Metro campus for more than a decade. But it was 2023—in the months after OpenAI released ChatGPT to the public—when X made plans to scoop up new generative AI equipment worth hundreds of millions of dollars, and approached Develop Fulton about a tax break. The property tax savings of $10.1 million is an estimate from Develop Fulton.
“There was a little bit of a shortage on the Nvidia GPUs,” Hall said, noting that companies like xAI were trying to go ahead and lock in facilities so they could sign contracts and line up shipments. (In the summer of 2023, Musk had asked chipmaker Nvidia to redirect more than $500 million worth of GPUs slated for Tesla to X, according to CNBC, though it’s unclear whether these same GPUs were shipped to the X Atlanta data center or elsewhere.)
As X tried to figure out where to store the GPUs and equipment it was purchasing, the company pitted Atlanta against Portland for a property tax cut. It turned into a ruckus around the Atlanta area—with critics arguing that X would have stored the equipment in the facility with or without the tax incentives, complaining that the data center wouldn’t bring many jobs, or saying that Musk, the world’s richest man, didn’t need tax cuts. Musk’s increasingly vocal support for President Donald Trump heightened the divide. “Elon Musk was a lightning rod to the community in a very Democratic stronghold,” Hall said, noting that he “took some barbs” from community members because he was “pushing for the new technology.”
Hall and Sarah-Elizabeth Langford, Develop Fulton’s executive director, said they asked X and xAI to agree to specific terms, which include attending forums, quarterly mentorship activities, financial sponsorship for AI-specific events, and hackathon opportunities that are expected to cost X and xAI some $300,000 a year—all which helped get the community on board with the tax break. If the companies fail to do this, they will be required to make donations to two local education organizations, according to the agreement documents.
It’s unclear whether X and xAI will operate separately out of the Atlanta data center, as two distinct businesses running separate workloads, or whether the computing resources will somehow service both businesses. But what’s clear from the documents is that X and xAI have both purchased the equipment. And both companies appear to be working out of the same facility together.
