A fierce political struggle is brewing in Memphis. On one side is the world's richest man, Elon Musk, whose company xAI quietly set up shop in an abandoned factory this past summer. On the other side is a broad cross-section of Memphis residents, led by the low-income, historically Black neighborhoods located nearby.
That factory now holds a data center for Colossus, a massive supercomputer responsible for training xAI's large language model, Grok, and supporting the operations of Musk's other ventures—including SpaceX and social media platform X. A second data center is slated to open "in the next few weeks," and it will occupy 1 million square feet in the Whitehaven neighborhood (better known as the home of Elvis' Graceland). xAI's presence in Memphis has been defined by a lack of transparency over the speed of construction, its massive power needs, and signs of severe air pollution coming from its facilities.
Memphis history is full of destructive alliances between local government and major industry, forcing working-class Black neighborhoods to accept ecological and corporal violence in order to boost the region's economy. Neighborhoods in the North and South, heavily redlined in the early 20th century, have frequently become prime locations for factories, chemical plants, landfills, and industrial parks. As Tennessee State Representative Justin Pearson recently put it, "Southwest Memphis has been treated like an extractive colony for far too long."
But AI data centers also represent a troubling new frontier in the fight against environmental destruction, corporate exploitation, and state repression. The market for AI infrastructure is wrapped up in key strategies of the second Trump regime: disinformation, political surveillance, and the massive deregulation and resource extraction that's accelerating the climate crisis.
MAKING A "DIGITAL DELTA"
The land on which Colossus sits has been a haven for some of Memphis' most marginalized communities and a key to its industrial ambitions. As Memphis became a hub for the global cotton market in the 19th century, the fertile soil of its rural outskirts became a major asset. Planter, industrialist, and slaveowner Enoch Ensley, Jr. took charge of 10,000 acres in southwest Shelby County just before the Civil War.
After Emancipation, Ensley turned to convict leasing. Hundreds of incarcerated people, almost all of them Black, tilled the land in the 1880s. Some traveled from as far away as Nashville. Black residents later recalled how these men and women were "worked in the fields by day and confined in stockades at night." By the time Ensley died in 1891, the plantation had quadrupled in size. It was split and sold into smaller plots, and the land eventually became known as Ensley Bottoms.
As one of the most remote parts of Shelby County, Ensley Bottoms attracted farmers (including sharecroppers), hunters, and, during Prohibition, bootleggers. At the same time, railroad companies laid tracks across the area. One pocket of Black freedmen—who'd begun settling there just after Emancipation—used discarded scrap and timber from the Illinois Central Railroad to build shotgun houses just east of Ensley Bottoms. Locals came to know it as Boxtown, the neighborhood now leading the charge against xAI.
In 1947, the city annexed Ensley Bottoms with so-called President's Island in the Mississippi River, hoping that it could be fertile ground for extending the Memphis harbor. With support from the U.S. Army Corps of Engineers, the city turned the island into a peninsula. Ensley Bottoms became a spillover for industrial sites that wouldn't fit there, and a large chunk was renamed to Frank C. Pidgeon Industrial Park in 1958. Since then, the area has hosted a steel plant, container yards, an industrial gas plant, a wastewater treatment facility, and multiple fossil fuel plants run by Tennessee Valley Authority (TVA), the nation's largest public utility.
To have adequate space for Colossus, xAI took over an abandoned Electrolux factory, which had previously manufactured kitchen appliances. It took the International Brotherhood of Electrical Workers (IBEW) two elections to unionize Electrolux workers in 2016, when they "[earned] $10 an hour making high-end ovens that sell for $10,000." Meanwhile, the city, county, and state offered Electrolux more than $100 million in tax incentives to open there, money that the Swedish company was not legally required to repay if the project fell through. In 2019, Electrolux announced it would close the factory to "modernize" and "consolidate" its U.S. manufacturing; more than 500 workers lost their jobs.
Unlike Electrolux, xAI has not requested tax incentives; according to Ted Townsend, president of the Greater Memphis Chamber of Commerce, xAI will become "the second largest taxpayer in the county." But the Daily Memphian has reported that xAI's assessed property taxes are significantly lower than their reported investment would suggest—"amounting to a tax break for a company that did not formally receive one." In June, Memphis Mayor Paul Young proposed that 25 percent of tax revenue from xAI's data centers be allocated to their surrounding communities, but it's still not totally clear what that will look like. Not all residents are convinced either. At one town hall, a teenager named Jasmine Bernard offered Young the clearest rebuttal in the room: "All money is not good money."
Thanks to xAI, the Mid-South could become increasingly fertile ground for projects like these. Business leaders across the region have sought to rebrand parts of West Tennessee, northern Mississippi, and eastern Arkansas as the "Digital Delta." The University of Memphis first used the term while applying for the Build Back Better Regional Challenge, a competitive grant program couched in the Biden administration's COVID-19 relief package. Since then, the Memphis Chamber has kept using it to encourage new corporate investments. Townsend announced in December that NVIDIA, Dell, and Super Micro Computer were looking at Memphis properties. 5C Group, a cloud computing and data center provider based in Canada, plans to install an AI data center in a former warehouse this summer.
In February, Delta State University staffer Nathan Duff directed an op-ed at President Trump and Elon Musk, arguing that new investments in the Mississippi Delta "could become a model for rural renewal across America." Since then, xAI has purchased a former natural gas plant in Southaven, Mississippi—a Memphis suburb—which seems to be the most likely power source for its second data center. In nearby West Memphis, Arkansas, Google is building a $10 billion, 580-acre campus with at least five "large-scale data center buildings;" the project's manager, Michael Montfort, is connected to two other Arkansas data centers proposed by undisclosed companies, each costing around $1 billion.
These projects have already reached rural Tennessee, as well. In 2021, Ford announced BlueOval City, a $5.6 billion campus for manufacturing electric vehicles and batteries. BlueOval City sits just miles from small, majority-Black towns like Mason and Stanton, Tennessee, and both towns have had their own political struggles related to Ford's investment. In 2022, state comptroller Jason Mumpower pressured Mason to relinquish its charter after "predominantly white administrations… had accrued high levels of debt." That attempt failed, but the comptroller's office now oversees Mason's finances. Meanwhile, Stanton residents are demanding a community benefits agreement (or CBA) from Ford that would guarantee living wages, investments in local infrastructure, and environmental monitoring.
The "Digital Delta" branding links the Mid-South's historical role as an agriculture and logistics hub to a number of growing tech industries, including medical devices, electric vehicles, and AI. In the Memphis Chamber's hands, it also builds on the region's go-to corporate pitch: low property values, low tax burdens, and right-to-work laws. (Within the past decade, the Chamber has explicitly advertised Memphis' low-wage workforce, as well.) Memphis gets especially sanitized in the process, as promotional materials downplay its high-crime reputation and a poverty rate almost double the national average.
The city's struggle to be seen as "livable" for outsiders rests on a brutal police force that receives almost 40 percent of the city's budget. Meanwhile, its infrastructure is falling apart from underinvestment. Its public transit system is in disarray, potholes are a constant complaint, and the combined effects of climate change and deferred maintenance frequently strain its power grid. When it comes to providing basic needs, the local government frequently shows more care to corporations and tourists than to its own citizens.
THE LANDSCAPE OF AI
Data centers are a vital part of the tech industry's urban footprint. In northern Virginia, for example, a cluster of more than 200 data centers forms a so-called "Data Center Alley" that transmits "more than 70 percent of global web traffic." But AI has shaken up the traditional design concerns of these facilities: Tech companies are competing for industrial plots that can meet their growing space and power requirements. Reporting by CNBC suggests that "individual data center campuses could soon use more electricity than some cities, and even entire US states." The South is at the center of this AI construction boom, especially Virginia, Georgia, Texas, and North Carolina.
One of the country's fastest-growing markets for data centers is Atlanta. In 2023, X proposed expanding one of its biggest data centers with new servers for AI. The company lobbied the county government for a $10.1 million tax break, threatening to move those servers to Portland, Oregon. Later that year, xAI quietly finalized a deal for its own data center in Atlanta—partnering with X to purchase $700 million in new equipment.
Stargate, a year-old partnership between OpenAI, Oracle, and SoftBank, is constructing 10 new data centers in Texas, with at least 10 more in the works. According to reporting by the Associated Press, "the initial plans for Stargate go back to the Biden administration." But Trump has heavily co-signed the project since taking office, heavily emphasizing its potential to help outpace AI developments in rival countries.
The South is at the center of this AI construction boom, especially Virginia, Georgia, Texas, and North Carolina.
Shortly before leaving office, Biden also "[directed] federal agencies to accelerate large-scale AI infrastructure development at government sites." Since then, the Department of Energy has identified 16 federally-owned sites that are "uniquely positioned" for the rapid construction of AI infrastructure, including data centers and power plants. One of those sites is a 562-acre plot near the Oak Ridge National Laboratory, a massive research center in East Tennessee that relies on the Tennessee Valley Authority (TVA) for power. They also include a former uranium enrichment facility near Paducah, Kentucky, and a nuclear processing and waste management complex near Aiken, South Carolina.
xAI has consistently claimed that its environmental impacts will be minimal compared to similar data centers. The company recently purchased 13 acres of city-owned land for an $80 million "greywater facility," which would recycle wastewater to cool Colossus and other industrial plants in the area. According to one estimate, the facility would reduce xAI's reliance on the city's underground aquifer by about nine percent. But those measures could be offset by the company's other needs. xAI's Whitehaven facility, once opened, is expected to use as much as 40 percent of the city's current power demand.
At the same time, the growing market for AI infrastructure has a direct relationship to power needs elsewhere. More data centers means more demand on local and regional power grids, which creates demand for new power sources. Shortly after taking office, Trump declared a "national energy emergency" that will accelerate fossil fuel production. In a virtual address at the World Economic Forum, Trump claimed he would use his emergency declaration powers to secure "rapid approvals" for power plants connected to AI infrastructure. According to Trump, "We need double the energy we currently have in the United States… for AI to really be as big as we want to have it." The national AI market is a central focus of the second Trump regime—and more Southern communities will be forced to bear its environmental and political burdens.
One of xAI's primary tasks in Memphis will be training Grok, X's AI assistant that includes a chat bot and image generation. Grok came under intense scrutiny during the 2024 election for loose ethical guardrails, spreading misinformation, and amplifying conspiracy theories. Since then, the Trump administration has repealed a 2023 executive order which called for federal safety standards around AI tools, as well as labels or watermarks for AI-generated content.
Thanks to xAI's recent purchase of X, Elon Musk's work in AI and social media are even more closely connected. Taken together, his Memphis holdings are partly meant to strengthen his efforts as a far-right propagandist. xAI's presence in the region offers a mutually-beneficial arrangement for the far right—one that will build physical infrastructure for the country's neofascist turn.
For one thing, Musk has clear political allies in Tennessee Governor Bill Lee and the state legislature's Republican supermajority. Although the state has not been directly involved in Colossus, Tennessee is a lightning rod for the kind of far-right rhetoric proliferated on X. State lawmakers have repeatedly used conservative policies to intervene in national debates about immigration, queer communities, and gun violence. White nationalists (who have flourished on X since Musk took over) and right-wing media darlings have enjoyed the spectacle of touring more liberal strongholds like Memphis and Nashville.
The Trump administration also has material interest in xAI's data center in several ways. For example, TVA's board members are nominated by the President and confirmed by the Senate. Around the time that TVA's board approved a new CEO, Trump fired board chair Joe Ritch and board member Michelle Moore without specifying why. (Just a week before Moore was fired, Tennessee's two Republican senators argued that the board "[looked] more like a collection of political operatives than visionary industrial leaders.") Those firings leave the board effectively powerless to approve new policies or change its long-term strategy.
The most obvious connection is the widely-publicized partnership between Trump and Musk. Although Musk has left his role with the Department of Government Efficiency (DOGE)—imploding his relationship with Trump in the aftermath—his hack-and-slash approach to federal spending will likely continue to influence the Trump administration's priorities.
Musk has a particularly fraught relationship to the Environmental Protection Agency (EPA), the federal agency that would be best-positioned to regulate his environmental impacts in Memphis. DOGE has worked closely with EPA head Lee Zeldin (a Trump appointee) to shrink the agency, cutting more than $2 billion in grants, loans, and contracts. In a recent letter to Zeldin, Democratic Senator Sheldon Whitehouse quoted new guidance sent out to EPA senior staff, which states that "all [funding] actions greater than $50,000" must have DOGE approval.
There's also limited evidence to suggest that xAI has directly contributed to handcuffing the EPA. Multiple inside sources recently told Reuters that DOGE is "using AI to monitor communication apps and software" used by EPA employees—seeking out language that could be "considered hostile to Trump or Musk." At least one of those sources specifically mentioned Grok, although "Reuters could not establish exactly how Grok was being used."
xAI's presence in the region offers a mutually-beneficial arrangement for the far right—one that will build physical infrastructure for the country's neofascist turn.
RESISTING AI IN THE SOUTH
How can Southern communities effectively resist the encroachment of AI data centers? In some cities, local legislation has slowed their growth. A recently-passed ordinance in Atlanta bans new data centers from being built near the city's Beltline corridor or public transit stations. That being said, this hasn't stopped developers from moving to the city's outskirts, and major proposals filed before the ordinance have been allowed to proceed.
City and county governments have discussed new regulations on xAI's presence in Memphis. But Tennessee's state government has a history of preempting local ordinances: marijuana decriminalization, minimum wage increases, gun regulations, and police reforms have all been stymied by state interference. If Memphis or Shelby County consider handcuffing xAI significantly, state officials could feel compelled to intervene. Trump also could interfere with that process directly. In March, the EPA invited companies to request a rare presidential exemption from federal air-emissions standards for up to two years. Trump has already approved exemptions for almost 70 coal-fired power plants across the country, including four run by TVA.
The most compelling challenge to xAI so far has come from its Black, working-class neighbors. Over the past century, grassroots movements in Memphis have drawn important connections between environmental destruction, state violence, and capitalist dispossession. During World War II (and for decades afterwards), the U.S. Army used South Memphis as a dumping ground for chemical weapons. In the 1970s, Black radicals saw urban renewal projects in their neighborhoods as manifestations of fascism. AI data centers hold those same tensions, as key signifiers of the growing alliance between big tech, the fossil fuel industry, and Trump's particular brand of authoritarianism. As recently as mid-July, xAI announced a new contract with the Department of Defense for up to $200 million, meaning that Grok will now assist in a variety of national security tasks.
xAI is only one of the major political crises facing Memphis since Democratic Mayor Paul Young took office last year. State lawmakers have been plotting a takeover of the city and county's public school district after the controversial ousting of its superintendent. Three former Memphis police officers were recently acquitted of state charges in the fatal beating of Tyre Nichols, while local reform efforts by city government have been frustratingly opaque. A city that's hospitable to AI land grabs is a city that sees its Black and working-class people as resources to be extracted. A victory against Colossus, or any of xAI's other Mid-South holdings, would represent a powerful rebuke of the dispossession and exploitation that have defined the region's recent history.
In fact, Boxtown already has one such victory under its belt: defeating the Byhalia Connection Pipeline, a 49-mile crude oil route that company reps once referred to as the "path of least resistance." A coalition of residents (along with high-profile support from around the country) used a variety of tactics to challenge the pipeline—including mass protests, court battles, and national media—until the project was dropped in 2021. Many of those same activists are now leading the fight against xAI, along with environmental groups, student groups like Tigers Against Pollution, and liberal and progressive groups broadly protesting Trump's current agenda. In an era increasingly defined by techno-fascism, white nationalism, and a worsening climate crisis, the trajectory of this fight is a peek into what anti-fascism could look like across the South.