Oracle Will Reportedly Spend $1 Billion a Year on a Gas-Powered Data Center

Oracle is going all-in on its AI-focused cloud business, pouring billions into building massive new data centers. One site under construction in West Texas will reportedly cost the company around $1 billion just to keep the lights on.

Bloomberg reported, citing unnamed sources familiar with the plans, that Oracle intends to spend more than $1 billion a year to run a new West Texas megasite on gas generators rather than wait for a utility hookup. 

It can take years to get approval and infrastructure to pull the kind of electricity these massive data centers need from local grids. Oracle’s workaround shows just how much it’s willing to spend, how fast it wants these sites running, and how little it cares for any environmental consequences.

Oracle, founded all the way back in 1977 and best known for its business database software, has reinvented itself in the last decade or so as a player in cloud services, after years of initially dismissing the idea. Its big bet now is on AI-focused cloud computing. 

In recent years, Oracle has landed big deals with major tech firms and quickly built a reputation for handling AI projects. A big draw is the company’s “bare metal” approach, which gives clients their own dedicated servers—opposed to sharing them with other clients. This makes the servers faster and more secure.

Oracle has now become the backbone for many AI companies. Things really took off for the company when TikTok came aboard, and by 2022, all U.S. user traffic on the app was flowing through Oracle servers. This deal quickly generated over $1 billion of annual revenue for the company. 

Today, the company is helping power Elon Musk’s xAI from a Utah data center and building a cluster of tens of thousands of AI chips for Nvidia. All these deals have helped make Oracle founder Larry Ellison the second-richest man in the world, just behind Elon Musk.

Oracle also recently signed what Bloomberg calls the largest single cloud deal ever with OpenAI for its Stargate project, an ambitious joint venture announced at the White House back in January. The AI company has agreed to develop about 4.5 gigawatts of data center power with Oracle. For context, one gigawatt is enough to power about 750,000 homes. Still, we’ve seen little movement in the real world to indicate the project is on track. 

Oracle’s new gas-powered data center is going up in Shackelford County, Texas, not far from another one of its data centers in Abilene. Developed by Vantage Data Centers, the site will have a massive 1.4-gigawatt capacity, making it one of the largest data centers in the world. 

Oracle did not immediately respond to a request for comment from Gizmodo.