Data Centers Raise Questions About Water Usage

Elon Musk’s xAI is building two huge data centers, one in Memphis, Tenn., on the site of an abandoned Electrolux factory, and another in Mississippi just across the Tennessee border. Data centers use a lot of power and can require a lot of water to cool the heat they generate, if they are water-cooled (not all are). Musk calls these two centers Colossus I (which came online late last year) and Colossus II, and they are designed to power xAI’s Grok artificial intelligence.

One big reason why Musk located the Colossus I and Colossus II projects in and around Memphis is the availability of the Mississippi River and its water supply. Colossus Iuses 200,000 Nvidia chips. To support the data centers, Musk is building a power station and a water treatment plant, which will treat and return some of the water to the river.

The proliferation of these data centers raises obvious questions about power usage and the electric grid, but it also raises questions about water usage. Just how much water will these centers use? And for the ones that source water from navigable waterways, could they ever affect water levels  for navigation?

The most recent full dataset from the U.S. Geological Survey, which tracks water usage, was published in 2023 and covers the year 2020. The 2020 report tracks both surface-water and groundwater withdrawals by category and by state. Data-center cooling water would fall under the “industrial” category, along with manufacturing. In 2020, all “industrial” uses only amounted to 9 percent of total withdrawals.

But a lot has happened since 2020, including the AI arms race and its energy demand, which are spurring many billions of dollars of investment. Reportedly, 18 data centers broke ground in July 2025 alone, with an average cost of around $220 million per facility.

Based on estimates and local reporting, Colossus I uses about 1 million gallons per day, some of which is returned. If the flow of the Mississippi River at Memphis is 275,000 cubic feet per second, that translates to about 148 billion gallons per day.

While that sounds minute, nonprofit analyses and regional studies by groups such as Alliance for the Great Lakes warn that data center growth could lead to large cumulative withdrawals. One recent regional analysis predicted data center-related withdrawals to reach the tens to low hundreds of billions of gallons nationally over the next several years, if the growth trend continues and if many centers rely on large water sources.

While these are trends to watch, it seems that navigation is not threatened in the short term.