Grok’s usage is so low that Elon Musk can sell compute to Anthropic

If you’ve driven anywhere near the outskirts of Memphis lately, you know the skyline is changing, but not with skyscrapers. It’s the massive, humming footprints of data centers. The latest news coming out of the xAI camp is a bit of a curveball for the Bluff City: Elon Musk is essentially subletting the “brains” of his Colossus 1 facility to Anthropic. For those of us watching the local economic ripple effects, this isn’t just a corporate handshake between two AI titans; it’s a signal that the “compute gold rush” is hitting a weird, volatile plateau right here in our backyard.

Let’s be real—the narrative around Grok was supposed to be one of total dominance. But the fact that Musk can lease out 300 megawatts of capacity and 220,000 NVIDIA GPUs because Grok isn’t using them is a telling admission. It means that while the hardware is present in Memphis, the actual user demand for xAI’s specific flavor of AI isn’t filling the room. Anthropic, the outfit behind Claude, is stepping in to fill that void, using Colossus 1 primarily for “inference”—which is just a fancy way of saying they’re using Memphis’s power and cooling to answer prompts for their Pro and Max subscribers globally.

The Power Struggle: MLGW and the Grid

From a macro perspective, this is a win for infrastructure utilization. But on a micro level, we have to talk about the grid. Running a facility like Colossus 1 puts an immense strain on Memphis Light, Gas and Water (MLGW). When you’re talking about 300 megawatts, you’re not just talking about a considerable electricity bill; you’re talking about the kind of load that can shift local energy pricing and prioritize industrial hubs over residential stability. The pivot to Anthropic doesn’t change the power draw, but it does change the stability of the tenant. We’re seeing a shift where Memphis is becoming a “compute colony”—a place where the physical grit of power and land is harvested to fuel digital intelligence that mostly benefits users in San Francisco or New York.

There’s also the “orbital” element Musk is teasing. The idea of moving AI compute into space to solve the cooling problem is classic Musk—visionary, slightly absurd, and incredibly expensive. But if Memphis remains the terrestrial anchor for these projects, we could see a surge in specialized aerospace and telecommunications infrastructure popping up around Shelby County. We’ve already seen how local tech trends shift when a major player moves in, but this is on a different scale. We aren’t just talking about a new warehouse; we’re talking about the ground-control for an interstellar data center.

The Political Friction in the Valley and the Delta

While the hardware is humming in Tennessee, the politics are fracturing in California. The recent reports about the weakening alliance between the Trump administration and Silicon Valley elites like David Sacks and Marc Andreessen are fascinating. For a while, the deal was simple: support the MAGA movement, and in return, get a free pass on AI regulation and a heap of tax cuts. But the wind is shifting. The White House is now considering “vetting” AI models, partly because Anthropic’s “Mythos” model proved it could find and exploit software vulnerabilities at scale. This is the irony of the Colossus 1 deal: Musk is arming a company (Anthropic) that the administration is now starting to view as a potential security risk.

For the Memphis community, this political volatility is a risk. If the federal government decides to crack down on “supply-chain risks” associated with certain AI labs, the stability of these massive investments in our region could waver. We’ve seen this cycle before with industrial shifts in the South. When the political winds change in D.C., the impact is often felt most acutely in the regional hubs that provide the labor and power.

Why Your Coding Job Isn’t Gone (Yet)

One of the most encouraging bits of news for the local developer community—whether you’re a grad from the University of Memphis or a freelance dev working out of a coffee shop in Midtown—is the failure of the new ProgramBench benchmark. Despite the hype, the top AI models (including Claude and GPT-5.4) scored zeros on complex architectural tasks. They can write a snippet of code, sure, but they can’t build a cohesive, strategic software system from scratch.

This is a crucial distinction. The “AI is replacing programmers” narrative is leaning heavily on simple tasks. But the high-level architectural decisions—the kind of work that requires understanding a client’s messy business logic and turning it into a scalable product—still requires a human brain. As we integrate more business growth strategies into our local economy, the demand for “AI orchestrators”—humans who can manage these tools without being replaced by them—is going to skyrocket.

Navigating the AI Shift in Memphis

Given my background in geo-journalism and tech punditry, I’ve seen how these “mega-projects” can either lift a city or leave it as a hollowed-out shell of utility. If you are a business owner or a resident in the Memphis area feeling the pressure of this rapid tech expansion, you can’t just wait for the trickle-down effect. You need a specific set of local experts to help you hedge your bets and capitalize on the infrastructure boom.

If this trend impacts your operations or your property, here are the three types of local professionals you should be consulting right now:

• Industrial Energy Consultants: With MLGW facing unprecedented loads from data centers, you need someone who can audit your energy efficiency and negotiate commercial rates. Look for consultants who specialize in “grid resilience” and have a proven track record with Shelby County’s industrial zoning.
• AI Integration Strategists: Don’t hire a “prompt engineer.” Look for specialists who understand the bridge between LLMs (like Claude or Grok) and actual logistics or supply-chain software. Since Memphis is a global logistics hub (thanks to FedEx), the real money is in applying AI to the movement of physical goods, not just generating text.
• Land Use and Zoning Attorneys: The sprawl of “Colossus-style” facilities is changing property values and zoning laws overnight. You need legal counsel who understands the intersection of municipal tax incentives and industrial land-use rights to ensure your property isn’t sidelined by the next big data center build-out.

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