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in  significant  delay  or  prevent  the  development  of  the  generation  we  require.  Grid-tied  electrical  supply,  for 
instance, is subject to the jurisdiction of federal and state energy regulators, regional grid operators, and public 
utility  commissions,  while  behind-the-meter  and  on-site  generation  is  subject  to  a  distinct  set  of  exclusive 
service franchise protections, permitting, environmental, air quality, interconnection, and siting requirements. 
In addition, environmental standards applicable to power generation continue to evolve, including as a result of 
changing  governmental  priorities  and  shifting  public  and  political  views  regarding  climate  change  and  the 
appropriate treatment of various power generation sources. Any failure to secure access to adequate electrical 
power, any legal, regulatory, or other administrative action or change limiting the availability of electricity, or 
any significant increase in energy or compliance costs, could adversely affect our cost structure and limit our 
ability to scale our compute infrastructure, develop and deploy our models, and service our customers. We have 
also made, and may in the future make, voluntary commitments to offset the impact of our data center energy 
consumption  on  local  communities  and  electricity  ratepayers,  including  commitments  to  cover  grid 
infrastructure upgrade costs, procure new power generation to match our energy needs, invest in curtailment 
systems to reduce strain on the grid during peak demand periods, and address environmental impacts. These 
commitments  have  increased,  and  we  expect  will  continue  to  increase,  our  operating  costs.  Moreover,  we 
believe  this  is  part  of  a  broader  emerging  trend  in  the  AI  industry,  and  such  commitments,  or  similar 
obligations, may become increasingly standard or required, which could further increase our costs. In addition, 
the  physical  effects  of  climate  change  may  increase  our  operating  costs  over  time,  as  higher  average 
temperatures can increase the power consumption and water usage required to cool equipment at the facilities 
on which we depend.

Data Center Infrastructure

Even  where  chips  and  electrical  power  are  available,  the  development  of  data  center  facilities  requires 
substantial  time,  capital,  and  specialized  expertise.  Data  center  construction  involves  lengthy  permitting 
processes, complex supply chains for specialized equipment, and significant lead times for the installation and 
commissioning  of  cooling  systems,  electrical  infrastructure,  and  networking  equipment.  Labor  shortages, 
including  shortages  of,  and  competition  for,  electricians,  facility  technicians,  and  other  skilled  tradespeople, 
supply chain disruptions, permitting delays, and other factors can extend construction timelines and increase 
costs. Further, given data center development projects require advanced and significant capital commitments 
with  dedicated  end  users,  we  have  in  some  cases  relied,  and  expect  to  continue  to  rely,  on  arrangements  for 
financing  or  with  partners  who  guarantee  the  lease  obligations  to  support  the  development  of  data  center 
capacity  that  is  expected  to  host  such  partner’s  chips  or  computing  infrastructure.  In  addition,  there  are  a 
limited number of qualified third-party vendors with the expertise we require and that support the particular 
infrastructure  we  wish  to  implement.  Accordingly,  we  rely  on  this  limited  number  of  third  parties  for  the 
construction,  management,  and  operation  of  certain  of  our  data  center  facilities,  some  of  which  have  limited 
operating history or may have less experience operating data center infrastructure at the scale and complexity 
our  operations  require.  In  certain  cases,  these  third-party  operators  are  trained  or  supervised  by  our  chip 
partners to manage facilities on our behalf but are not affiliates of those partners and may not have the same 
depth of expertise, operational resilience, or resources. Any failure by these third-party operators to perform as 
expected could disrupt our access to compute. In addition, safety or environmental incidents at facilities built or 
operated  for  us,  whatever  their  cause,  could  expose  us  to  claims,  fines,  or  suspensions  of  construction  or 
operations, the costs of which we may bear. We also depend on an extended network of suppliers, builders, and 
facility operators. If any of them engage in practices that are unsafe, unlawful, or contrary to the labor, human 
rights,  environmental,  or  other  standards  we  or  our  partners  require,  we  could  face  legal  liability,  lose  the 
ability to use affected suppliers or facilities, and suffer harm to our reputation, even where we did not direct or 
know of the conduct. 

Our collective data center infrastructure is currently concentrated primarily in the United States, which exposes 
us  to  risks  associated  with  regional  regulatory  changes,  power  grid  constraints  or  failures,  disruptions  to 
network  connectivity  between  facilities,  natural  disasters,  physical  attacks—including  those  motivated  by 
geopolitical  events,  opposition  to  AI,  and  opposition  to  data  center  development—and  other  disruptions  that 
could  affect  multiple  facilities.  Certain  state,  local,  and  municipal  jurisdictions  in  the  United  States  are  also 
considering  or  have  approved  moratoriums  on  new  data  center  construction,  citing  public  health,  safety,  and 
environmental  concerns.  Such  jurisdictions  and  other  regulators,  grid  operators,  or  utilities  may  also  adopt 
other measures that subject users of large electricity loads, including data centers, to curtailment, interruptions, 
forced reductions, disconnection, or other restrictions during periods of grid stress, whether through changes in 

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