3 minute read
The Circular Money Machine Is Now Official
Here’s a sentence that sounds made up but isn’t. Nvidia is in talks to guarantee roughly $250 billion in financing so OpenAI can lease a data center, and that data center exists mostly to hold Nvidia chips. The Wall Street Journal broke this Sunday and by Monday half of finance Twitter was making jokes about circular financing that would make a 2008 mortgage bond blush. The kicker, the guarantee doesn’t even cover the chips themselves. That’s a separate conversation, worth up to $350 billion. Add it up and you get a company backing its own customer to the tune of $600 billion combined, give or take.
Built on a Former Nuclear Weapons Site, Because Sure Why Not
The location picked for this monument to compute is Piketon, Ohio, about 50 miles south of Columbus. Until 2001, the site enriched uranium for the US weapons program. Now SoftBank’s energy arm, SB Energy, is building a 10 gigawatt data center campus there instead. Ten gigawatts is roughly what 8 million American households burn through in a year. So somewhere in Ohio, a plot of land is going from splitting atoms to running GPUs, and honestly neither use case screams “quiet neighbor.”
Nobody With Actual Money Wanted to Lend OpenAI a Dime
Here’s the part that explains the whole weird structure. OpenAI is privately held, unprofitable, and has no investment grade credit rating. Normal lenders looked at that and said no thanks. So Nvidia is stepping in to co-sign, letting SB Energy borrow against Nvidia’s balance sheet instead of OpenAI’s. If OpenAI can’t cover lease or construction payments, Nvidia eats the loss. OpenAI keeps the building either way.
Why Nvidia Would Even Do This
This isn’t charity. A deal like this locks Nvidia in as the exclusive chip supplier for what would be the largest AI campus ever built, for years. Nvidia has already put $30 billion directly into OpenAI. Investor Michael Burry, who’s currently shorting the AI trade, called the arrangement exactly what it looks like, Nvidia guaranteeing OpenAI’s spending on Nvidia’s own hardware.
Nothing Is Signed Yet
Terms haven’t been finalized and people close to the talks say the whole thing could still fall apart. Nvidia, OpenAI, and the Commerce Department all declined to comment when asked. The first phase of the campus, a comparatively modest 800 megawatts, is targeted for 2028. The full $500 billion buildout is still just a plan on paper, powered partly by a Japanese government investment tied to trade negotiations.
Stay Essential Here Means Stay Skeptical
None of this is confirmed as done. It’s a negotiation reported by anonymous sources. But given how much money and how much uranium history are involved, it was worth checking the numbers three times before writing a single word of it. So, just to say it. Bubbles do tend to burst, right? Not if but usually when.
Sources: Wall Street Journal, CNBC, Tom’s Hardware, Yahoo Finance, Quartz