Semiconductor giant Nvidia is reportedly in talks with OpenAI to provide funding guarantees for a data center in Ohio, according to The Wall Street Journal. The $250 billion deal would help the ChatGPT owner lease a 10-gigawatt project being built by SB Energy, a SoftBank subsidiary, in Piketon, Ohio.

The total project could exceed $500 billion, including chips inside the data center, and is expected to deliver up to 800 megawatts of electricity by 2028, enough to power 640,000 homes. Power will come from a separate $33 billion US government deal with Japan for a natural gas plant.

The $250 billion guarantee covers the lease but not the chips, worth another $350 billion. In June, The Information reported that OpenAI signed a potential 20-year lease. The Ohio center would be a public-private partnership with the US Department of Energy allowing SoftBank to build the world's largest AI data center on leased land.

Analysts question whether these multibillion-dollar commitments are fruitful for a startup valued at $852 billion but unprofitable. Aleksandar Tomic of Boston College called the deal the latest example of circular financing in the AI industry, reminiscent of the dot-com bubble.

Tomic argued that companies buy from each other, making demand appear stronger than it is. Nvidia's stock fell 4.9 percent on the announcement. Meanwhile, data centers have become a political flashpoint: New York imposed a one-year moratorium on new construction, and Texas and Utah are considering similar measures.

Source: www.aljazeera.com