Tesla and SpaceX have formally committed $16.8 billion to start building Terafab, Elon Musk's giant AI chip factory, after relocating the project from Austin to Grimes County, Texas. Total spending across the build-out could reach $119 billion, and the announcement lands while both companies still hold sizable bitcoin treasuries.
Tesla and SpaceX will put up $16.8 billion in initial construction spending on Terafab, the AI chip plant Musk once pitched for Austin. Company filings suggest the total cost across multiple build-out phases could climb as high as $119 billion.
Site Moves From Austin to Grimes County
Musk first unveiled Terafab in March at Austin's Seaholm Historic Power Plant, framing it as a joint venture between Tesla, SpaceX, and xAI, the AI startup SpaceX absorbed earlier this year in an all-stock deal. That plan pointed to Tesla's Giga Texas campus as the likely site, with an early cost estimate of $20 billion to $25 billion.
This week, the companies confirmed the project is instead heading to Grimes County, north of Houston. According to Bitcoin.com News, Musk has called the plant "the largest and most valuable building on Earth by far", and the building will house more than 100 million square feet of manufacturing space — roughly 10 times the size of Tesla's existing Gigafactory Texas.
Built to Feed an AI Compute Race
Terafab's job is producing advanced chips for AI workloads across Musk's companies. The plant targets roughly 1 terawatt of AI compute output a year, manufacturing about 1 billion full-reticle chip equivalents annually, each delivering roughly 1 kilowatt of compute.
Those chips are earmarked for edge computing and inference tasks on Tesla's Optimus robots and Cybercab vehicles, plus higher-power chips for SpaceX's orbital data-center push, which targets 1 gigawatt of compute capacity in orbit by 2027. Intel joined the project as a contributing partner earlier this year, and the plant is expected to create at least 3,000 jobs across Grimes and neighboring Brazos County.
Bitcoin Holdings Sit in the Background
SpaceX holds 18,712 BTC, worth roughly $1.29 billion. Tesla holds another 11,509 BTC, and together the two holdings make Musk's companies among the largest corporate bitcoin holders in the US. Earlier this week, SpaceX's bitcoin stash shed roughly $540 million in value even as the company's core launch business topped forecasts.
Neither company has said whether Terafab's budget will draw on its bitcoin holdings, and both have historically treated their BTC treasuries as long-term balance-sheet assets rather than a funding source. Construction on Terafab is expected to begin in the coming months, with Tesla and SpaceX arguing that current global chip manufacturing capacity cannot support the AI compute buildout they are chasing.
Source: Bitcoin.com News
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