The $19B "Nuclear AI" Energy Startup That Couldn't Sign a Single Client (financialpost.com) 11
"Nuclear AI startup" Fermi had hoped to build power plants generating 17 gigawatts of electricity, remembers Bloomberg, "three times the amount typically consumed by New York City."
Hyperscalers could install their data centers on the site itself and tap directly into that power, which would come first from natural gas turbines and later from nuclear reactors. The pitch ticked so many boxes — artificial intelligence, nuclear energy, political connections — that some investors found it irresistible. Fermi went public in October worth more than $19 billion in market value, despite reporting no revenue or signed customers.
Now, the startup's board has fired its top executive, Toby Neugebauer, after months of negotiations failed to secure a single client. Chief Financial Officer Miles Everson left as well... Fermi's stock, meanwhile, has tumbled 84% from its peak. The company's more than 5,000-acre site in the Texas panhandle — dubbed Project Matador, or the President Donald J. Trump Advanced Energy and Intelligence Campus — remains mostly unfinished. And some analysts see a cautionary tale of the market's AI enthusiasm running ahead of reality, with investors betting on companies whose grand projects may never get built...
The idea of giving data centers their own, dedicated power supply not dependent on the grid may sound tempting, but former US Department of Energy official Jigar Shah said banks don't want to finance it. The grid, drawing power from many sources, is more reliable than a handful of expensive, on-site plants, he said. He considers Fermi a failure "of monumental proportions" and says similar, off-grid data center projects elsewhere deserve more skepticism than they've received... "We're allowing these types of projects to continue to be viewed as viable when they most certainly are not," said Shah, who ran the department's Loan Programs Office during the Biden administration....
"It was a piece of dirt with a dream," an investor who visited the site in February told the short sellers, Fuzzy Panda Research.
Now, the startup's board has fired its top executive, Toby Neugebauer, after months of negotiations failed to secure a single client. Chief Financial Officer Miles Everson left as well... Fermi's stock, meanwhile, has tumbled 84% from its peak. The company's more than 5,000-acre site in the Texas panhandle — dubbed Project Matador, or the President Donald J. Trump Advanced Energy and Intelligence Campus — remains mostly unfinished. And some analysts see a cautionary tale of the market's AI enthusiasm running ahead of reality, with investors betting on companies whose grand projects may never get built...
The idea of giving data centers their own, dedicated power supply not dependent on the grid may sound tempting, but former US Department of Energy official Jigar Shah said banks don't want to finance it. The grid, drawing power from many sources, is more reliable than a handful of expensive, on-site plants, he said. He considers Fermi a failure "of monumental proportions" and says similar, off-grid data center projects elsewhere deserve more skepticism than they've received... "We're allowing these types of projects to continue to be viewed as viable when they most certainly are not," said Shah, who ran the department's Loan Programs Office during the Biden administration....
"It was a piece of dirt with a dream," an investor who visited the site in February told the short sellers, Fuzzy Panda Research.
"A startup in hot industry- (Score:2)
Re: (Score:3)
Honestly Solyndra was blown out of proportion (Score:2)
It's almost as if there was a coordinated attempt to discredit solar energy by powerful people who had nearly limitless money and a vested interest in making sure the public had a bad taste in their mouth regarding solar power...
It's a good thing crazy conspiracy theories like that don't happen in the real world. Now if you excuse me I'm going to go play some Nintendo ga
Solyndra story was always a lie. (Score:2)
Sigh. Yes. Yes, I do, because for TWELVE FREAKING YEARS, I've been having to find and copy this excerpt from the NYT story on it, November 16, 2014:
"Here’s another: Remember Solyndra? It was a renewable-energy firm that borrowed money using Department of Energy guarantees, then went bust, costing the Treasury $528 million. And conservatives have pounded on that loss relentlessly, turning it into a symbol of what they claim is rampant crony capitalism and a huge waste of taxpayer money.
Defenders of t
So the scam was incredibly obvious? (Score:2)
Even more obvious than what the nuclear bros usually push, I take it. Well. With the demented things investors are willing to finance these days, they must have really, really, really screwed up their pitch.
It's one thing to run a scam (Score:2)
I mean up until about halfway through Trump's third term. But then anything goes.
'cause they all know it's a fad (Score:2)
Nuclear power stations take decades to build. The customer base knows this whole AI thing isn't going to really pan out even as they sell it. They need to make their money as soon as possible before the curtain falls, and that will be much sooner than this power solution will be ready.
Lets set a few things straight (Score:2)
Because investors don't get advice from Fox (Score:2)
Investors can watch the nuclear industry trying hard with SMRs and thorium and traveling wave and pebble-bed, and NOT see industry getting the construction cost down below $10/watt. One hears tell that China is kicking reactors out the door in sixty months flat, at $4.50/watt. But then, China is an unreliable narrator about the greatness of China, and may be doing awful things to local environments. Even if they lean on our governments to ease up on nuclear (Trump sure would), halving the cost to $5/wa