In Brief:
- An enormous quantity of water is needed to prevent servers in data centers from overheating.
- A Memphis xAI facility, which builds Grok, is located near a wastewater treatment plant. The data center will use water from the plant instead of drinking water.
- It’s a strategy that has been used elsewhere, one that could help other communities preserve supplies needed by residents.
A sudden influx of 10,000 new households drawing on the water supply is the stuff of nightmares for a local water utility.
That’s more or less what happened to Memphis in 2024 when xAI built Colossus, a supercomputer that powers the chatbot Grok, in just 122 days. The data center needed about that much water to cool its equipment.
Memphis is one of the country’s rainiest cities, and its water budget is less vulnerable to drought than communities in Nevada, Texas and Arizona, where data centers are proliferating. Even so, more water is being pumped from the Memphis Sands Aquifer than is being replenished, says Sarah Houston, executive director of Protect Our Aquifer.
For residents, water can be an even bigger concern than energy when a data center comes to town. A large data center can use as much water per day as a town of 50,000 people, and worries about this impact are prompting pushback from state and local governments. (A 2025 investigation by Bloomberg News found that more than 7 in 10 new data center projects built or proposed since 2022 are in communities already experiencing water stress.)
Colossus, promoted as the world’s biggest supercomputer by xAI, is functionally different from the usual data center. It exclusively trains AI rather than hosting e-commerce, streaming or other web services. Still, it’s the same kind of warehouse-sized building filled with high-performance hardware that needs extra energy and generates extra heat.
There was enough water in the local drinking water supply to satisfy the millions of gallons Colossus needs each day for its cooling towers, but there was another possibility for the long term. The city’s wastewater treatment plant was a neighbor in the Frank C. Pidgeon Industrial Park, where Colossus servers worked day and night to set the future course of AI.
Data center cooling towers don’t need potable water to do their job. Could wastewater take its place?
A Neighborhood Resource
For decades, servers in data centers were protected from overheating through various air conditioning systems. But as the power of computer processing chips increased, so did the heat they generated. The centers came to need a different cooling method.
At Colossus, water is used for cooling in two ways.
Water purified above drinking water standards is cooled by a chiller and circulated continuously in a closed loop, drawing heat from chips and then getting cooled down again. The heat this water collects is transferred to an open water loop that goes to cooling towers, where most of it (about 85 percent) evaporates.
The closed loop water doesn’t need replacing, but the open loop at Colossus needs 3 million gallons a day, says xAI engineer Mark Carroll. There’s no reason this water needs to be as clean as drinking water and, he says, xAI founder Elon Musk thought it was “stupid” to use it to cool a supercomputer.
The city’s wastewater treatment plant, a huge source of non-potable water, was a quarter mile away. What started as “that would be available to us” turned into “that sounds like a good idea, let’s do it,” Carroll says.
Other data centers have used treated wastewater for cooling. Amazon has done this since 2020, and currently uses recycled water at 20 locations in the U.S. Google has said it uses “reclaimed or non-potable” water for cooling at a quarter of its data campuses.
The city had long hoped to see companies in the industrial park use wastewater for cooling, says Scott Morgan, public works director for Memphis. The Tennessee Valley Authority considered this for a power plant it built there in 2016 that uses methane from the wastewater treatment plant to generate electricity. It’s located even closer to the wastewater treatment plant than Colossus.
But nothing concrete came of the plan until 2024. The treated wastewater from the city’s plant needed a bit more cleaning before xAI could use it, Carroll says, essentially filtration to remove suspended solids. xAI decided to build a treatment plant to accomplish this that would sit between the city facility and Colossus.
The city, the Tennessee Valley Authority, the local water utility and xAI sorted out the arrangement and the Colossus Water Recycling Plant was born, to be owned and operated by xAI. Construction began in October 2025.
Toxic Legacy
Carroll is the project engineer and will manage the plant when it comes online. At groundbreaking, the facility was expected to be complete by the end of 2026, but weather delays and other factors have made that target “hazy,” he says.
xAI will pay the city for the treated wastewater it receives. The city plant cleans about 40 million gallons a day, far more than the 3 million needed to keep Colossus cool. Carroll hopes to send another 7 million to the Tennessee Valley Authority power plant that sits across the road and, eventually, to other facilities nearby.
Conservation isn’t the only reason to use wastewater in the industrial park, Houston says. The Tennessee Valley Authority operated a coal-fired power plant above the aquifer for almost 60 years. Coal ash generated there was mixed with water and stored in unlined pits known as coal ash ponds to prevent airborne dispersal of the ash. Coal ash contains toxic heavy metals, and the metals in the unlined ponds eventually seep into groundwater.
A shallow aquifer affected by this contamination sits above the Memphis Sands Aquifer, separated by a layer of clay. The more water pulled from the aquifer, and the more deep wells drilled to access it, the greater the risk of causing breaches in this layer and drawing toxic material from the ash pond into the drinking water supply.
Save Our Aquifer was founded over concerns that the Tennessee Valley Authority planned to draw water from new deep wells for cooling at the methane power plant and endanger drinking water. The group first campaigned for the authority to use recycled water years ago, and it’s now within sight.
(Jeff Willhelm/MCT)
Limits to Sustainability
The story doesn’t end at the industrial park. There are two more supercomputers in the Colossus complex. Colossus 2, in South Memphis, began operations in January. A third facility is scheduled to be built this year. Both are too far away to use wastewater from the xAI treatment facility, and both will use millions of gallons of drinking water each day.
These facilities need more than water. All told, their energy consumption will be about as much as that of 1.5 million homes. xAI is building a natural gas power plant to meet part of this demand, and in the meantime has brought in methane gas turbines to generate electricity.
These are causing pollution and “doing significant harm to families in South Memphis,” says an attorney for the Southern Environmental Law Center. The Colossus 2 campus encompasses land in both Memphis and Mississippi. On March 10, the Mississippi department of environmental quality granted approval for 41 methane gas turbines at Colossus 2.
For now, the first Colossus stands alone in bringing environmental benefit to the community. Instead of being released to the Mississippi River, some of the wastewater being treated at the city plant is sustaining its operations.
“It didn't change my operations that much,” says Morgan, the public works director. “But if they can use some of it for an overall good, it's a definite win.”
