xAI, a subsidiary of SpaceX, is facing criticism for its rapid data center buildout, particularly at its "Colossus" facility in Memphis. The company has been operating unpermitted gas turbines, which have been a source of pollution, including smog and formaldehyde. A lawsuit filed by the Southern Environmental Law Center (SELC) on behalf of the NAACP, alleging violations of the Clean Air Act, was dismissed by the Department of Justice, citing national security and the need for "artificial-intelligence innovation that supports the Department of War’s military operations."

xAI has announced an agreement with the Mississippi Department of Environmental Quality to remove the "temporary" turbines by July 2027, replacing them with a natural gas power plant. This move, however, has drawn further criticism, with concerns that the company will face no penalties for past emissions. The company's public statements regarding the number and status of its turbines have also been inconsistent, leading to confusion and mistrust.

The location of the data center in Memphis, a majority Black population area, has also raised concerns about environmental racism. Critics suggest that such developments, which pose health hazards, are disproportionately allowed in less affluent communities with higher minority populations. Residents are left with limited legal recourse to contest these developments.