Crusoe CEO Chase Lochmiller on Building the First Phase of Stargate ...Middle East

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Crusoe CEO Chase Lochmiller on Building the First Phase of Stargate

Where did the name Crusoe come from? 

It’s named after Robinson Crusoe, who was stranded on this desert island, and he had to be really innovative with his resources in order to survive. At Crusoe, we try to channel that same sense of innovation applied to stranded energy. Stranded energy is energy that could be produced but isn’t being produced because there’s no demand for it. We had a whole flare-gas mitigation business, where we were capturing waste methane from oil production that was being burned off, and using it to power modular data centers.

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    Crusoe is building the first phase of OpenAI’s Stargate data-center project in Abilene, Texas, announced by President Donald Trump in January. How did this deal come about?

    ChatGPT was launched November 2022. Demand spikes. All these AI startups get going. Companies like us leased up the majority of available data-center capacity over the next 12 months. Suddenly, we had the lowest data-center vacancy rates in the history of the industry. People are looking around like, “OK, I need hundreds of megawatts of capacity, and I don’t know where it’s going to come from.” We were in this position where we had a lot of power and opportunities that we could develop into high-performance compute infrastructure, and we had the will to execute on that on a very accelerated time frame.

    My understanding is a lot of Stargate is powered by wind, but there’s some gas as well as backup. Is that correct?

    Exactly. It’s connected to the grid. But the point is that it’s in an area that is very rich in wind and solar production. There were a lot of renewable-energy developers that had built out wind farms in this region because they were incentivized by tax credits, where they were actually getting paid to produce renewable energy and sell it independent of the real price. That program existed for 10 years, and actually led to a bit of overinvestment in that region. What you had was power prices very frequently going negative, because these power producers were willing to sell at a negative price. They were literally paying to get rid of their power. So it was actually a surplus of clean energy in that region. We viewed that as a massive opportunity to basically bring the ultimate demand for energy to this region of oversupplied clean energy.

    Are you seeing a trend playing out where there is now increased demand for energy as a result of AI?

    Absolutely. You’re seeing renewable, clean, and also fossil-based generation. A lot of new energy is being developed because of AI to support the demand. We need a lot more of that.

    A report recently argued every data center in the world is vulnerable to Chinese espionage. In these data centers that you’re building, what security measures are you taking? 

    Security is of massive concern to us. We take it extremely seriously, on the physical side as well as the digital. On the digital side, it has been—and I think will continue to be—a constant game of cat and mouse, where it takes investment and staying up to speed with the latest trends. We understand that the scale and the importance of this project makes it a security attack threat. Just by virtue of how big it is, and how important it is, it’s got a target on its back from certain people. To give you an example, the perimeter is secured in such a way that if you drove a fully loaded 18-wheeler into it, you wouldn’t scratch an inch of anything.

    Are there three-letter agencies involved?

    I don’t know that we have three-letter agencies involved. Maybe it’s above my pay grade. [Laughs.] Maybe one of our partners has them involved. That’s possible.

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