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Earlier this month, Anthropic surprised the AI world<\/a> with a deal to buy 300 megawatts worth of compute \u2014 securing the entire output of the Colossus 1 data center near Memphis, Tennessee.\u00a0<\/p>\n Turns out, compute at that scale isn\u2019t cheap. Anthropic will be paying xAI $1.25 billion per month through May 2029, with a discounted rate for the first two months as xAI completes its ramp-up. All told, the deal could bring xAI over $40 billion in revenue.<\/p>\n Details of the transaction emerged from SpaceX\u2019s S-1 filing with the SEC. The deal, the company said, \u201callows us to monetize unused compute capacity in our infrastructure.\u201d The terms of the deal allow either side to terminate the contract with 90 days\u2019 notice.\u00a0<\/p>\n \u201cWe expect to enter into additional similar services contracts,\u201d the filing stated.<\/p>\n The move has given xAI a hybrid stance in the AI market. Most players either build data centers for themselves or build data centers for others to use \u2014 rarely both simultaneously. This emerging model, sometimes called a \u201cneocloud,\u201d lets AI companies offset infrastructure costs by acting as a cloud provider when their own usage falls short of capacity.<\/p>\n SpaceX argues the arrangement is a savvy use of resources. \u201cWe believe our dual monetization strategy provides multiple pathways to generate returns on invested capital,\u201d it wrote. But the subtext is hard to miss. xAI appears to have overbuilt its compute capacity and needed to find a way to monetize it ahead of a public offering. Usage of Grok \u2014 xAI\u2019s flagship AI assistant \u2014 has dropped significantly<\/a> in recent months, freeing up servers that the company is now selling to one of its closest competitors.\u00a0<\/p>\n<\/div>\n