The Stargate Reality Check

Despite partnership tensions and scaling back of the broader $500B vision, Stargate’s Texas operations represent the most significant AI infrastructure deployment in history. The Abilene facility is operationally progressing while the broader partnership struggles, creating a complex picture of infrastructure success amid organizational dysfunction.

Current Operational Status: What’s Actually WorkingAbilene Stargate I – Confirmed Operational ProgressConstruction Status: OpenAI said Tuesday that construction of the Stargate I in Abilene, Texas, is underway, and that parts of the facility are already up and runningGPU Deliveries: Oracle started delivering the first Nvidia GB200 racks to the facility last monthJob Creation: Stargate I has created “thousands” of jobs, including specialized positions for electricians, equipment operators, and techniciansPhysical Scale: 875-acre site (larger than NYC’s Central Park)Current Capacity: 200 MW deployed as of January 2025 out of 1.2 GW securedConstruction Timeline Reality

Phase 1 (Current):

Buildings: Two buildings totaling 980,000 square feetPower: Over 200 MW of power capacityTimeline: This phase is slated to be energized in the first half of 2025GPU Count: 16,000 Nvidia GB200 GPUs by summer 2025

Phase 2 (In Progress):

Expansion: Construction of the second phase has already begun, adding six additional buildings to the campusTotal Scale: Eight buildings encompassing approximately 4 million square feetPower Target: Total power capacity of 1.2 GWGPU Capacity: Each of the data center buildings is planned to run a single network fabric with up to 50,000 of NVIDIA’s GB200 NVL72s AI GPUsCompletion: This expansion is anticipated to be completed by mid-2026Financing: The project has secured a significant financial boost with a $7.1 billion construction loan arranged by NewmarkInfrastructure Reality vs. Partnership FictionWhat’s Actually Being Built vs. What Was PromisedMetricOriginal PromiseCurrent RealityStatusTotal Investment$500B over 4 yearsAbilene-focused executionScaled BackImmediate Deployment$100B immediately~$7B construction loan secured10x SmallerPartnership StatusUnified joint venture"Stargate is not formed yet" - Oracle CEOFailedPhysical ProgressMultiple sitesAbilene operational, expandingPartially DeliveredJob Creation100,000+ jobs promised"Thousands" created in AbileneLocalized SuccessGPU DeploymentMassive scale implied16,000 → 64,000 → 400,000 pathwayOn Track LocallyThe Execution Paradox

The Abilene site demonstrates that AI infrastructure can be built at unprecedented scale when partnership complexity is removed:

Direct Execution: Crusoe began construction in June 2024. The first two buildings are expected to go live in the first half of 2025Speed Record: “We’re trying to deliver on the fastest schedule that a 100-megawatt-or-greater data center has ever been built,” Lochmiller told reportersOperational Success: Parts of the facility are already up and running despite broader partnership failuresFinancial Reality AssessmentActual Capital Deployment

What’s Been Secured:

Construction Financing: $7.1 billion construction loan for Phase 2Crusoe Capital: According to The Wall Street Journal, Crusoe Energy has secured $11.6 billion in new capitalOracle Investment: Oracle had committed $7 billion in the Stargate joint venture with an additional $25 billion in capital expenditures in 2026Power Infrastructure: $500 million expected cost for 360.5MW natural gas plant

What’s Missing:

SoftBank Uncertainty: SoftBank has yet to develop a project financing template or begin detailed discussions with banksPartnership Funds: The broader $500B partnership remains “not formed” according to Oracle CEOMulti-Site Expansion: Beyond Abilene, other locations remain in planning phasesRevenue Model Reality

OpenAI’s Direct Infrastructure Strategy:

Oracle Deal: $30 billion annual data centre infrastructure deal with Oracle to rent 4.5GW of data centre capacityPrimary Customer: OpenAI will operate the center and serve as its main customerProven Demand: ChatGPT now has 500 million weekly users, validating infrastructure demandTechnical Infrastructure AnalysisPower and Energy Strategy

Multi-Source Approach:

Grid Power: 200 MW currently deployed from gridNatural Gas: Developers have filed permits to operate natural gas turbines at the site (360.5MW capacity)Renewable Plans: Discussed generating power with solar and wind projects and modular nuclear reactorsEnvironmental Concerns: Environmental groups have criticized the Stargate Project’s energy strategy, urging a shift towards renewable energyGPU and Compute Deployment

Staged Rollout:

Current: Oracle started delivering the first Nvidia GB200 racks to the facility last monthSummer 2025: 16,000 Nvidia GB200 GPUs operationalEnd 2026: 64,000 GPUs deployedFuture Capacity: Up to 400,000 GPUs possible (design capacity, not confirmed timeline)Network Design: Each data center building will be able to operate up to 100,000 GPUs on a single integrated network fabricGeographic and Expansion RealityConfirmed Locations

Operational/Under Construction:

Abilene, Texas: Primary site, partially operational, expandingNatural Selection: Texas’ favorable business environment, access to renewable energy resources and infrastructure as key factors

Planned/Scouted:

Amarillo, Texas: Crusoe is eyeing Amarillo, Texas, for the next siteOther States: OpenAI has also scouted Oregon, Pennsylvania, and WisconsinInternational: A separate AI data center in Abu Dhabi is in development, though it will not operate under the Stargate LLC entityMarket Context and Competition

Abilene’s Advantages:

Power Availability: “Power is the big stumbling block, there’s not a lot of huge tranches of power just sitting out there,” said SaavedraRural Strategy: That’s put rural places once considered far afield by data center users — such as the Dakotas and small West Texas towns — on the mapCost Structure: Using low-cost renewable energy to power operationsOrganizational Structure RealityWho’s Actually Building What

Operational Roles:

Crusoe: Physical buildout leader, construction managementOracle: Leasing the site and providing server infrastructure, GPU deliveryOpenAI: Primary customer, operational responsibilityLancium: Original site developer, infrastructure foundation

Financial/Strategic Roles:

SoftBank: Supposed capital investment (stalled)MGX: Strategic investor (limited operational role)Microsoft: Maintained Azure relationship as backupPartnership Dysfunction vs. Execution Success

The Abilene Paradox:

Local Success: Thousands of jobs created, construction progressing, GPUs being deliveredPartnership Failure: “Stargate is not formed yet” despite operational progressDirect Relationships: OpenAI-Oracle-Crusoe triangle working effectivelyBureaucracy Bypass: Direct execution without mega-partnership coordinationMarket Impact and Competitive PositioningInfrastructure Precedent Setting

Scale Achievements:

Speed Record: Fastest 100+ MW datacenter construction timelineGPU Density: Up to 100,000 GPUs on single network fabricPower Integration: 1.2 GW total capacity with multi-source power strategyConstruction Scale: 4 million square feet across eight buildingsIndustry Model Validation

Lessons for AI Infrastructure:

Direct Partnership Model: OpenAI-Oracle-Crusoe proves more effective than mega-partnershipsRural Deployment: Abilene demonstrates viability of rural AI infrastructureIntegrated Approach: Power generation + datacenter + customer integrationSpeed Premium: Fast execution beats comprehensive planningGeopolitical and Policy ImplicationsU.S. AI Infrastructure Strategy

What’s Working:

Domestic Production: “The data centers are already under construction here in Texas” – demonstrable progressJob Creation: Thousands of specialized positions createdTechnology Leadership: Deploying latest Nvidia GB200 technology at scaleEnergy Independence: Multi-source power strategy reduces grid dependence

What’s Not:

Coordinated National Strategy: Partnership failures limit broader deploymentMulti-State Expansion: Other locations remain in planning phasesInternational Competition: China may capitalize on U.S. coordination difficultiesTrump Administration Claims vs. Reality

Promises vs. Delivery:

$500B Investment: Scaled back to Abilene-focused execution100,000 Jobs: Thousands created locally, broader impact uncertain20 Locations: Only Abilene under constructionImmediate $100B: ~$7B actually deployed

Political Validation:

Physical Progress: Undeniable construction and operational progressTechnology Leadership: Cutting-edge AI infrastructure deploymentEconomic Impact: Significant local economic developmentRisk Assessment and ChallengesOperational Risks

Technical:

Power Grid Stability: 1.2 GW demand on regional Texas gridCooling Challenges: Direct-to-chip liquid cooling at unprecedented scaleGPU Supply: Dependence on Nvidia production schedulesNetwork Performance: 100,000 GPU network fabric complexity

Financial:

Revenue Concentration: Heavy dependence on OpenAI as primary customerPower Costs: Natural gas price volatilityCompetition: Other AI companies building competing infrastructureStrategic Risks

Partnership Dependencies:

Oracle Relationship: Critical for infrastructure managementOpenAI Demand: Customer concentration riskCrusoe Execution: Construction and operational capabilityRegulatory Changes: Potential policy shifts affecting AI infrastructureFuture Outlook and ScenariosMost Likely Scenario (70% probability)

Abilene Success with Limited Expansion:

Local Optimization: Abilene reaches full 1.2 GW capacity by 2026Selective Expansion: 2-3 additional sites in Texas/neighboring statesPartnership Evolution: Direct bilateral relationships replace mega-partnershipMarket Leadership: Abilene becomes model for AI infrastructure developmentOptimistic Scenario (20% probability)

Scaled Success and Coordination:

Partnership Resolution: SoftBank coordination issues resolvedMulti-State Expansion: 5-10 locations under development by 2027Technology Breakthrough: Infrastructure advantages translate to AI capability leadershipPolicy Support: Government infrastructure support accelerates expansionPessimistic Scenario (10% probability)

Stagnation and Competition:

Expansion Stall: Abilene remains isolated successCustomer Diversification Failure: Over-dependence on OpenAI creates vulnerabilityCompetitive Pressure: Other infrastructure providers capture market shareTechnology Disruption: New AI architectures reduce centralized infrastructure advantagesStrategic RecommendationsFor OpenAIAccelerate Abilene Optimization: Maximize learning from current deploymentCustomer Diversification: Attract additional AI companies to Abilene infrastructurePartnership Simplification: Focus on proven bilateral relationshipsTechnology Integration: Leverage infrastructure advantages for AI capability developmentFor Infrastructure ProvidersAbilene Model Replication: Study and adapt successful elementsRural Strategy: Explore similar rural deployment opportunitiesDirect Partnership Approach: Avoid mega-partnership complexitySpeed Premium: Prioritize execution velocity over comprehensive planningFor PolicymakersSuccessful Model Support: Provide policy support for proven approachesInfrastructure Incentives: Create frameworks supporting AI infrastructure developmentEnergy Coordination: Address power availability as critical constraintRural Development: Leverage AI infrastructure for rural economic developmentBottom Line: Reality vs. Rhetoric

Stargate represents both a massive partnership failure and a significant infrastructure success. While the $500 billion mega-partnership vision collapsed, the Abilene facility demonstrates that world-class AI infrastructure can be built rapidly when organizational complexity is minimized.

Key Insights:

Execution Excellence: “Parts of the facility are already up and running” proves infrastructure can be built at unprecedented speedPartnership Paradox: The mega-partnership failed while direct relationships succeededScale Validation: 1.2 GW capacity with 400,000 GPU potential validates AI infrastructure demandModel Innovation: Rural deployment with integrated power generation creates new infrastructure paradigm

The real Stargate story isn’t about partnership success or failure – it’s about proving that AI infrastructure can be built at scale when execution is prioritized over coordination. Abilene represents the future of AI infrastructure development: direct, fast, and technically excellent, even if organizationally simplified.

For the AI industry, Stargate’s lesson is clear: infrastructure success requires execution focus over partnership complexity, and rural deployment with integrated power strategies may be more viable than urban coordination-dependent approaches.

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