Crusoe seeks $3B to power AI data centers with flare gas

Key Takeaways

• Crusoe is in talks to raise $3 billion, potentially tripling its valuation to around $30 billion
• The startup has contracts with Meta and Oracle to supply AI computing power from data centers in Texas and Missouri
• Crusoe pivoted from cryptocurrency mining to AI infrastructure, capturing flared natural gas to power its facilities

Crusoe Energy Systems is negotiating a $3 billion funding round that could triple its valuation to roughly $30 billion, Bloomberg reported Thursday. The AI data center startup has secured contracts to supply computing power to Meta and Oracle, positioning itself as a major player in the race to build infrastructure for generative AI.

The deal remains in active negotiation, with no final valuation set. But investors expect the number to land around $30 billion including the new capital, according to people familiar with the talks. Crusoe did not respond to requests for comment, and Reuters could not independently verify the report.

From crypto mining to AI infrastructure

Crusoe launched in 2018 as a cryptocurrency mining operation with an unusual twist: it powers its data centers by capturing natural gas that would otherwise be flared at oil drilling sites. Flaring burns off excess gas as a waste byproduct, releasing methane and CO2 into the atmosphere. Crusoe intercepts that gas and converts it to electricity on site.

The company has since pivoted to AI workloads, joining a crop of startups called "neoclouds" that provide specialized AI cloud and data center services. These companies are racing to meet demand from hyperscalers who need massive compute capacity for training and running large language models.

Last year, Crusoe raised $1.38 billion in a Series E round at a valuation above $10 billion. Valor Equity Partners and Mubadala Capital co-led that round. A $3 billion raise at $30 billion would represent a threefold jump in less than 18 months.

Why Meta and Oracle are buying from Crusoe

The AI boom has created a power crisis. Training a single frontier model can consume megawatts of electricity for weeks or months. Inference at scale requires even more. Tech giants are scrambling to secure power capacity wherever they can find it, and Crusoe offers something the major cloud providers cannot easily replicate: distributed power sources that bypass grid constraints.

Bloomberg reported last month that Meta has signed contracts to buy computing capacity from two Crusoe data centers, one in Childress, Texas, and another in Warrenton, Missouri. Oracle is also a customer. In June, Crusoe said it has contracts for 4.9 gigawatts of computing power and more than 40 gigawatts in its total project pipeline.

To put that in context, a single gigawatt can power roughly 750,000 homes. The pipeline Crusoe claims would represent a significant fraction of the new power capacity the AI industry needs over the next decade.

The neocloud market heats up

Crusoe competes with other AI infrastructure startups like CoreWeave, Lambda Labs, and Cerebras in providing GPU compute to enterprises that cannot get enough capacity from AWS, Azure, or Google Cloud. CoreWeave raised $7.5 billion in debt financing last year and filed for an IPO. The common thread: demand for AI compute far outstrips supply, and anyone who can deliver power and GPUs at scale commands a premium.

Crusoe's environmental angle may also appeal to enterprises facing pressure to reduce Scope 3 emissions. Using gas that would otherwise burn as waste is not carbon-neutral, but it is arguably less harmful than drawing from the grid or building new natural gas plants. Whether that framing holds up to scrutiny depends on the counterfactual: would that gas have been flared anyway, or does Crusoe's business create incentives to keep drilling?

What happens next

If the round closes at the reported terms, Crusoe would join the small club of private AI infrastructure companies valued above $20 billion. That puts it in the same conversation as OpenAI and Anthropic, though Crusoe's business model is fundamentally different: it sells picks and shovels rather than models.

The bigger question is whether the AI infrastructure boom is sustainable or a bubble. Crusoe has real contracts with real revenue from creditworthy customers. But a $30 billion valuation implies expectations of continued hypergrowth. If AI spending slows or shifts, the math changes fast.

Frequently Asked Questions

What does Crusoe Energy do?

Crusoe builds AI data centers powered by natural gas that would otherwise be flared at oil drilling sites. It sells computing capacity to enterprises like Meta and Oracle for AI training and inference workloads.

How much is Crusoe raising in its new funding round?

Crusoe is in talks to raise approximately $3 billion, which could value the company at around $30 billion including the new investment, according to Bloomberg.

Who are Crusoe's main customers?

Meta and Oracle have contracts to purchase AI computing capacity from Crusoe. The company has 4.9 gigawatts of contracted computing power and over 40 gigawatts in its pipeline.

Is Crusoe's flare gas model actually sustainable?

It is less carbon-intensive than building new gas plants, but not carbon-neutral. Crusoe uses gas that would be burned off as waste, reducing methane emissions compared to flaring. Critics argue the model could create incentives to continue fossil fuel extraction.

How does Crusoe compare to other AI infrastructure startups?

Crusoe competes with neoclouds like CoreWeave and Lambda Labs. Its differentiation is the stranded-gas power model, which allows it to build capacity in locations where grid power is unavailable or constrained.

Source: Tech-Economic Times / ET