Anthropic Breaks From Its Rental Strategy
AI's power crunch has become so acute that Anthropic—a company that has generally avoided buying physical infrastructure—is spending $3.4 billion on natural gas turbines.
The AI company, which plans to go public this year, is buying Caterpillar generators that equipment supplier OnePWR had originally ordered, according to a Financial Times report. The generators can produce up to 1.7 gigawatts of electricity.
A Shift Away From Renting Compute
Historically, Anthropic has preferred to rent rather than buy. In its May S-1 filing, the company disclosed that it is paying SpaceX subsidiary xAI $1.25 billion per month through May 2029 to use xAI's computing power.
"We expect to enter into additional similar services contracts," Anthropic stated in the filing, signaling more deals to rent computing capacity.
But as demand for compute ramps up, the market for power has grown increasingly uncertain—which may have forced Anthropic's hand. The backlog for natural gas turbines stretches into the early 2030s, and queues to connect to the electrical grid can be just as long.
Anthropic's purchase looks like a last resort.
How the Deal Came Together
According to the report, OnePWR ordered the turbines a couple of years ago but couldn't find financing to complete the purchase. Anthropic had planned to buy them from OnePWR but instead went directly to Caterpillar, the manufacturer.
It remains unclear why OnePWR was unable to secure financing despite Anthropic's apparent interest as a customer. Whatever the case, Anthropic likely wanted to keep the generating capacity for itself rather than give a competitor an opportunity to snap it up.
AI Companies Race to Secure Natural Gas
AI companies have been ramping up purchases of natural gas equipment and supplies in recent years. Google, Amazon, Microsoft, and Meta have all announced plans to build massive natural gas power plants to power their data centers on-site, rather than drawing from the public grid.
The binge has given a second wind to fracking, the drilling method used to extract natural gas from underground rock. If the buildout proceeds as planned, U.S. data centers alone could consume more natural gas than Germany and Japan combined by 2035. The reliance on natural gas also exposes hyperscalers to price fluctuations. One analyst expects prices could more than triple by the end of the decade in some markets. If that happens, Anthropic might have a serious case of buyer's remorse.
via TechCrunch AI