Access to water is now a risk factor in SpaceX’s IPO

SpaceX has added new language to its IPO filing that warns potential investors about the company’s access to a potentially scarce resource: water.

The company, which now includes Elon Musk’s artificial intelligence game, xAI, wrote in a revised version of the filing on Monday that access to water — required to cool its data centers — is just as important as SpaceX’s ability to secure power, processors and other critical resources.

This addition comes amid an ever-evolving debate about how much water data centers use, and whether that use contributes to local droughts exacerbated by climate change.

In the “Risk Factors” section of SpaceX’s IPO filing, the company added language about water to a section about the challenges of scaling up AI infrastructure.

Previously, SpaceX has focused on telling investors that its data centers were constrained primarily by access to “economically affordable energy,” coupled with long construction timelines and material shortages. The edited file adds multiple lines about water access. SpaceX is now telling potential IPO investors that data center construction is constrained by “the availability of power and water at economically viable prices.”

The company goes on to say that “significant water resources may be needed to cool large-scale data center operations.” Water availability is such a big concern that SpaceX says it has become “a critical consideration in data center site selection, development, and operation.”

SpaceX also says that “water scarcity, drought conditions, competition for local water resources, or regulatory restrictions on water use could limit our ability to obtain sufficient water for cooling, restrict data center cooling capacity, increase our costs, delay or limit the expansion of our data center infrastructure, or require us to implement alternative cooling technologies that may be more expensive or less available.”

It’s not clear what inspired SpaceX to add this water-related language to its filings, or why it was left out of the initial release. The company is in the pre-IPO period, during which the SEC has been sending “comment letters” to SpaceX requesting clarification or additional details about the filing. It’s possible that the SEC’s questions prompted this particular change, although we won’t know until those comment letters are published in the weeks following the IPO.

Adding more details about SpaceX’s access to water wasn’t the only change the company made in this first revised filing. SpaceX also revealed that it has set aside up to 5% of the shares sold in the IPO to employees and friends of executives. SpaceX also added language warning investors that the company may issue a “substantial” number of shares in future transactions after the IPO — a hint at a potential merger with Tesla — which could dilute existing shareholders.