xAI Is Adding Two More Data Centers in Southaven, Mississippi. Some Neighbors Are Being Offered Buyouts.

Two buildings in Southaven, Mississippi, are about to change jobs. One used to be a police and fire training facility. The coverage calls it Gun Range. The other used to be a Hormel Foods warehouse, and it's called Spam. Both are on Tulane Road, next to xAI's Colossus 2 complex, and both are being turned into AI data centers.

That's the news. The more interesting question is what it's like to live next door.

What's Being Built

According to the Tennessee Tribune, the two sites will hold about 420,000 Nvidia GB300 chips combined. Gun Range gets roughly 220,000 for training. Spam gets roughly 200,000 for inference, which is the work of actually answering users. Elon Musk's stated schedule has Gun Range online by the end of November and Spam in December.

Local station WMC Action News 5 reports both are under construction and part of what it calls the SpaceXAI footprint, the name local coverage now uses for xAI's operations. The station says six SpaceXAI data centers will run across the Memphis area. Musk has said the whole Colossus complex should reach about 1.2 million Nvidia Blackwell chips by the end of 2026.

What Neighbors Are Saying

The Tribune says residents near the sites keep raising the same four issues: pollution, noise, electricity demand and water use.

The company has put money on the table. Southaven Mayor Darren Musselwhite confirmed that SpaceXAI is offering to buy more than 400 nearby homes and businesses from owners who are bothered by noise or pollution. He says he asked the company to make the offer. He also says the development brings in about $63 million a year for DeSoto County Schools, DeSoto County and the City of Southaven.

Water is the open question. Sarah Houston of Protect Our Aquifer has had a records request in with Memphis's utility for three months, seeking utility bills for the Colossus sites. She says the utility's CEO told her SpaceXAI could be one of Memphis's top five water users by the end of the year. "We don't have an accurate picture of water use," she told Action News 5.

Some of the costs are more ordinary. A Southaven bar owner told the station his customers are avoiding the area to dodge the xAI traffic.

The Turbine Fight

Power is where this has turned legal. In April, the NAACP sued xAI and a subsidiary, MZX Tech, alleging that methane gas turbines ran at the Southaven site without the required permits, according to the Tribune. The paper reports that a federal judge recently rejected the companies' request to dismiss the case. It's an ongoing lawsuit, and the allegations haven't been decided.

Across the state line, the Memphis City Council voted for a 135-day pause on new data center permits after turning down a proposed year-long moratorium. The pause doesn't affect existing facilities.

Our Take

This is the AI buildout in miniature. On one side, a few hundred thousand chips and a bunch of tax revenue. On the other, a city that's now offering to buy homes from people who live too close.

What we keep noticing is how many basic facts are still missing. We couldn't find how much power the two sites will draw, what's supplying it, what permits cover these particular buildings, or how many jobs they'll create. Those are the questions that will decide whether the neighbors come out ahead.

What We Cannot Conclude

• The dates are Musk's, not a regulator's. The Tribune presents the November and December start dates as his projections.
• We don't know the power or water numbers for these two sites. Neither report gives megawatts or gallons.
• The pollution question is open. Action News 5 says the environmental impact isn't yet known, and the turbine lawsuit is unresolved.
• Naming is messy. The two local reports label the Colossus sites differently, so we've kept to the names they agree on.

Why It Matters

• Local fights now shape AI capacity. Permit pauses, lawsuits and buyouts are part of the buildout.
• Water and power are the scarce resources. Chips are the visible part, but the grid and the aquifer are the limits.
• Money and disruption land in the same place. Southaven collects tax revenue while nearby residents are being offered a way out.
• The politics are shifting. We look at the broader backlash in our piece on the proposed AI data-center rules.