Nvidia Backs OpenAI's Ohio Data Center with $250 Billion Guarantee

Nvidia is in advanced talks to provide $250 billion in funding guarantees for a massive OpenAI data center in Piketon, Ohio, according to The Wall Street Journal. The deal would help OpenAI lease a 10-gigawatt project being built by SB Energy, a SoftBank subsidiary, about 68 miles south of Columbus. The total project cost could exceed $500 billion when including chips, with 800 megawatts of power expected by 2028 - enough to light up 640,000 homes. Power will come from a separate $33 billion U.S.-Japan natural gas plant.

Critics question whether such massive commitments make sense for OpenAI, which is valued at $852 billion but remains unprofitable. Boston College's Aleksandar Tomic warns of circular financing, where Nvidia effectively funds OpenAI to buy Nvidia chips. He compares it to the dot-com bubble, when companies bought from each other to inflate demand. Others, like Founder's ETF's Michael Monaghan, argue this is just normal economic activity - money flowing through an ecosystem. Nvidia's stock dipped nearly 5% on the news, though it remains up 4% year-to-date.

Political opposition to data centers is growing. New York recently imposed a one-year moratorium on new construction, and Texas Governor Greg Abbott has called for a ban in rural areas. A Texas Democrat proposed ending tax breaks and requiring operators to pay for grid upgrades. A recent Gallup poll shows 71% of Americans oppose new data centers in their communities. Monaghan downplays the regulatory risk, noting that large projects rarely get undone. Neither Nvidia nor OpenAI commented on the report.

Source: Al Jazeera